Renewables industry leaders join forces in letter to Congress

By Luke Geiver | February 08, 2012

Leaders from the biomass power, geothermal and hydropower industries have teamed up to voice their support for extending the renewable energy production tax credit.

Industry representatives, including Bob Cleaves, president and CEO of the Biomass Power Association, explained during a Feb. 8 teleconference the importance of extending the tax credit, set to expire in 2013. “We really are in a tax cliff situation,” Cleaves said, noting that although the production tax credit is currently of very little value to members of the BPA based on the long lead times associated with biomass projects, the tax credit still works.

Cleaves pointed to the recent success of large biomass projects in Texas, Florida and New Hampshire that created $1.5 billion worth of investment in the renewable energy sector, and were all made possible by the presence of a tax credit that awards 2.2 cents for every kilowatt hour in a closed loop system, and 1.1 cents per kilowatt hour in an open loop system. “We also know that as currently structured, these larger capital intensive, longer lead time type forms of renewable energy just aren’t going to happen unless we get a longer extension,” he added.  

Cleaves joined Linda Church Ciocci, executive director of the National Hydropower Association, and Karl Gawell, executive director of the Geothermal Energy Association, in a letter sent to several prominent members of the U.S. Congress. “It is critical that Congress, at a minimum, extend the renewable energy production tax credits through 2016 for the full range of renewable energy technologies, including hydropower, geothermal and biomass—all of which have much longer deployment lead times compared to other renewable energy technologies,” the letter states. 

The letter pointed out the investment tax credit that was extended through 2016 for the solar industry based on Congress’ recognition of the importance of stable and predictable tax policies. The biomass, hydro, and geothermal industry leaders called the extension of the solar credit a model for enhancing the effectiveness of federal tax incentives.

The general consensus during the teleconference was that a payroll tax extension bill could include renewable energy tax credit legislation. An end of the year bill that would extend Bush-era tax cuts is also a possibility, they said. Waiting until the end of 2012, although possible, would present negative consequences for all industries seeking an extension on the credit.

For the hydropower industry, Ciocci and others pointed out the potential loss of previously purchased and permitted sites waiting for the proper licenses and investment, based off the probability of the tax credit, to move forward into full construction mode. And, Gawell added to that sentiment. “The difference between now and the end of the year is a whole season of construction,” he said. That loss of a single construction season, he pointed out, would mean the loss of thousands of construction jobs for his industry alone.

In their letter to Congress, the industry leaders touched on the importance of extending the tax credit based on a further commitment to renewable energy and the job creation linked to such commitment. “We believe the investment will pay off,” the letter states.