Byrd is the word

Source: BY MATTHEW CHOI, Politico • Posted: Monday, December 13, 2021

The Senate is poised to begin bipartisan meetings with the parliamentarian this week, where both parties will haggle over what provisions belong in the budget reconciliation bill and what provisions violate the Byrd rule that restricts measures that do not directly affect spending or revenues.

Ahead of the clash, the Senate Finance Committee unveiled updated text Saturday for its portion of the bill. The panel has jurisdiction over the package of clean energy tax credits that comprise the largest portion of the bill’s climate provisions. The committee “made targeted improvements to the Build Back Better Act, and is ready to move forward in this process,” Chair Ron Wyden (D-Ore.) said in a statement, but they still don’t resolve some of the highest-profile, lingering disagreements on the climate front.

The draft Finance text includes some notable changes from the version the House passed in November. But Senate Democrats have so far avoided any major tweaks to the electric vehicle tax credit that has caught both Sen. Joe Manchin and our neighbors to the North’s attention, or to the carbon capture tax credit that some Democrats are eyeing (though sources following the negotiations tell ME that senators, including Manchin, continue to negotiate a compromise that would make the credit more accessible. Wyden said conversations over the text are “continuing.”)

While the changes unveiled Saturday were largely technical, they did offer a significant victory for the hydropower industry, which had so far largely been left out of the package. The text eliminates a half-credit reduction under current law for hydropower projects under the production tax credit and expands the investment tax credit to include environmental improvements to hydroelectric dams.

Other tweaks include an expansion of the PTC to include brownfields as a qualifying energy community and the exclusion of forested lands. The bill also now ties the termination of the ITC for transmission projects to when facilities begin construction, rather than when they are placed in service, providing a longer on-ramp, and it also expands eligible components for the advanced manufacturing production credit to include solar tracker components, inverters and offshore wind-related vessels. The phase-out for the advanced manufacturing credit would also be delayed by two years. Democrats narrowed the definition of sustainable aviation fuel, as well, and tweaked the definition of clean hydrogen so that retrofitted facilities may qualify as newly placed in service.

What about us? The Finance panel tweaked language to its “book income” minimum tax on large corporations, offering companies with pensions special protections . That change is likely to raise some eyebrows among the clean energy crowd, where companies and trade associations have called on tax writers to provide an exemption for renewable energy project accelerated depreciation, or else risk slowing deployment and increasing cost. They argue a failure to do so would increase the cost of projects by 15-20 percent and mean the loss of 130 gigawatts of clean energy deployment over the next decade. With the pension concerns addressed, expect the pressure to increase from clean energy groups raising the question, “What about us?”

Also worth noting, a carbon tax is absent from the draft Senate Finance bill, an unsurprising development that all but closes the door on efforts by Wyden and committee member Sen. Sheldon Whitehouse(D-R.I.) to add the long-elusive policy. Whitehouse has claimed 49 senators support the idea of including a carbon tax in Democrats’ climate and social spending legislation, but the one senator in question, Manchin, is unlikely to come around to the idea. Most House Democrats also prefer not to insert a new tax at this late stage.