President Barack Obama signaled Monday that a tentative agreement to avoid the fiscal cliff would also extend a critical tax benefit for the wind power industry.
In an apparent reference to the production tax credit set to expire at midnight, the president said White House and Senate negotiators have agreed to “extend tax credits for clean-energy companies that are creating jobs and reducing our dependence on foreign oil.”
The extension would be part of an agreement to avoid automatic across-the-board income tax increases slated to kick in on New Year’s Day if Congress does not act. The agreement would wrap in a package of tax credit extensions already approved by the Senate Finance Committee, including the production tax credit.
Obama said Monday afternoon that a fiscal cliff agreement between the White House and Senate Minority Leader Mitch McConnell, R-Ky., was close but had not been finalized. McConnell said later on the Senate floor that there had been agreement on tax issues but that other matters had not yet been resolved.
Preserving the tax credit would be a major triumph for the wind power industry. Congressional critics have argued that the industry is now mature enough to survive without the tax benefit. The industry has said the tax break remains critical, though even lobbyists for wind producers have proposed a phase-out over the next few years.
Initially, wind producers pushed for a two-year extension, arguing that anything less would provide little certainty to investors in wind projects. But the industry later backed off and supported the Senate Finance Committee plan (S 3521) to extend the credit for just one year, though with a modification that would qualify any projects started during 2013 — rather than those just producing power by the end of the year — for the credit.
That plan would cost an estimated $12 billion, and a utilities industry lobbyist said Monday that some Republican lawmakers were balking at the price tag.
Some utilities have begun pushing a hybrid tax credit, which would scale down the credit to wind power producers while providing a credit to utilities that integrate more wind power into their energy mix. It was not clear Monday if any of those new ideas might be included in a fiscal cliff agreement to placate lawmakers concerned about the cost of the Finance panel’s package.