Clean Energy Sector Scrambles to Save Incentives

Representatives of the renewable energy industries are scrambling to salvage what they say is a crucial federal incentive that has helped keep them afloat during the worst of the recession.

Craig Lassig for The New York Times  

In a release circulated Tuesday afternoon, the American Wind Energy Association, a trade group, said that “tens of thousands of Americans could lose their jobs or not get called back from layoffs” if the incentive program is not extended.

The program, part of last year’s federal economic stimulus package, allows qualified renewable energy projects to access a cash grant — 30 percent of the project’s cost — in lieu of traditional tax credits. The measure, industry representatives have said, proved vital in helping developers to secure financing amid the economic downturn.

The incentive will expire in a little over three weeks unless Congress extends it.

“We have people being laid off right now, and we expect to see more without fast action on the tax extenders now being negotiated,” Denise Bode, the chief executive of the wind energy association, said in a prepared statement.

“We are risking those jobs,” she added, “by not sending a clear signal that America remains open for business in wind energy.”

Proposals to extend the program have been floated, including one recently slipped into Congressional tax negotiations by Senator Max Baucus, the Montana Democrat. But whether any sort of extension will be included in a pending deal on a new tax bill is far from certain.

As my colleague Matt Wald and I wrote recently, renewable electricity development in the United States has been reeling of late — in part because of the recession and associated drops in electricity demand. Rock-bottom prices for natural gas — a chief competitor for renewable forms of electricity — is also proving a challenge, leaving the industry heavily reliant on what few federal incentives are available to it.

Renewables advocates had been certain that 2010 would yield a price on carbon dioxide emissions — either through a direct tax or a cap-and-trade system — or federal targets for renewable electricity generation. Neither of those, came to pass, however, and with Republicans signaling that issues like climate change will not be driving the energy agenda in the new Congress, it appears unlikely that such measures will be explored again anytime soon.

Meanwhile, developers are racing to meet eligibility deadlines for the existing grant program. To qualify, projects must be physically under way or have incurred at least 5 percent of the projected cost by the end of 2010.

The $3 billion grant program was established under what is known as Section 1603 of last year’s American Recovery and Reinvestment Act. On Tuesday, the American Wind Energy Association posted a “Take Action” alert on its Web site, imploring visitors to lobby their representatives in Washington to extend the program as part of the compromise.

“We need you to CALL your Senators and Representative IMMEDIATELY,” the alert stated, “and ask them to only support a final tax bill that includes an extension of the 1603 Program.”

By TOM ZELLER JR./NYT

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