Clean Energy Businesses Need Reliable Federal Tax Credits

Legislation to extend incentives would support economic growth and innovation

Clean Energy Businesses Need Reliable Federal Tax Credits
The clean energy industry needs stable, predictable federal tax policy© Flickr RF/Getty Images

Geothermal plant at the southern end of California's Salton Sea.

To create jobs, invest capital, and deploy pollution-reducing technologies, the clean energy industry needs stable, predictable federal tax policy. Two bipartisan bills under consideration in Congress, H.R. 5172 and H.R. 5167, would level the playing field by providing consistent incentives for clean and efficient technologies. Transparent, long-term, and reliable federal policies, such as the investment tax credit and the production tax credit, provide critical incentives to private investors.

In December 2015, Congress passed legislation providing a five-year extension with a gradual decline of the production tax credit for wind and the investment and residential tax credits for solar. However, other technologies that currently qualify for these credits—such as fuel cells, combined heat and power, small wind, microturbines, biomass, biogas, geothermal, hydropower, and marine and hydrokinetic energy—were excluded.

This is fundamentally unfair and short-sighted. Allowing tax incentives to lapse or end abruptly jeopardizes investments and could impede the growth of clean energy industries.

Congress should avoid disruptions to the clean energy sector by passing legislation that provides a multiyear extension of the tax credits.

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