Coalition Pressing For Clean Energy Tax Credit Extension
If the White House and Congress are serious about making clean energy a meaningful part of the still-to-finalized infrastructure package, they need to enact a 10-year extension of an investment tax credit that has buoyed the industry in recent years.
At least that’s the position of the Coalition for Clean Energy Jobs and Innovation, which sent a letter spelling out its hopes and concerns to President Joe Biden, House Speaker Nancy Pelosi and Senate Majority Leader Charles Schumer this week.
The coalition is composed of more than 100 organizations representing renewable energy firms, manufacturers, homebuilders, electric cooperatives and a variety of affiliated industries. They are seeking a 10-year extension of section 25D and 48 Investment Tax Credit and a direct payment option for projects claiming the ITC.
The tax credit is particularly relevant to the solar power industry. It is currently a 26% federal tax credit claimed against the tax liability of residential (under Section 25D) and commercial and utility (under Section 48) investors in solar energy properties.
According to the Solar Energy Industries Association, the residential and commercial solar ITC has helped the U.S. solar industry grow by more than 10,000% percent since it was implemented in 2006, with an average annual growth of 50% over the last decade alone.
The tax credit is also available to investors in geothermal, fuel cells, combined heat and power, and distributed wind power projects.
Congress passed a two-year delay of the ITC phasedown in 2020.
“Solar and storage are proven job creators that can modernize America’s power grid and tackle the climate crisis,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association.
“These are economywide benefits that extend far beyond just one industry, and that’s why a diverse coalition of leaders representing multiple sectors, technologies and communities are asking Congress for long-term policy certainty for clean energy infrastructure. The solar and storage industry stands ready to put Americans back to work, but Congress must act now to unleash the clean energy economy,” she added.
The coalition believes a 10-year extension of the ITC would give businesses the certainty needed to make long-term investments and drive clean energy deployment at the scale needed to tackle climate change.
In addition, a direct pay provision would make project financing less dependent on the availability of tax equity, speeding deployment and pandemic-driven economic challenges affecting clean energy companies, the coalition stated in a press release.
“The long-term extension of the ITC will help ensure America continues to be the leader in technology innovation by helping scale up clean energy industries like the fuel cell and hydrogen sector, fuel economic growth, and protect the environment,” said Morry Markowitz, president of the Fuel Cell and Hydrogen Energy Association.
To reach 100% clean electricity by 2035, annual solar deployment from 2024 to 2028 will need to be twice as large as the current forecast.
Passing long-term clean energy policies will drive deployment and help to create hundreds of thousands of jobs,” the coalition says.
Over 400,000 Americans work in the industries supported by the ITC.
According to the National Solar Jobs Census 2020, the solar industry will need to grow to more than 900,000 workers by 2035 to support the level of deployment needed to reach President Biden’s 100% clean electricity target.
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