Author: Iulia Gheorghiu  Published: Dec. 18, 2019  Up Date: 12/20/19 Utility Dive

The Senate approved the spending bills on Thursday. President Donald Trump must sign the bills by midnight to prevent a government shutdown.
Dive Brief:
  • The U.S. House of Representatives approved a broad spending bill on Tuesday extending tax credits for wind energy, which expire at the end of 2019, for another year.
  • The House had proposed a wide-reaching clean energy package of tax credits, including new incentives for energy storage and offshore wind, and extensions for electric vehicles and solar. Those proposals were not included in the $1.4 trillion spending measure.
  • On Monday night, House Republicans and Democrats agreed to a slew of extensions of other credits that had already expired, from biodiesel energy to geothermal. The bipartisan legislation includes credits for energy efficient homes and Native American-owned coal plants.

Dive Insight:

Renewable energy stakeholders were disappointed in the deal, having hailed the previous House Democratic draft bill as a crucial way to advance clean energy deployment.

The Senate is expected to pass the package, which includes an extension of a biodiesel tax credit, a key priority for Senate Finance Committee Chair Chuck Grassley, R-Iowa.

“Historically, over the past more-than-a-decade, it’s typically been almost a no-brainer that Congress will at the end of the year just reauthorize a whole grab-bag of different tax provisions,” but that changed in 2017 and 2018, Erica York, an economist at the conservative think tank Tax Foundation, told Utility Dive.

Several expired tax credits have been awaiting reauthorization, adding to investment uncertainty. “That’s why in general it’s not a good idea to have a temporary tax code,” York said. “If the Congress does decide to have industry specific carve-outs, they should be permanent.”

The wind tax credit extension through the end of the 2020 tax year would therefore still create a sense of uncertainty for industry, she said.

However, energy lobbyists are not giving up, despite the disappointment.

The clean energy extensions included in the agreement “do little for renewable growth and next to nothing to address climate change,” Greg Wetstone, president and CEO of the American Council on Renewable Energy, said in a statement.

For some, like the energy storage industry, establishing new tax credits was the top priority of the year. An energy storage tax credit bill also had bipartisan support, according to the Energy Storage Association (ESA).

Reps. Mike Doyle, D-Penn., Earl Blumenauer , D-Ore., and Vern Buchanan, R-Fla., as well as Sens. Martin Heinrich, D-N.M., Susan Collins, R-Maine, and Cory Gardner, R-Colo., supported an energy storage investment tax credit (ITC). The technology currently qualifies if paired with solar power.

“Despite this missed opportunity, ESA and our members are not dissuaded from continuing our effort to finally include energy storage in the ITC,” Kelly Speakes-Backman, ESA CEO, said in a statement.

The 2020 Fiscal Year spending bill does include a bipartisan provision supported by the National Rural Electric Cooperative Association (NRECA) to ensure these utilities can accept government grants without losing their tax-exempt status, an unintended consequence of the 2017 tax law.

The bill allows co-ops to “leverage federal and state grants for economic development, storm recovery and rural broadband deployment,” NRECA CEO Jim Matheson said in a statement.