The U.S. Senate late on Wednesday approved legislation extending billions of dollars in tax credits for the solar, wind and biodiesel industries as part of a $700 billion rescue plan for Wall Street, according to Reuters.
The legislation would extend for one year the production tax credit for wind energy, with an eight-year extension for investment tax credits for solar energy projects.
Buyers of plug-in electric cars would receive tax credits ranging from $2,500 to $7,500.
The bill also provides incentives for the use of biodiesel. However, critics of this subsidy say it promotes a "splash and dash" loophole where companies mix foreign biofuels with U.S. biodiesel to receive the U.S. subsidy, but then sell the fuel at a discount to European markets.
Senate Finance Committee Chairman Max Baucus said with the addition of the tax incentives, the bailout bill will help average Americans as well as Wall Street.
"Senators and representatives can now know that a `yes` vote on the financial rescue plan is now a vote to rescue America`s working families from this financial crisis, with the right tax relief at just the right time," Baucus said in a statement.
The House of Representatives will now take up the modified bailout bill, after rejecting a similar rescue plan on Monday.
However, the House will now be under pressure to follow the Senate`s action. It is not clear how adding the tax package will affect the legislation in the House.
The inclusion of the tax credits measures in the bailout package pushed shares of solar energy companies up sharply on Wednesday. Shares of JA Solar climbed 12.33 percent to $11.84 on Nasdaq, while those of U.S. market leader SunPower rose 8.9 percent to $77.25.
In addition to the energy tax breaks, the Senate bill included tax incentives for other businesses and a one-year fix to the Alternative Minimum Tax so millions of Americans will not be subject to higher income taxes.
Senate Majority Leader Harry Reid strongly urged Congress to pass the expanded rescue package with the tax breaks before it adjourns for the November elections.
"It would be a blight on this Congress not to pass these tax extenders," Reid said. "These aren`t for the wealthy, but for the people who are working for a living."
Renewable energy industry groups applauded the Senate.
"The House now has an opportunity, and the responsibility, to follow the Senate`s lead in recognizing solar`s important role in securing our nation`s economic future," Solar Energy Industries Association President Rhone Resch said in a statement.
Rhone added that the tax credits would create 440,000 permanent jobs and add $325 billion in private investment in the U.S. solar energy sector.
Randall Swisher, executive director of the American Wind Energy Association, said the tax breaks would allow wind power companies to continue to provide a clean source of electricity in America.
"We`re also gratified to have bipartisan support, which is absolutely essential if we as a nation are to make progress on our energy challenges," Swisher said in a statement.
Reuters