Advanced Energy Perspectives

FEDERAL: Tax Credit Expiration Looms, While Stalled Efficiency Bill Gets Vow of House Support

Posted by Tom Carlson

Nov 7, 2013 4:45:00 PM

    

Flag_Shaheen_PortmanThe word around the Hill is that the PTC and ITC for wind (above 100 kW) and other technologies are likely to expire at the end of 2013 as scheduled, at least temporarily. Any discussion of extending these key tax benefits for wind development will likely be put off until some time in 2014 as key House and Senate committees examine comprehensive tax reform.

 

In more positive news, bipartisan leaders in the Senate are hopeful that the Shaheen-Portman energy efficiency bill will advance. Additionally, two bills were introduced in late October that would take separate approaches to a national renewable energy standard (RES), with one bill also adding a national energy efficiency resource standard (EERS).

 

Finally, on the anniversary of Superstorm Sandy, President Obama issued an executive order to move toward greater grid resiliency during future severe weather events.

 

On the Hill

 

The continued uncertainty around tax credits for the wind industry has slowed development in the wake of the last-minute extension, for just one year, now approaching expiration. Meanwhile, opponents of the PTC are pushing for the wind-boosting tax credit to expire permanently.

 

While the focus has been around the PTC for land-based wind, offshore wind power relies on the ITC, which would also expire at the same time. The developers of Cape Wind in Massachusetts announced in October that they’re hoping a couple of legal challenges will be resolved so that they can commence construction this year and take advantage of the credit. Sen. Tom Carper (D-DE) and Rep. John Carney (D-DE) are championing the Incentivizing Offshore Wind Power Act (S. 401) to extend the ITC for the first 3,000 megawatts of offshore wind facilities placed into service, which would give the nascent industry a clear runway to take off.

 

AEE and our business members continue to track all these tax discussions closely as we advocate for an extension of current credits while discussing a more sustainable tax paradigm moving forward. AEE spoke on a panel about the topic this week at state partner North Carolina Sustainable Energy Association’s “Making Energy Work Conference” with representatives from PEW Charitable Trust and US Bank.

 

House Energy and Commerce Chairman Fred Upton (R-MI) announced that he planned to move the Shaheen-Portman energy efficiency bill in his committee if it’s able to pass the Senate, noting that the bill has bipartisan support in the House. Leaders in the Senate continue to discuss a pathway for moving the bill on the floor, perhaps before the end of the year, after it got stalled in the midst of the government shutdown battle.

 

On October 29, Senators Mark Udall (D-CO) and Tom Udall (D-NM) introduced the Renewable Electricity Standard Act of 2013 (S. 1595), which would set up a national RES of 25% by 2025. A couple of days later, Sen. Ed Markey (D-MA) introduced the American Renewable Energy and Efficiency Act (S. 1627), which would also require a 25% by 2025 RPS. Markey’s bill adds a national EERS, requiring electric and gas utilities to achieve energy savings equivalent to 15% and 10% of sales, respectively, by 2025.

 

A national RES would build upon the 29 states and the District of Columbia that already have renewable portfolio standards. States with RPS laws have a combined population of over 200 million people; 25 states and DC, representing over 60% of electricity sales nationally, have EERS laws or similar binding energy savings targets. Nationalizing successful RPS and EERS policies, which have also survived challenges in multiple states this year, would extend the jobs, cost savings, and other benefits of advanced energy development now enjoyed by these states to the rest of the country.

 

Meanwhile, Sen. Joe Manchin (D-WV) and House Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) touted planned legislation to gut EPA’s ability to regulate carbon emissions within the power sector. AEE sees EPA’s recently begun effort to regulate carbon emissions from existing power plants as an opportunity for advanced energy companies to provide solutions that carry substantial economic benefits for the country, including regions that are currently coal-dependent.

 

AEE also continues to watch for the next nominee to lead FERC, which sources say could take a while.

 

In the Agencies

 

The Bureau of Land Management (BLM) held its first competitive lease auction for Solar Energy Zones (SEZs) in Colorado on October 24, but did not receive any bids. Industry representatives cited market and regulatory uncertainty for the lack of trigger-pulling in this first auction, but BLM officials committed to going back to the drawing board for future auctions within the 17 SEZs that were created in 2012, covering 285,000 acres in six western states.

 

On carbon capture and sequestration, DOE is proposing $1 billion in stimulus funds for the FutureGen 2.0 project in Illinois, with construction expected to take place from 2014 to 2017.

 

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Topics: Federal Policy Update

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