That is according to a 1,180-page portion of the budget bill that Senate Democrats released late on 10 December. The updated text is similar to what the Democratic-led US House of Representatives passed last month, but with some technical and policy changes. Democrats also tweaked parts of the bill to align with Senate rules that will avoid the risk of a Republican filibuster.
“The Finance Committee has made targeted improvements to the Build Back Better Act, and is ready to move forward in this process,” Senate Finance Committee chairman Ron Wyden (D-Oregon) said.
The release of the legislative text comes as Senate majority leader Chuck Schumer (D-New York) tries to meet an ambitious deadline to vote on the $1.85 trillion budget bill before 25 December. The Senate is set to release text soon for other parts of the bill, including sections that may overhaul federal oil and gas leasing and impose a $1,500/metric tonne fee on excess methane emissions.
President Joe Biden is set to make the case today for the budget to moderate senator Joe Manchin (D-West Virginia), who worries the bill will exacerbate inflation nearing 40-year highs. It remains unclear what changes could resolve Manchin’s concerns, highlighted by a new Republican-sought estimate that the bill would add $3 trillion to US debt if it were highly modified so that every program lasts through fiscal year 2031.
No carbon tax, EV credit remains
The Senate Finance Committee’s updated version of the budget bill excludes major changes that many Democrats wanted, such as putting a tax on carbon emissions. Most changes to the energy sections of the tax language focus on technical changes or small policy changes, such as giving incentives to projects in industrialized areas.
The bill retains a tax credit of up to $12,500 for each new electric vehicle sold in the US. That policy has received complaints from Manchin, along with foreign trading partners, because $4,500 of the tax credit is tied to a requirement for vehicles to be assembled in the US by union workers. That section of the bill, plus a tax credit for used electric vehicle, is expected to cost $10bn over the next decade, according to the US Congressional Budget Office (CBO).
The Senate bill also retains a blenders tax credit for sustainable aviation fuel that would be set at a base rate of $1.25/USG for fuels that achieve a 50pc cut in lifecycle greenhouse gas emissions compared to conventional fuel, plus a further 1¢/USG for each percentage point of further emission cuts. The tax credit would be available from 1 January 2023 until 31 December 2026 and is only expected to cost $90mn in total, the CBO said of the House version of the bill.
Another part of the bill would offer a new tax credit of up to $3/kg for clean hydrogen that achieves a 95pc cut in lifecycle greenhouse gas emissions, compared to conventional hydrogen, which would phase down to a minimum tax credit of 60¢/kg for a 40-75pc lifecycle emission reduction. The Senate revised the bill so the credit could apply to retrofitted facilities. The CBO estimated the House’s clean hydrogen tax credit would cost $5bn over the next decade.
For the biofuels industry, the bill would include a four-year extension of a $1/USG federal tax credit for biodiesel and renewable diesel that is set to expire on 31 December 2022, along with a five-year extension of a $1.01/USG producers tax credit for second-generation biofuels set to expire on 1 January 2022. Those programs as passed by the House would cost $15bn, according to the CBO.
Another part of the bill would also impose a 16.4¢/bl tax on imported petroleum products and crude received at US refineries that would pay into a hazardous waste cleanup program known as Superfund. That tax expired in 1995 at a rate of 9.7¢/bl, but Democrats want to reinstate the tax and index it to inflation, a change that CBO estimates will raise $12.7bn over the next decade. The tax would go into effect on 1 July 2022.
The Senate modified part of its extended production tax credits for wind and other renewable energy to provide an added incentives to develop on “brownfield” sites that housed previous industrial development. The House bill included more than $100bn in tax credits for wind, solar, nuclear, carbon capture projects and electric transmission facilities over the next decade, according to the CBO.