US Senate Democrat are pushing for an overhaul of federal energy tax incentives to help cut the country’s greenhouse gas (GHG) emissions.
A group of 25 Democrats, led by Senate Finance Committee chair Ron Wyden (D-Oregon), today introduced legislation, the Clean Energy for America Act, that he said would replace a “hodgepodge” of more than 40 different tax breaks with a more streamlined, technology-neutral set of incentives that will encourage greater use of zero- and low-carbon technologies in the energy sector.
“It’s not about picking winners and losers. It’s about meeting emission goals,” he said.
Among its key provisions, the bill would offer a production tax credit (PTC) of up to 2.5¢/kWh or an investment tax credit (ITC) of up to 30pc for zero-emission and net-negative emission technologies in the electric sector, as well as incentives for battery and fuel cell electric vehicles and charging stations.
It also includes a tax credit for domestic production of low-carbon transportation fuels, as long as the fuel is at least 25pc “cleaner” than average, with a maximum incentive of $1/USG for zero- and net-negative GHG fuels. The incentive would be available to on-road and aviation fuels.
The bill would require fuels to become increasingly less carbon-intensive in order to qualify, with only those with lifecycle emissions at or below zero eligible starting in 2030.
Eligibility for the electricity and fuel incentives would largely be tied to reductions in US emissions. The PTC and ITC would begin to phase out once electric sector GHG emissions have fallen by 75pc from this year’s levels, while the fuel credit would begin to phase out once transportation sector emissions have fallen by at least 75pc from 2019 levels.
In addition, the bill would repeal what Wyden called “special benefits” for oil and coal companies, including expensing of intangible drilling costs and credits for enhanced oil recovery, marginal oil wells, coal gasification, and advanced coal projects.
The proposal is getting early support from a number of US utilities, renewable energy companies and environmental groups.
“The Clean Energy for America Act will be a critically important tool in the electricity sector toolbox,” said Stefan Bird, president of utility Pacific Power, a subsidiary of Berkshire Hathaway Energy.
Wyden said he is hopeful the legislation can be made part of the $2 trillion infrastructure package proposed by President Joe Biden, which also calls for new and expanded tax incentives for clean energy, electric vehicles and biofuels.
“What the president is talking about and what I am talking about are quite well aligned,” he said. “It is very doable to bring these proposals together.”
He also said he believes he can find bipartisan support, noting that Republicans “for years” have criticized tax incentives they believe favor certain technologies over others.
“I believe there is a lot for Republicans to like about this approach,” he said.
The office of US senator Mike Crapo (R-Idaho), the lead Republican on the Finance Committee, did not immediately respond to a request for comment.
(Argus) — By Michael Ball
