When Congress begins its new session in earnest later in January, construction industry officials and renewable-energy advocates want to see legislators extend key tax breaks that were allowed to expire on Dec. 31. Among them are the production tax credit (PTC) for solar, wind and other renewable-power sources. But some observers are pessimistic about prospects for such extensions any time soon.

The House and Senate are slated to take up a further continuation of one break—the payroll-tax cut, which on Dec. 23 was extended through February. Some congressional leaders say they are ready to work on a long-term fix for the payroll break early in the new session. Such a measure also could be a vehicle for extending other recently lapsed tax incentives. But it isn't clear whether the House, which is controlled by Republicans, and the Senate, where Democrats hold the majority, will be able to reach a deal on the payroll-tax provision, and even if they do, whether they will extend any other tax incentives, too.

Senate Minority Leader Mitch McConnell (R-Ky.) said on Dec. 30, "As we move into the new year, it's crucial for everyone to realize that, once this temporary [payroll-tax cut] extension is behind us, the larger goal is to move beyond a discussion of temporary assistance, and toward a bipartisan plan to get our economy moving again, reform the tax code and preserve and protect entitlement programs for future generations."

Senate Finance Committee Chairman Max Baucus (D-Mont.) says he would like to find a bipartisan solution that includes extensions for the research and development (R&D) credit and "job-creating clean energy tax incentives."

Those "extenders" could be part of a payroll-tax-cut continuation, or be an entirely new bill, says Rob Gramlich, American Wind Energy Association (AWEA) senior vice president of public policy.

However, others doubt that Congress can agree to renew expired breaks retroactively for small businesses, R&D, renewable energy production and new energy-efficient homes.

Jeff Shoaf, Associated General Contractors of America senior executive director for government affairs, notes that the main sticking point for the payroll-tax extension passed at the end of 2011 was how to offset its cost. "If you can't agree on the pay-fors on the most important, must-pass kind of things, how do you come up with pay-fors for everything else?" Shoaf asks. "I'm not optimistic that Congress can wrap its head around sound tax policy and make a good decision."

Gramlich is more upbeat. He cites support among lawmakers from both parties for the renewables provision while they were deliberating the two-month payroll-tax cut extension in December.

The PTC has been renewed seven times, and the question of how to pay for it "is always an issue," Gramlich says. But, he adds, "We're confident that the support exists from both Republicans and Democrats to include the PTC" in legislation during the first quarter of 2012.

A study, prepared for AWEA by Chicago-based Navigant Consulting and released in December, concluded that if Congress allows the PTC to expire, half the jobs in the wind industry—37,000 positions in all—would be eliminated, and private investment in the industry would drop by nearly two-thirds. On the other hand, the report says, if Congress were to retroactively extend the PTC, the wind industry could grow to nearly 100,000 jobs in the next four years.