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As the country tries to figure out the impact of the mammoth $700 billion financial rescue plan just passed by Congress, there are a couple of industries that are especially ecstatic—the wind and solar businesses. Just about everyone loves renewable energy. And the vast majority of members of Congress support the idea of tax breaks for these industries. The problem has been that the existing tax incentives for wind and solar were scheduled to expire at the end of this year. Despite the widespread support, Congress turned them down in vote after vote this year. The failure to pass them wasn’t on their merits. Instead, the credits were essentially held hostage by other agendas. The Republicans wouldn’t pass them unless they got more areas opened to drilling too. The Democrats wouldn’t pass them unless the tax credits were paid for (in most proposals, by removing tax breaks for oil and gas), which the Republicans fought. This standoff was beginning to have serious consequences for the industries. Orders for next year plunged. Companies were beginning to plan to cut thousands of jobs if the credits weren’t renewed.
So the irony here is that these credits, long held hostage to other agendas, ended up serving another agenda anyway. They proved to be one of the sweeteners that got the House of Representatives to sign on after the first bailout package was rejected. Of course, this being Washington, it wasn’t a clean victory for renewable, environmentalists say. “It is unfortunate that Big Oil and its allies added incentives for liquid coal, tars sands, and oil shale which will increase global warming pollution and use enormous amounts of water in the arid West,” says Anna Aurilio, director of Environment America.
BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.