US renewables tax break imbroglio rumbles on

Optimism that US lawmakers could reach a deal to extend renewable energy tax credits before they break for November's presidential election is receding after the House of Representatives approved a package of measures that experts believe will struggle to gain support in the Senate.

The Senate had last week voted in favour of proposals that would see tax credits on wind energy projects extended by one year and those on solar energy projects extended by eight years.

The bill secured grudging approval from the White House, which said it would not veto the legislation if passed.

Speaking at the time, Senate majority leader Harry Reid, a democrat for Nevada, warned House legislators that they should approve the version of the bill put forward by the Senate or risk any changes being opposed by republican senators.

"I hope they will take into account the seriousness of how difficult it has been for us to get this passed," he said on the Senate floor. "Don't send us back something else. We can't get it passed."

However, on Friday the House voted by 266-166 in favour of its own proposals for extending the tax credits, which although similar to the Senate's package in many respects are likely to be opposed by the White House.

Both packages aim to extend existing renewable energy tax credits and introduce new tax breaks on electric vehicles, with the incentives paid for by changes in the tax regime for oil and gas companies.

But importantly, the House version does not include new tax breaks for refineries to develop oil from shale and tar sands or turn coal into liquid fuel, which had been included in the Senate version as a means of securing support from some republican senators.

Environmentalists had opposed the support for carbon-intensive tar sands projects, but are also fearful that if a deal is not reached before the Senate and House break up next month, the existing tax credits could be allowed to lapse at the end of the year, putting about $19bn (£10.5bn) of renewable energy investment at risk.

House of Representatives speaker Nancy Pelosi urged the Senate to support its version of the bill, arguing that it represented the best option on the table.

"I urge my colleagues in the Senate to seize the opportunity to enact this bill law," she said. "Thus creating and saving jobs in a difficult economy, providing essential tax relief to families and businesses, and speeding our transition to a clean, renewable energy and energy-efficient future."