Renewable energy grants appear headed for spot in tax package

Extension of a federal grant program for renewable electricity projects appears to have found a spot in the wider Senate package to extend Bush-era tax cuts, according to a Democratic senator and a Senate aide close to the matter.

“I hope that they will be in there and I believe they probably will be based on what I am hearing,” said Sen. Ben Nelson (D-Neb.) on Thursday.

“We are pretty sure we have managed to get [the grants] included,” added a Senate aide, while an environmentalist tracking the issue also said an extension appears to be in the measure.

Seventeen Senate Democrats said Thursday they would have “difficulty” supporting any tax package that does not extend the expiring Treasury Department program that supports projects like wind farms and solar plants.

The letter from the lawmakers to Majority Leader Harry Reid (D-Nev.) escalates the effort — backed by renewable energy companies and green groups — to continue the program that was launched in last year’s big stimulus law.

The program, which sunsets at year’s end absent an extension, allows grants for renewables projects in lieu of federal tax credit financing. The tax financing market had tanked alongside the economy.

“We are writing to express that we will have difficulty supporting tax legislation currently being drafted for Senate consideration that fails to include an extension of the Treasury Grant Program (TGP),” states the letter from Sens. Dianne Feinstein (D-Calif.), Maria Cantwell (D-Wash.) and 15 other lawmakers.

“The Treasury Grant Program allows renewable energy developers to claim tax incentives directly. It is rightly credited with maintaining growth in the renewable energy sector in the midst of an economic downturn. If Congress allows taxes to rise on renewable development, momentum would be lost and the growth of renewable energy would be jeopardized,” adds the letter, which claims the program has supported around $18.2 billion in investment to build 8,600 megawatts of renewable energy generation thus far.

Sen. John Kerry (D-Mass.) said the issue is part of discussions with the White House over the emerging tax agreement.

“We are working on it with the White House,” Kerry said of the grants. “It would be great if we could do it.”

“We are pushing, pushing, pushing,” Feinstein told reporters.

President Obama has reached an agreement with Republicans to extend all Bush-era tax cuts — including cuts for the wealthy. They will be coupled with extension of unemployment benefits and a reduction in payroll taxes, among other measures.