Senator Harry Reid

But the legislative process works in strange and mysterious ways sometimes, and final enactment is not assured before Congress adjourns in the coming days. House Democrats have reservations about the tax bill, saying they don’t want to add to the national debt, so the big bill may be in jeopardy.

If an agreement is not worked out on the tax bill, House members could extend the tax credits for wind and solar anyway in a separate bill, and then go back on the campaign trail and say they supported clean energy. But unless the Senate also breaks out the energy provisions in a separate bill, that would not be enough.

Since wind and solar energy still need government support to be competitive, timely enactment of the tax incentives is important, if not crucial. European utilities that are increasingly prominent in installing wind farms in the United States, for instance, could reroute equipment they have ordered for use in the United States to Europe or other continents instead. And smaller American companies that already are facing tighter credit may have to at least slow down their planned projects.

Since the tax credit was established in 1992, it has been extended several times for one or two year periods. However when it lapsed in 1999, 2001 and 2003, investment in alternative energy quickly dried up until the credits were extended again. (The value of the credit currently is 2 cents per kilowatt hour of electricity produced.)

Given the stakes, it is likely that Congress will eventually enact the credits, if not this week then after the election or sometime next year.

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