Debate continues this morning over a Senate tax reform proposal, and a final vote is soon to follow.
The Senate version of the tax plan is much friendlier to renewables and electric vehicles than its House counterpart.
The House of Representatives passed a tax reform proposal in early November that shattered some sacred cows in the clean energy field. The House version would eliminate the $7,500 federal credit for electric-vehicle purchases. It also would drastically reduce the tax credits for wind and solar power development.
Specifically, it would roll back the production tax credit (PTC) for new wind projects by doing away with inflation adjustments. By eliminating the inflation adjustments, the current 2.4-cent rate would drop to 1.5 cents.
In a one-two punch to the wind power industry, the proposal also would change the PTC requirements for so-called "continuous construction." These changes would make it harder for developers of wind projects that are already underway to qualify for the higher 2.4-cent rate.
Regarding solar power, the proposal would repeal the 30 percent investment tax credit (ITC) for commercial and utility projects that begin construction after 2027. The credit is scheduled to expire for residential projects in 2021, and it is scheduled to reduce in steps for commercial projects, eventually reaching and permanently remaining at 10 percent starting in 2027. The House proposal would eliminate that credit in 2027 instead.
Since the House passed its proposal, industry proponents have lobbied the Senate to reinstate these provisions. The Senate heard their objections and restored these provisions in their tax reform bill.
If the Senate bill passes, a House-Senate conference committee may be formed to reconcile differences between the two proposals and produce one bill.