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United States

Production tax credit stalled

Yet again the wind business found itself trapped in the crossfire of a political war that late last month had US energy legislation hanging on a cliff edge. A three-year extension to the wind industry's Production Tax Credit (PTC) is a relatively minor and uncontested element of the huge and long-overdue US energy bill, but it is vital for the wind industry's continued well being. With the bill stalled in a Senate unhappy with its hefty price tag and liability protection for makers of a polluting gasoline additive, the PTC remained stuck in no man's land.

The Senate adjourned for the year with the Republican leadership unable to muster the support needed to end debate and move the bill, the first major overhaul of the nation's energy policy in more than a decade, to a final vote. Without that vote, further action was put off until at least early next year.

The current PTC will expire December 31 without being extended. The hiatus is likely to bring the momentum of a near-record year for the US wind market to a crashing halt. The country's largest wind developer, FPL Energy, has said it is not expecting to break ground on new projects until later next year because of uncertainty over the PTC's future.

The energy bill was passed overwhelmingly by the Republican led House of Representatives and has the support of the Bush administration, despite containing nearly $24 billion in tax breaks. The White House had sought about $8 billion in energy tax breaks.

Although much of the debate in the Senate polarised around a plan to shield petrochemical companies from lawsuits for contaminating water with MTBE, a gasoline fuel additive, lawmakers from both parties took time to condemn the huge handouts going largely to the fossil fuel, gas, and nuclear industries, as well as the lack of conservation initiatives.

Jeff Bingaman, the ranking Democrat on the Senate Energy Committee, also criticised the decision to drop a Senate backed proposal for a national renewables mandate of 10% by 2010 as a "missed opportunity." The bill, he says, "is pretty much status quo on the future role of renewables. The tax credits are extended for a few more years and slightly broadened, but renewables don't get anywhere near the attention lavished on coal and nuclear power."

The bill also includes a small turbine investment credit, capped at $2000, for homeowners and farmers installing small wind generators.

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