Update:  The House passed the bailout bill with a 263-171 vote.

The economic rescue bill passed by the Senate earlier this week contains a wide array of tax incentives with the potential to influence investment in a variety of renewable energy and energy efficiency technologies. The House is currently debating the bill, with a vote expected in the next hour or so. The debate is proceeding under closed rules, meaning that no amendments may be offered, so the version that passed the Senate will get an up-or-down vote in the House. The original version of the bill was defeated in the House on Monday, but the new version - including the energy provisions - is expected to gain enough support to pass today’s House vote.

The two tax credits that receive the most attention are the solar energy investment and wind energy production credits, both of which are currently scheduled to expire at the end of this year. The bill extends the solar investment credit until 2017, and the wind production credit through 2009. The investment and production credits are considered critical to continued investment in these areas. The House had actually passed them earlier this year, but they failed to clear the Senate by a single vote on two separate occasions. Senator McCain was absent for both votes, but indicated through his spokeswoman that he would have voted against extending the tax credits.

Beyond the high-profile solar and wind credits, the bill includes several other provisions that should increase investment in nascent renewable technologies.

• Section 102 creates a production credit for “marine and hydrokinetic renewable energy” - which expands the production tax credit beyond ordinary hydroelectric dam-based power and will now cover basically any kind of energy generation from the movement of water. This will make investments in wave and tide based energy generation more attractive.
• Section 105 extends the investment tax credit to cover geothermal heat pump systems, which use “the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure.”
• Producers of wind energy equipment will also be helped by Section 106, which creates a tax credit for homeowners that install wind energy generation equipment. This credit covers 30% of expenditures, up to $4,000 per homeowner.

There are also a host of tax provisions for advanced coal technologies, transportation fuels, and energy efficiency related to commercial and residential buildings and appliances. Put together, these credits will provide tens of billions of dollars in incentives to help spur the low-carbon economy and ensure the creation of renewable energy jobs in the US.

For further information about this topic, please contact Akin Gump.