WASHINGTON, DC (RUSHPRNEWS)09/08/2008--A thriving renewable energy industry is a critical solution to problems such as high energy prices and climate change. But unless Congress extends the renewable tax credits soon, the industry’s steady growth could stall. For the past year, lawmakers have vigorously debated three inter-connected issues: energy costs, the economy, and climate change. Green power is part of the solution for all three.

First, a sustained clean energy boom will make our economy less dependent on fossil fuels such as natural gas that are subject to significant price volatility. Second, better policy support for green power will allow U.S. companies to lead in a fast growing market, and create the jobs and technologies that will supply the world with the next generation of energy. Finally, the displacement of fossil fuels in favor of renewable energy will decrease greenhouse gas emissions and help tackle the climate change threat.

Renewable energy tax credits-the Production Tax Credit (PTC) and the Investment Tax Credit (ITC)-have been a key driver of in the development of green power in the United States. These credits improve the cost-competitiveness of low-carbon technologies for energy production.

The incentives have wide, bipartisan support, but a Congressional fight over how to pay for them has left the future of these tax incentives in limbo. (Read more here.) In late July, the Senate again failed to extend them. They are set to expire on December 31st. With the political world focused squarely on the November election, lawmakers have little time to pass tax credit extensions before Congress adjourns at the end of the year.

The tax savings companies receive from the credits can make the difference between a profitable renewable energy project and a failed one. The PTC and the ITC also increase R&D funding to these industries and speed the rate at which these technologies are adopted in the market. (Learn more about renewable tax credits from WRI’s Bottom Line publication.)

Year-to-year extensions do not provide the certainty companies need to make large, long-term capital investments that are necessary to complete renewable power projects.

As the chart below illustrates, the wind industry is especially dependent on the Production Tax Credit (PTC). Congress failed to renew the PTC in 1999, 2001, and 2003. Consequently, wind project development stalled. Congress passed a three-year extension in 2004, and the certainty provided to the industry has led to sizable growth. In 2007, the U.S. wind power industry grew by 45 percent, and AWEA predicts the U.S. will become the world’s top wind power producer by year’s end.

Source: World Resources Institute WRI