"Budget Deal Provides Tax Breaks For Green Energy"

DAVID GREENE, HOST:

And let's consider a recent decision by Congress in today's Bottom Line in business. We know money's tight these days. So tight that Congress voted to increase taxes for the first time in many years.

But as NPR's Elizabeth Shogren reports, lawmakers, at the same time, Congress OK'd billions of dollars in tax breaks for green energy.

ELIZABETH SHOGREN, BYLINE: Whether you're a homeowner who bought an energy-saving refrigerator last year or a company hoping to build a wind farm, the new tax package may give you a reason to cheer.

Kateri Callahan is president of the Alliance to Save Energy.

KATERI CALLAHAN: It's got something in there, a Christmas gift if you will, for almost everyone: American homeowners, workers who commute via transit and manufacturers of efficient equipment, like clothes washers, dryers, refrigerators.

SHOGREN: Homeowners can save up to $500 on taxes for 2012 or 2013 if they install more insulation or an energy efficient furnace.

The tax package is especially meaningful to clean energy businesses that rely on tax benefits to stay profitable.

Jennifer Case is the CEO of New Leaf Biofuel. It's a San Diego company that turns used cooking oil into diesel. She and colleagues had been betting on Congress to come through for them. So they're breathing a huge sigh of relief.

JENNIFER CASE: And everybody was thrilled and now it's back to work today to sell the fuel that we now can afford to make.

SHOGREN: Last year was a difficult year for New Leaf because Congress let a one-dollar-a-gallon tax break for biodiesel expire. Even so, Case's company decided to triple the capacity of its plant. Case was hoping that Congress would re-instate the benefit, it did.

CASE: I think coming to work everyday it a gamble. But so far, it's been a good gamble.

SHOGREN: Daniel Kunz runs a company called U.S. Geothermal. It creates electricity from sources of super hot water that occur naturally under ground. When it looked like Congress might not renew tax credits for renewable energy, his company shelved plans to expand one of its plants.

But then, Congress not only extended the tax credit for renewable energy projects, but it also changed the rules. Now, instead of needing to complete a project by the end of 2013 to be eligible, a company only has to start construction by the end of the year.

DANIEL KUNZ: In fact, this is going to help us make a decision, an economic decision, to go forward on a project that otherwise might not.

SHOGREN: The tax benefits for green energy that Congress extended were originally created over the last decade. At the time, it seemed that energy sources, especially homegrown ones, were scarce. The country also seemed to be on the verge of setting limits on emissions of greenhouse gases like carbon dioxide.

KEVIN BOOK: There was a sensible reason to want to subsidize a transformation.

SHOGREN: Energy Analyst Kevin Book says it's harder to make a case for renewable energy now, given the booms in natural gas and oil.

BOOK: Well, all of these things are different now. Demand is declining, supply is increasing, the decarbonization mandate has weakened if not disappeared and practically speaking, energy security isn't the risk that it used to be.

SHOGREN: Book predicts that the New Year's tax package may be the last big payday for green energy.

But Daniel Kunz from U.S. Geothermal says the United States should keep investing in renewable energy.

KUNZ: It will never be the cure-all energy source, but it is a gift to our children when we build these things to have clean energy sources.

SHOGREN: These projects will produce less pollution, including greenhouse gases. They also can save money over the long haul because, unlike say a natural gas plant, they don't need to keep buying fuel.

Elizabeth Shogren NPR News, Washington.

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