Green Tax Credits and Agencies Saved from Fiscal Fall

  • Wind farm in Cambria County, Pennsylvania. Photo: Scott Detrow. State Impact.

  • Athula Kulatunga, associate professor of electrical engineering technology, takes a ride on the electric tricycle that he and his students built. Photo:Purdue University.

The recent passage of the American Tax Payer Relief Act, widely known as the fiscal cliff bill, reshaped federal budget provisions.  It also renewed a broad range of tax credits, including tax credits that many environmental groups have been seeking.

Wind power

The highest profile environmental extension is a one-year extension of a tax credit for wind energy production. The federal production tax credits give wind power developers a 2.2 cents/kilowatt hour credit for production of renewable energy.

The production tax credit has been on an on- again,off- again trajectory for the past 20 years. It was allowed to expire in 1999, 2001 and 2003.

There are 17 active wind farms in Pennsylvania. Nineteen projects are on hold.

"Companies have indicated that the late term decision to extend the tax credit has played a big part in putting off these projects," says Matt Walker, community outreach coordinator with the Clean Air Council, an environmental group in Philadelphia that follows wind energy issues.

About 200 wind turbine manufacturing jobs have also been lost in the state.  Gamesa, a Spanish turbine manufacturer with factories in Pennsylvania, says 92 people will still be laid off  in early 2013 even though the tax credits were extended for one year.

According to the Amercian Wind Energy Association, the industry wants the Congress to extend tax credits until 2018 to stop the boom and bust cycle of wind energy production.

Biofuels

Tax credits for biofuel producers, a biodiesel and renewable diesel credit, and a special allowance for cellulosic biofuel plant property were saved from the fiscal cliff.

Cellulosic biofuels are produced from cellulose (fibrous material) derived from renewable biomass. They are thought by many to hold the key to bigger benefits from renewable biofuels because they are made from potentially low-cost, diverse, non-food feedstocks. Cellulosic biofuels could also potentially decrease the fossil energy required to produce ethanol, resulting in lower greenhouse gas emissions.

Cellulosic biofuels are produced on a very small scale at this time—major hurdles must be jumped before commercial-scale production can happen.

The bill also specifies that algae is a qualifed feedstock for biofuel production.

Energy efficiency

The Senate and House extended a group of tax credits that encourage more sustainable residential energy consumption, too, including tax credits for new and existing energy-efficient homes and another that lessens the expense of energy-efficient appliances.

Alternative-fuel vehicles

The bill extends a tax credit for two- or three-wheeled plug-in electric vehicles.  This could mean up to $2,500 for anyone who buys a qualified electric motorcycle or trike. And it extends a credit for alternative-fueled-vehicle refueling property through the end of December 2013.

Averts Agency Cuts 

The most environmentally important part of the fiscal cliff deal may well be what it stops — at least for now. Dramatic spending cuts at federal agencies like the National Park Service, the Bureau of Land Management and the EPA have been averted by the passage of the bill.

These across-the-board cuts would have deeply cut funding for things like national park management, public health research and environmental cleanups.