Democrats Try to Extend Wind, Solar Aid They Agreed to Let Die
(Bloomberg) -- Tax credits worth billions of dollars for the wind and solar industries are set to expire or begin phasing out next year -- part of a 2015 deal Democrats struck that ended a 40-year-old ban on the export of crude oil.
But some Democrats are seeking to extend the credits, saying President Donald Trump’s tariffs on solar panels and moves to roll back Obama-era climate-related policies have changed the equation.
“We had a change election, we’ve got new leadership in the halls of Congress and we’ve got an opportunity to seize,” Representative Haley Stevens, a Michigan Democrat elected in November, said in an interview.
Stevens helped put together a letter to the chairman of the House’s main tax-writing committee -- which has scheduled a hearing for Wednesday on climate change -- calling for giving the wind and solar tax credits more time. It was signed by more than 100 Democrats.
“For many of us who served in 2015 when that bipartisan, bicameral agreement was reached, the facts on the ground have now changed demonstrably,” the representatives wrote.
The push comes amid an intra-party squabble over climate policy that has pitted progressives led by Representative Alexandria Ocasio-Cortez of New York, a champion of the Green New Deal, against moderates who favor a less radical approach.
Under the 2015 agreement, inserted into a 2,000-page bill needed to keep the government funded, a lucrative production tax credit for the wind industry that had expired was restored and scheduled to phase out over five years ending in 2020. The solar industry’s 30% investment tax credit was also extended as part of the deal, with a phase-down slated to begin next year and reach zero for residential projects in 2022.
In exchange for granting those Democratic priorities, Republicans secured an end to the 1970s-era prohibition on exporting crude oil.
The Democrats, in their letter, wrote that the Trump administration’s efforts to undermine the Clean Power Plan, relax fuel economy standards for cars and trucks, undo efforts to curtail methane emissions and withdraw the U.S. from the Paris climate accords have “fundamentally altered the framework by which the 2015 agreement was reached.”
Representative Richard Neal of Massachusetts, the House Ways and Means Committee chairman, said in an interview he’s in favor of extending the solar and wind tax incentives.
But the idea is likely to encounter Republican opposition. Senate Finance Chairman Chuck Grassley, an Iowa Republican, said he doesn’t favor another extension for either of the credits. He said he committed to opponents of the wind tax credit in 2015 that he wouldn’t try again.
“I said ‘If you go along with this phaseout that is the end of it,”’ Grassley said in an interview, adding the wind energy industry agreed to those terms as well.
Not all Republicans are against an extension.
“I’d want to see what the package looked like, but we are pretty big on wind energy in Texas,” said Senator John Cornyn of Texas. “I would be certainly favorably inclined.”
Opponents of the credits say they aren’t surprised by the effort to renew them.
“That’s the thing with these tax credits -- they never go away,” said Tom Pyle, president of the American Energy Alliance, a free-market advocacy group. “They’re like zombies.”
In the Senate, Minority Leader Chuck Schumer, a New York Democrat, supports an extension of the wind and solar tax credit, and Maryland Democrat Ben Cardin, a member of the Senate’s tax-writing committee, has suggested using fixes sought by Republicans to the tax overhaul passed in 2017 as leverage to get them.
“That’s going to require some attention to our priorities,” Cardin said in an interview, where he also expressed support for extending a consumer tax credit for the purchase of electric vehicles. “There is a lot of trading that goes on around here.”
An extension of the credits would need the backing of Senate Republicans to pass and would represent a bonanza for the solar and wind industries. Rooftop solar installer Solar City Corp. surged 34% after the 2015 deal was announced. BloombergNEF predicted the credits’ extension would lead to $73 billion in new investment and a 56% increase in new wind and solar capacity.
Yet the prospect of another extension represents a predicament of sorts for the wind and solar industry, with some companies making the case in 2015 that a multiyear extension of their tax credits was the last support they would need to become cost-competitive with traditional energy sources.
Both the Solar Energy Industries Association and the American Wind Energy Association, the industry’s main trade groups in Washington, didn’t directly answer when asked if they planned to seek another extension of the credit. But they appear to be leaving the door open.
“As lawmakers in both parties evaluate the best way to address climate change, more solar energy is a must, and smart tax policies such as the ITC have proven to be successful,” Abigail Ross Hopper, president and chief executive officer of the solar industries trade group, said in a statement.
The wind and solar industries may also decide to throw their weight behind other tax tweaks that could have more impact and are more likely to garner Republican support, such as the creation of a new tax credit for energy storage. Other options include “technology neutral” tax credits that increase in value based on how little carbon dioxide emissions an energy source produces.
“As members of Congress push for long-term tax credits, AWEA is encouraging a widely applicable, transferable technology-neutral tax credit based on carbon emissions,” said Bree Raum, the wind energy group’s vice president of federal affairs.
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