Bailout Bill Includes Renewable Energy Tax Credits

In a Washington paradox, lawmakers concerned about the cost of the proposed financial bailout and where the money will come from may be more likely to vote for it now that it includes another $150 billion in tax cuts.

It's hard to know what to think about what should be done about the economy -- whether the $700 billion Paulson plan is the only or best choice, as it's been presented, and if the situation is so urgent that debate can't continue for a few more days.

But whatever the case, the Senate has stepped in to pass a bailout bill that includes a raft of tax cuts, including the renewable energy tax credits that are seen as essential for continuing the growth in wind, solar and other alternative energy industries.

Transforming the energy sector will require both those tax credits and abundant private capital. Right now, private capital has seized up -- that's the big problem -- and the tax credits expire at the end of 2008. The tax credits are necessary because the make these newer technologies cost-competitive with heavily subsidized fossil fuels, and that makes investors willing to put money into steep upfront costs that are repaid over time. Of course, without lenders lending money, investors won't invest at all -- in anything.So the financial bailout moves on -- back to the House, which had been unable to pass the financial bailout bill, and unable to come to terms with the Senate on the renewable energy tax incentives previously.

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