It’s official: Renewable power grants, ethanol credits hitch ride on Senate tax plan

The energy provisions are rolled into the wider bill that extends Bush-era income tax cuts, extends unemployment benefits and cuts payroll taxes. An initial Senate vote is slated for Monday.

Environmentalists and renewable energy trade groups cheered the decision to extend the deadline for grant-eligible projects to begin construction.

These groups waged a furious lobbying campaign after it appeared that the initial deal President Obama struck with Republicans on the Bush tax cuts didn't continue the program.

American Wind Energy Association CEO Denise Bode called extension of the grant program a “great day for American workers” in a statement Thursday night.

“We have a lot of work to do to ensure that this victory is upheld in the House and Senate, and signed by the President, but we saw an outpouring of support this week that was truly inspiring,” she said.

“Factories across the country will restart production lines, recall workers, and avoid layoffs that would have followed the loss of this key incentive for wind energy. With consistent policies like this one, wind energy can generate 20 percent of America’s electricity within 20 years, and employ half a million Americans,” Bode added.

The grants, first offered through the 2009 stimulus law, are available in lieu of renewable energy tax credits. The tax financing market had tanked alongside the economy.

The grant program extension is expected to cost almost $3 billion, according to preliminary estimates from the Joint Committee on Taxation, while extending the ethanol credits and other renewable fuels incentives will cost over $4.8 billion.

The bill also extends several other energy incentives through 2011, such as credits for manufacturing energy-efficient clothes washers, dishwashers and refrigerators.

But the tax package omits additional funding for a newer and wider program that offers credits for projects to expand U.S. manufacturing of a range of “clean energy” equipment.

The stimulus law provided $2.3 billion in clean energy manufacturing credits, but demand quickly outstripped that cap, leaving many companies out in the cold.

An earlier version of the tax package that Senate Finance Committee Chairman Max Baucus (D-Mont.) floated last week would have provided another $2.5 billion worth of credits, but they were left on the cutting room floor.

—This post was updated at 8:06 a.m.