Congress must decide before the end of February whether and how to extend the current payroll tax cut and unemployment benefits through the end of the year. Many argue that extending this is key to sustaining the fragile economic recovery. In a similar light, renewable energy advocates believe that renewing and extending tax incentives for renewable energy can help sustain and drive the economic recovery, too. They hope to combine these measures in the same bill.

Renewable energy was one of the bright spots in the economy last year. The Energy Information Administration reports that renewable electricity generation grew 23 percent in 2011 while coal and nuclear declined. And a new report from Next10 in California ("Many Shades of Green: California's Shift to a Cleaner, More Productive Economy,") finds that the renewable energy sector continued to grow and add jobs during the recession in 2008-2009 while other sectors shrank. The question now is whether the renewable energy industry will continue to lead the economy in creating jobs in 2012 and beyond.

At the end of 2011, a number of federal renewable energy tax incentives expired. These included the Section 1603 Treasury grant program and production tax credits for biodiesel ($1.00/gallon), renewable diesel ($1.00/gallon), small agri-biodiesel producers ($0.10/gallon), and alternative fuels ($0.50/gallon). At the end of 2012 and 2013, additional renewable energy production tax credits are set to expire, including for wind, biomass, solar, geothermal, hydro power and cellulosic biofuels ($1.01/gallon). In order to provide a measure of certainty for investors and energy producers, renewable energy proponents are calling for long-term renewals and extensions of these incentives now.

In a February 8 Op Ed in The Hill , Senator Jeff Bingaman (D-NM), chair of the Senate Energy and Natural Resources Committee, said "Failure to extend tax incentives for clean energy now will result in jobs lost, reduced U.S. manufacturing competitiveness in a growing, multitrillion-dollar market and a blow to our economic recovery. Despite recent years of solid growth, several industries — including the wind, biofuels and energy efficiency sectors — have already begun cutting workers. Unless Congress acts immediately, more layoffs are inevitable."

At a press conference on February 8, representatives of the Biomass Power Association, Geothermal Energy Association, and the National Hydropower Association called for extending renewable energy tax credits for hydropower, biomass power, and geothermal power through 2016. See their press release here .

A House-Senate conference committee is now considering whether and how to include renewable energy tax credits as part of the payroll tax cut extension bill.

For previous SBFF posts on expiring Section 1603 Treasury grants and bioenergy tax incentives, click here .