Green Energy Avoids Tumble Off Fiscal Cliff

Any tax legislation worth the name carries with it a host of hangers on that represent special gifts to special interests, and the American Taxpayer Relief Act of 2012 is no different. In addition to the tax changes we all know about, a number of extensions to existing legislation also made it into the final bill. Here is a rundown of the favors granted to the green energy business.

Wind Power
The production tax credit of $0.022 per kilowatt-hour was extended for another year and the language of the law was changed to allow solar projects under construction by the end of 2013 to qualify for the 10-year tax credit. This is expected to cost taxpayers $12.1 billion over the 10-year period.

Biofuels
The $1.01 per gallon production tax credit for cellulosic biofuel was extended through 2013 and now includes algae-based fuels within the definition. The credit is expected to cost $59 million over the next 10 years.

The $1.00 per gallon biodiesel and renewable diesel production tax credit was also extended through 2013. All told for all types of fuels, these credits will cost about $2.2 billion over 10 years. The biofuels industry also got a depreciation bonus that is likely to cost about $500,000 over the next decade.

Solar energy got nothing from lawmakers, and neither did 4-wheeled plug-in electric vehicles. The 2- and 3-wheeled varieties of plug-ins, however, receive a tax credit of up to $2,500 for 2012 and 2013.

The extension of the wind energy tax credit is the most expensive and potentially the most far-reaching of the tax breaks added to the fiscal cliff legislation.

The extension of tax breaks for biofuels has pushed up share prices for BioFuel Energy Corp. (NASDAQ: BIOF), which is up more nearly 33% today; Gevo Inc. (NASDAQ: GEVO), up more than 16%; Codexis Inc. (NASDAQ: CDXS), up nearly 12%, and Renewable Energy Group Inc. (NASDAQ: REGI), up nearly 10%.

Chinese solar panel maker LDK Solar Co. Ltd. (NYSE: LDK) is up more than 10%, following the sale of all its shares in LDK Anhui for about $4 million. The good news is that LDK will chop its negative net asset holdings by about $54 million and its debt by $485 million.

Paul Ausick