The Senate Finance Committee's passage on August 2 of legislation extending tax cuts known as "extenders" came as a welcome surprise to many. The package, cobbled together in the final week before the August recess by Committee Chairman Max Baucus (D-Mont.) and ranking member Orrin Hatch (R-Utah), would extend dozens of tax provisions set to expire at the end of the year. It cleared the committee by a bipartisan 19-5 vote.

Environmental groups and renewable-energy advocates were quick to praise the committee for passing the bill. But some observers say the legislation faces an uphill battle and may not see significant action until after the election.

"This is still the first inning," says Jeff Shoaf, senior executive director of government affairs for the Associated General Contractors of America (ACG).

The legislation would provide more than $205 billion in tax-cut extensions for individuals, businesses and renewable-energy enterprises. One measure would expand the 10-year production tax credit (PTC) to projects under construction by the end of 2013, rather than put in place by 2012, which renewable-energy advocates hailed.

"That provision will really help all the renewable technologies," says Karl Gawell, executive director of the Geothermal Energy Association. "Allowing projects to qualify by starting construction will spur development of geothermal power projects that otherwise would be on hold due to the impending PTC cliff," he says. Gawell estimates that at least 150 geothermal projects currently in the planning or early stages could benefit from the change.

Steve Hall, vice president of government affairs for the American Council of Engineering Companies (ACEC), adds that the credits are "absolutely essential" for the renewable sector's continued health.

But some industry officials say the bill is still in flux. Shoaf says, "I'm still trying to figure out which extenders in this package they intend to keep in the end."

Whatever the end-of-year tax extensions package finally turns out to be, Hall says ACEC would like to see language added that would remove the volume cap for private activity bonds for water projects. Sen. Robert Menendez (D-N.J.) successfully added such a measure to the Senate version of MAP-21, but the language was dropped during conference negotiations.

Baucus and other members of the Finance Committee say the tax extensions are just a first step to comprehensive tax reform, which they hope to tackle next year. For AGC, comprehensive reform can't happen soon enough.

"A temporary tax provision I don't think provides enough incentive for capital investment, and that's what our industry is all about," Shoaf says.