U.S. alternative energy tax credit in jeopardy

The U.S. Senate passed a bill that had Republican and White House support, but changes made by the U.S. House of Representatives have thrown the measure into limbo.

Renewal of the U.S. federal production tax credit (PTC) and investment tax credit (ITC), designed to encourage development and manufacturing of alternative energy resources and set to expire at the end of 2008, faces stiff opposition by the U.S. Senate and U.S. President George Bush. The PTC is credited for, in part, fueling the expansion of wind energy production facilities and wind farms in the U.S. over the last decade.

The U.S. Senate last week passed a PTC bill that would, among other things, extend the wind energy PTC for one year to Dec. 31, 2009, and the solar energy ITC for eight more years. President Bush had verbally committed to signing the Senate bill. The Senate passed the bill to the U.S. House of Representatives and cautioned that any modification of might jeopardize it.

The U.S. House changed the legislation by splitting it into four separate measures and passed each one as a standalone bill. The House also changed the legislation to include measure to pay for the tax breaks. Most Senate Republicans are opposed to the "pay-for" change and President Bush says he will not sign the House version.

The future of the PTC/ITC is now very uncertain. The House and the Senate, consumed with bank bailout legislation, has promised to remain in session through the end of September. It's possible that both chambers will reconsider the PTC/ITC bill during this time and produce a version that Republicans and President Bush will support.