Renewable energy tax credits denied by Senate

Stocks in US solar and wind energy firms dipped yesterday, after the Senate again blocked plans to extend a package of renewable energy tax credits that are currently due to expire at the end of this year.

Under the Energy Independence and Tax Relief Act of 2008, tax credits on wind turbines would have been extended by one year, while similar credits on other renewable energy sources including biomass and landfill gas would have been extended for three years.

However, Republican opposition meant that a vote of 52-44 in favour fell just short of the 60 votes required for the $17.7bn package of tax breaks to proceed – the second time the bill has been blocked in the past week.

Observers said that the renewable energy tax credit had broad cross-party support, but Republican Senators denied the proposals over Democrat plans to pay for the changes by rescinding tax breaks for the oil and gas industry, closing a tax "loophole" for hedge funds and delaying a planned tax break for multinational firms.

Speaking to Forbes.com, Raymond James analyst Pavel Molchanov said that the Democrats would be likely to reach a compromise to allow the renewables tax to break through. But he warned that with the summer recess, the bill may not be finalised until after the US presidential elections in November – a situation that would introduce further investor uncertainty into the US renewables sector.

Rhone Resch, president of the Solar Energy Industries Association, warned that if the package of tax credits is allowed to lapse it will "result in the loss of billions of dollars in new investments in solar".