Governors' Wind Energy Coalition

A key wind-energy incentive was restored yesterday as the Senate Finance Committee began marking up legislation aimed at extending dozens of expired and expiring tax breaks.

Chairman Max Baucus (D-Mont.) included a one-year extension of the production tax credit for wind, which otherwise would expire at the end of this year, in a tweaked version of the package released this morning. It was omitted from an earlier bill committee leaders released yesterday (Greenwire, Aug. 1).

Baucus also expanded eligibility for the credit by allowing developers to claim the credit for wind farms that begin construction by the end of next year. Current law requires projects to actually be producing electricity in order to claim the credit. Because it typically takes 12 to 18 months to get a turbine farm started, some wind-power supporters had worried that extending current law for a year would do little to spark industry growth in the next year. The tweak was outlined in an amendment filed yesterday by Sen. Chuck Grassley (R-Iowa), who wrote the first PTC bill in 1992.

The new package also allows wind developers to take an investment tax credit that covers 30 percent of a facility’s costs, rather than the 2.2-cents-per-kilowatt-hour PTC. Smaller developments, such as community wind projects, typically opt for the ITC, while utility-scale developers rely primarily on the PTC

Final action on the credit is not expected until after the election, as House members have said that is when they plan to unveil their approach to the temporary tax breaks that expired last year or are set to do so this year

The package being marked up today by Senate Finance addresses dozens of the provisions, broadly referred to as extenders, that affect a wide range of individuals and businesses, including many in the energy industry.

In addition to the PTC extension, Baucus’ chairman’s mark modifies several other energy-related provisions that were included yesterday. More than 100 other amendments also were filed to the package, although it remains to be seen how many of those will be voted on today; the committee spent an hour hearing members’ opening statements at the start of this morning’s markup and had just started considering amendments at press time.

Baucus’ new version of the extenders package eliminates a provision from the earlier version of the bill allowing businesses to deduct from their tax bills expenses related to environmental remediation at qualified sites contaminated with hazardous materials, known as “brownfields” under Superfund law.

The earlier version of the package would have allowed that deduction for costs incurred this year and next, but the new version doesn’t extend the credit, which expired at the end of last year. The chairman’s mark also makes technical corrections to tax credits offered to biofuels producers and for biofuels plant property. Sen. Robert Menendez (D-N.J.) offered an amendment that would replace the brownfields deduction.

Of the 115 amendments filed to the extenders bill, about a third address energy-related provisions, including several amendments that begin to broach the subject of how to phase out the wind PTC, an idea that is gaining traction, especially among Republican lawmakers.

Sen. Olympia Snowe (R-Maine) offered an amendment that would phase out the credit by 2016. Developers would be eligible for the full credit next year, and it would be reduced by a third in 2014 and two-thirds in 2015. Sen. Tom Coburn (R-Okla.) offered a similar amendment that would reduce the credit by 20 percent the first year and 40 percent the year after that. Coburn also offered an amendment to eliminate the credit altogether.

Other energy provisions

Several Democrats offered amendments to replace energy provisions that had been left on the cutting room floor as the package was developed.

Sen. Ron Wyden (D-Ore.) offered amendments to extend credits for electric motorcycles, one of which was adopted by voice vote this morning. Sen. Tom Carper (D-Del.) and others proposed allowing offshore wind developers to claim the ITC until total offshore installations reach 3,000 megawatts, and several senators offered amendments taking various approaches to extending the PTC.

Sen. Jay Rockefeller (D-W.Va.) offered an amendment to reinstate a credit for steel manufacturers that recycle hazardous byproducts into fuel to make coke, which is aimed at preventing the waste from being trucked to incinerators or landfills.

Rockefeller also joined Sen. Kent Conrad (D-N.D.) to offer an amendment that would modify a credit available for carbon capture and sequestration. The amendment would require a formal application to receive the credits and add a cap of 15 million tons of captured carbon dioxide per project eligible for the credit.

The amendment was not directly within the scope of the extenders package, so Conrad said he would not request a vote. But he said the requirement that companies apply for allocation of a certain number of CO2 credits would provide needed certainty to expand CCS deployment and the use of captured CO2 in enhanced oil recovery. Baucus said he would continue to work with Conrad on achieving the goals of the amendment.

Some Republicans, meanwhile, offered amendments that would strip various clean energy tax credits, while others aimed to expand tax incentives for fossil fuel production.

Sen. Jon Kyl (R-Ariz.) offered several amendments that would eliminate incentives for home efficiency upgrades, alternative refueling stations, biodiesel, efficient appliances, alternative fuels, cellulosic biofuels and new energy-efficient homes. Coburn joined Kyl in sponsoring many of those amendments and offered some of his own aimed at the clean energy incentives.

Meanwhile, Sen. Mike Enzi (R-Wyo.) offered an amendment that would make “supercritical” coal-fired power plants eligible for the 30 percent ITC. Sen. Pat Roberts (R-Kan.) offered an amendment to expand applicability of a marginal well depletion credit, which he argues is important for independent oil and natural gas drillers.

Among the provisions in the underlying extenders package is the renewal of a credit for transit commuters that urban Democrats have tried to restore since its expiration in January. The measure would raise the pre-tax monthly benefits an employer could offer for commuting by transit from $125 to $240, the same level as the benefit offered for parking. The measure would apply retroactively to January and would expire in December 2013.

The credit was attached to the Senate’s transportation reauthorization but was ultimately dropped in a conference deal with the House. Several other attempts to restore the credit have gone nowhere, despite its popularity in urban areas.