Tax breaks finally back on track for cleantech
A large tax package pushed through the U.S. Senate today promises to finally renew a set of incentives for the cleantech industry that many had feared would run out at the end of this year, leaving growing industries in wind, solar and other alternative energy segments to wither on the vine.
The Investment Tax Credit (ITC) returns money to buyers of alternative energy, whether residential or commercial, and also provides money for the companies manufacturing cleantech products. Additionally, this latest version will add credits for utilities, which should help push adoption by a large buying segment that has so far been reluctant to pour money into renewable energy, outside of states like California.
As we covered earlier this year, the problem with the ITC was not convincing political leaders to fund cleantech, but instead, getting past partisan in-fighting. The problem so far has been that the Senate would reject whichever version the House passed, and vice versa. However, this time around the Senate’s plan is in a form similar to one the House previously approved. The White House, also, has already given a grudging nod of approval.
Aside from specific benefits that the bill, the Energy Improvement and Extension Act of 2008, provides, the most important detail is probably the length of time the credits lasted. The group of cleantech companies who were optimistic that a bill would be passed this year for the most part only expected a single year extension.
The full breakdown provides more time for some segments of renewable: Wind gets a single year, but wave and tidal will get two years, while home and business investment in alternative energy get a full eight years. An additional credit will give people who buy plug-in electric vehicles from $2,500 to $7,500 back.
The incentives should keep cleantech on a growth track even during a recession, as companies will now be able to approach banks (if any survive) to request funding for projects, and be able to provide assurance that Federal benefits will be in place when they’re needed.
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About the Author, Chris Morrison
Chris Morrison writes about cleantech and environmental issues for VentureBeat, with occasional forays into gaming and semantic technology. He got his start writing about tech for Business 2.0 magazine, but quickly realized new media was the ticket when that institution closed its doors in 2007. Chris has also covered public equities and regulatory issues. He originally hails from southern Virginia, graduated from Evergreen State College in Washington, and now lives in San Francisco.