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PTC/ITC Extensions Run Aground in the Senate

Efforts to extend key tax subsidies for US renewables have stalled in the US Senate.

Senate Democrats had hoped to pass legislation that would have extended the Production Tax Credit and Investment Tax Credit but failed to secure support of 3/5 of the chamber's members. As a result, the bill was tabled and the Senate moved on to other business.

The legislation the Senate sought to consider cleared the House of Representatives last month. It would have extended the PTC as it applies to wind projects for one year and for three years as it applies to biomass, geothermal, hydropower, landfill gas and solid waste projects. The legislation would also have qualified marine energy projects for the PTC. In all cases, the bill would have capped the PTC's benefit at 35% of a project's costs starting in 2010.

The legislation also included a six-year extension of the Investment Tax Credit, both as it applies to utility-scale projects and home PV systems. It would also have allowed publicly-traded utilities to exploit the ITC. The residential cap for PV systems would have been raised from USD 2,000 to USD 4,000.

Fifty Senators voted in favour of ending debate, including 45 Democrats, two Independents who caucus with the Democrats, and three Republicans. Forty-four Republicans voted no and blocked the measure from advancing. Senators Barack Obama and John McCain were among the six Senators absent from the vote.

The Senate vote on the PTC/ITC came immediately after the chamber failed to advance a separate bill that would have imposed a windfall tax on the oil majors. That legislation would have diverted the funds raised into a special federal fund that would have supported US clean energy.

In February, the House passed a USD 157bn economic stimulus bill that included an extension of the PTC/ITC but the Senate then stripped the renewable energy provisions out of the legislation.