To Spur Economy, Senate Votes to Extend Renewable Energy Tax Credit

Photo: Ivars Zolnerovichs / istock

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Yesterday a Senate emboldened by the housing crisis and fears of a recession passed an ambitious bill to stimulate the economy. The good news is the bill includes a one-year extension of the renewable-energy production tax credit.

As Reuters reported, the tax credit would be extended for one year through 2009 for producing electricity from wind, biomass, hydropower and geothermal means. Both businesses and homeowners would also be able to offset 30 percent of the cost of installing solar or fuel-cell equipment with a one-time tax credit.

The bill passed the upper chamber handily by an 88 to 8 vote. Boosters hope it will kick off an impressive $20 billion worth of renewable energy projects. In the immediate aftermath, solar power stocks have soared.

The provision also provides for homeowners to get credits for energy-efficient furnaces, windows and insulation; builders to get a deduction for constructing energy-efficient homes; and businesses to get savings for making energy-efficient upgrades.

Of course, the bill has two more layers of government to get through, and it is reportedly (and not surprisingly) not favored by the President. The House is currently working on a more restricted version, so it's unlikely all of these plans will pass.

Even so, the bipartisan nature of the bill is extremely encouraging, and it shows that lawmakers are thinking forward to a cleaner future. Given high innovation and leadership from President Jimmy Carter, the U.S. was once the unquestioned leader in the alternative energy sector. Yet we allowed that lead to erode in subsequent years, falling behind Europe, Japan and possibly even China in terms of both deployment and support for R&D.

Progressive pundits have been recently bantering around hope that clean high tech and "green jobs" offer tremendous economic growth potential. It's time to spur that development along.

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