The Senate Tuesday voted to extend $17 billion in tax credits for wind, solar, biomass, hydroelectric, and geothermal power, easing fears that the fledgling alternative energy industry would find itself unable to compete with fossil fuels.
The tax credit, which was added to the Renewable Energy and Job Creation Act, would extend residential and business tax breaks for solar energy for eight years, wind energy for one year, and other renewable sources, such as tidal and geothermal projects for two years. The bill also includes a tax credit of up to $7,500 for plug-in electric cars. The Senate approved the bill 93-2.
The House passed a version of the bill in May, which, unlike the Senate bill, sought to cover the full cost of these energy tax breaks by rolling back some breaks for hedge fund managers and corporations doing business abroad. The Senate bill only offsets part of the costs.
For the bill to go to President Bush for his approval, the two versions will need to be reconciled. There's not much time left: Congress is scheduled to begin its election season recess Friday, although they have said that they may remain in session to address the financial crisis.
While enjoying wide bipartisan support, the tax bill has struggled to get through the Senate this year. Senate Democrats have been caught between Republicans and the White House who oppose any new taxes to offset the costs of the tax relief and House Democrats demanding that the bill be paid for to avoid adding to the federal deficit.
"Don't send us back something else," Senate Majority Leader Harry Reid, D-Nev., said in an appeal to the House. If there are changes, he said, "it will die."
Investors are betting that the bill won't die. As Reuters reports, solar energy stocks rallied following the bill's passage. Share prices were held down this year, as Congress had failed on eight occasions to extend solar tax credits that were set to expire in December.