Permanent Extension of Wind/Solar Tax Credits in Obama's 2016 Budget

Posted by Amy Guinan

Mar 4, 2015 8:00:00 AM

obama_energyPresident Obama has made fighting climate change his top priority in the last two years of his presidency - renewable energies would receive new capital investments and existing incentives would be strengthened.

In the fiscal 2016 budget, Obama is proposing $7.4 billion in funding for clean energy (a 7% increase from the 2015 budget) and an additional $4 billion fund to encourage US states to transition away from coal more quickly.  The budget highlights a fiscal argument to fight global warming:  the United States has taken on over $300 billion in direct costs resulting from extreme weather and fire in the past decade.

Widely applauded by the wind and solar industries, Obama's budget also calls for the permanent extension of the Production Tax Credit, used by the wind industry, and the Investment Tax Credit, used by the solar industry. Both of these credits have crucial for the development of wind and solar in the United States. 

  • The Production Tax Credit is a federal incentive which allows companies that generate electricity from wind, geothermal, and “closed-loop” bioenergy to become eligible for a 2.3-cent per kilowatt-hour (kWh) incentive for the first ten years of operation.  Congress has extended and let the PTC expire five separate times since its enactment as part of the Energy Policy Act of 1992 leading to "boom and bust" conditions for the wind industry (the current PTC expired in 2013).  In order for wind energy to sustain long term growth, a long term extension of the PTC is viewed as critical.

 Now to see how Congress responds.


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