There have been all sorts of drastic proclamations about the tax deal Obama struck with congressional Republicans earlier this week. Here's another to chuck on the pile: The agreement might end up killing what little momentum the U.S. clean-energy industry has picked up over the past two years.
Some background. Back in 2008, Congress extended (yet again) tax credits for solar and wind producers, which now cover 30 percent of upfront costs. But when the recession made it tougher for firms to get financing, the credits were no longer working as advertised. So, in last year's stimulus bill, Congress converted the credits to flat grants. That seemed to do the trick: According to the Financial Times, two-thirds of all new solar projects and 85 percent of all new wind projects in the United States now rely on these grants. Trouble is, the grant program is going to expire at the end of the year. This frequently happens with tax support for renewables, and Congress usually just extends the program after a brief period of dithering.
But not this time. The tax breaks weren't included anywhere in the Obama deal. And so the solar and wind industries are now freaking out, warning that their companies are about to tumble off a cliff, shed thousands of jobs, etc. What's particularly galling is that the ethanol industry is getting its tax breaks renewed.
http://www.tnr.com/blog/the-vine/79771/how-the-tax-deal-could-throttle-the-green-economy