On Wednesday, February 22, the White House and the Department of Treasury issued a report entitled “The President’s Framework for Business Tax Reform.” Among other proposals for reforming the way U.S. businesses are taxed, the report calls for a permanent extension of the Production Tax Credit (“PTC”) for renewable energy projects. In addition, the President’s plan would make the PTC refundable, ostensibly to avoid the inefficiencies incurred in tax equity structures. The President’s plan does not mention the investment tax credit, which is the only subsidy available for solar energy as well as certain other renewables.
Interestingly, the President’s FY 2013 budget proposals, released just ten days earlier, included different proposals for renewable energy. Under the President’s budget, the PTC would not be made permanent. Instead, it would be extended for wind facilities (only) that are placed in service in 2013. It would also extend the election to claim the ITC for wind in lieu of the PTC). In addition, the section 1603 grant would be extended to facilities for which construction began in 2012 (if placed in service in 2012). For property placed in service after 2012, the President’s budget would replace the section 1603 grant with a refundable tax credit applicable to property for which construction began in 2009-2013. The refundable credit would apply to wind facilities placed in service in 2013 (that meet the requirements of the PTC) and for other energy property in 2013-2016. The qualification requirements for the refundable tax credit would be the same (except for the effective date provisions) as currently apply to the section 1603 grant.
It is unclear why the proposals have been changed or whether either has a serious prospect of being enacted. The original budget proposal was estimated to cost $3.87 billion over ten years. There was no revenue estimate issued for the latest proposal.