The U.S. House of Representatives has set forth its plans for helping stimulate the U.S. economy in The American Recovery and Reinvestment Act. On Friday, I discussed one aspect of the Act, $14 billion in funding to help the nation's K-12 schools upgrade to more energy efficient products.
Today, a group of investors from the United States and Europe are weighing in with what they would like to see in the stimulus package. The theme of the message was simple, "green recovery."
"An energy economic stimulus package would not only be good for the environment, saving energy and reducing greenhouse gas emissions, but also good for the economy, leading to the creation of jobs," said New York City Comptroller William C. Thompson, Jr., whose office oversees more than $100 billion in pension fund assets. Source: PR Newswire
The letter was sent to leaders in both the Senate and the House of Representatives as well as to representatives with the Obama administration. One of the key requests in this letter is extending the Production Tax Credit (PTC) by at least five years.
The PTC was set to expire on Dec. 31, 2008, but a one-year extension was granted by President Bush on Oct. 3, 2008, as part of the Emergency Economic Stabilization Act of 2008. So what is the PTC and why is the extension so important?
"Companies that generate wind, geothermal, and “closed-loop” bioenergy (which is powered by dedicated energy crops) are eligible for the production tax credit (PTC), which provides a 1.9-cent per kilowatt-hour (kWh) benefit for the first ten years of a renewable energy facility's operation." Source: Union of Concerned Scientists
The PTC is important as it encourages companies to invest in these types of renewable energy. Without the PTC, there is no incentive for companies to set aside money in their already tight budgets for expensive green energy projects.
Industries, companies and special interest groups across the country are trying to get their voices heard so that they can get a piece of the stimulus pie. I have seen several different organizations calling for an extension to the PTC over the past few weeks and this group of investors is joining in with their request for a long-term renewal of this credit.