Hydro industry looks to 2008 for extension of tax incentives

Although Congress failed to extend tax incentives for hydro and ocean technologies, a spokesman for the National Hydropower Association says the industry will renew efforts in 2008 to extend the tax provisions that benefited some hydro development.

The Senate leadership deleted enough provisions from a House-passed energy bill to win Senate approval late Dec. 13. However, the deletions included tax incentives for renewable energy developers such as some types of hydropower. (HNN 12/13/07) The remaining bill, which mandates increased fuel efficiency of U.S. cars and trucks, returns to the House the week of Dec. 17, where final passage is expected.

“The energy bill, in its current form, provides little assistance to encourage hydropower development in the near term,” Jeff Leahey, NHA senior manager of government and legal affairs, said Dec. 14. “With the tax title removed, both the long-term extension of the Section 45 production tax credit and the additional funds for the Clean Renewable Energy Bonds program have been stripped out.

“This sends a negative market signal to developers of hydropower and waterpower technologies and their backers,” he said.

One bright spot for ocean, hydrokinetic development

Leahey said one bright spot remained in the bill, in the form of a marine and hydrokinetic renewable energy title.

“This new program specifically authorizes a federal research and development program for ocean, tidal, and in-stream hydrokinetic technologies, as well as conduit power applications and ocean thermal energy conversion devices,” the NHA official said. “It also establishes ocean energy research centers to test equipment and support demonstration projects.”

Despite that authorization, Leahey said Congress still must pass appropriations in coming years to bring that program into operation.

Leahey was asked whether hydro and other renewables industries might ask the House to reject the Senate amendments, in an attempt to restore the tax incentives. He indicated House approval is assured for the remaining energy bill, which delivers several landmark national energy goals including the increased Corporate Average Fuel Economy standards for autos.

“We are now looking toward 2008 and will strongly urge both the Congress and the White House to adopt a bill with a long-term production tax credit extension that includes all hydrokinetic technologies and significantly increases Clean Renewable Energy Bonds funding,” Leahey said.

He said NHA would work with congressional leaders in an effort to renew the tax benefits before they expire at the end of 2008.

Senate Energy Committee Chairman Jeff Bingaman, D-N.M., said he was disappointed in the loss of the renewables tax incentives as well as a national renewables portfolio standard that would have required electric utilities to generate 15 percent of their electricity from renewables by 2020 or to buy renewable energy credits. Incremental hydropower, hydrokinetic, ocean, and tidal energy were among renewable energy sources that would have been included in that measure.

“I hope in the next session of Congress we are able to revisit both of those issues and enact legislation,” the senator said.

There were no vocal opponents of the production tax credit extension or the Clean Renewable Energy Bonds funding. However, to win passage of the bill, the Senate deleted language that would have raised taxes on the oil and gas industry. As a result, the bill did not contain enough revenue to pay for the extended renewables tax benefits, meaning those provisions also had to be removed from the bill.

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