Solar, wind industries want rework of tax credit

DENVER - Tax credits passed just three months ago to increase investment in renewable energy have lost much of their effectiveness amid a global economic downturn and should be reworked in Congress, industry officials said Friday.

Much of the momentum that led to a record year in the wind and solar industries will be lost if tax credits are not made refundable, putting more cash in people's pockets, industry officials said.

Because most companies and individuals now expect far lower tax liabilities, the incentive to invest in alternative energy technology because of tax credits has been muted, industry trade associations say.

Making those investments refundable would ensure continued investments sought by the incoming Obama administration, said Rhone Resch, president and chief executive of the Solar Energy Industries Association.

"Companies have started laying off workers," said Resch. "Factories have been shuttered and many small businesses that entered into the solar industry in the last couple of years cannot get lines of credit to keep their businesses open."

Resch said the slowdown affects not only manufacturers but installers, plumbers, electricians, roofers and other tradesmen.

The solar industry also plans to ask Congress to allocate $10 billion to federal agencies to either invest in solar facilities on federal property or in 25-year power purchase agreements.

On Wednesday, President-elect Barack Obama said he wanted to use his economic aid plan to cut energy use in federal buildings, a long-sought goal that has achieved mixed success.

"We believe that step can keep wind power growing in this difficult economy," said Denise Bode, chief executive of the American Wind Energy Association.

The Renewable Fuels Association, a trade group for ethanol and biofuels, has suggested $1 billion in short-term credit and $50 billion in loan guarantees for its industry.

Association spokesman Matt Hartwig said the suggestions were not a formal request and that he wasn't aware of any proposals in the works to put before Congress.

The biofuels industry has received a little more than $30 billion in federal tax credits since 1978.

The U.S. government has set an aggressive renewable fuels standard that will require 36 billion gallons of biofuels to be blended into gasoline by 2022. It continues to give refiners a blenders tax credit, although that dropped Jan. 1 to 45 cents a gallon from 51 cents a gallon.

Yet biofuel producers were among the hardest hit late last year, a casualty of rapid growth in the sector.

Plants were closed or never opened from Clovis, N.M. and Greybull, Wyo., to Hartsburg, Ill., and Rock Port, Mo.

VeraSun Energy Corp., the nation's No. 2 ethanol producer, filed for Chapter 11 bankruptcy protection.

The recession and crumbling oil and gas prices have begun to hit the solar and wind industries as well.

This week, windmill blade maker LM Glasfiber said it will lay off more than 150 employees and halt production at a Little Rock, Ark., plant.

Wind tower manufacturer DMI Industries is cutting 20 percent of its work force — roughly 150 workers — at plants in West Fargo, N.D., Tulsa, Okla. and Fort Erie Ontario. And, Evergreen Solar closed its Marlboro, Mass., pilot plant.

Last fall, billionaire oilman T. Boone Pickens put his massive wind farm plans on hold in Texas. BP Solar scrapped plans for a $97 million expansion of its Frederick, Md., plant.

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