Committee clears extenders bill with renewable energy, efficiency incentives

Source: Nick Juliano, E&E reporter • Posted: Friday, April 4, 2014

Sen. Ron Wyden (D-Ore.) put a greener tint on his package of temporary tax breaks this morning, adding key renewable electricity and efficiency credits to the slate, but he stopped short of considering several tangential proposals, including one to expand the scope of an existing solar energy tax credit and another to encourage natural gas as a transportation fuel.

The Finance Committee spent the morning marking up its “tax extenders” bill, which would extend about 50 tax credits and other incentives that expired in January or are set to lapse at year’s end. A modified package Wyden introduced this morning added the production tax credit (PTC) and incentives to reduce energy use in existing homes or commercial buildings that had been left out of an earlier version. The bill also would extend credits for biofuels, other gasoline alternatives and additional energy efficiency activities (Greenwire, April 1).

The package passed on a voice vote early this afternoon, but it remains to be seen how quickly it will make it to the floor. Congressional aides and lobbyists tracking the process have suggested final passage may wait until an end-of-the-year, lame-duck session, as was the case when the incentives were most recently renewed following the 2012 election.

Nearly 100 amendments were filed ahead of this morning’s markup, but sponsoring senators were more likely to use the session as an opportunity to push their favored causes than to actually seek a vote on their proposals.

Several energy-related amendments were determined to not be germane to today’s proceedings because they did not directly address the expired extenders, but Wyden pledged to return to the ideas in the future. That was the case for an effort from Sens. Maria Cantwell (D-Wash.) and Michael Bennet (D-Colo.) to give solar developers the same expanded tax credit eligibility that wind and other sources had by making the solar credit deadline based on when construction starts on a project rather than when a facility comes online.

Wyden pledged to work with the pair to address that issue when the committee turns its attention to comprehensive tax reform. He said he was sympathetic to arguments the solar industry and its supporters have been making — namely that utility-scale development already is starting to wane because projects take several years to come online and not enough time remains until the 30 percent investment tax credit expires in 2016.

“I feel very strongly” that we “get this fixed,” Wyden said, although he said the amendment was not germane today. “This is not the last word on this subject.”

A similar sequence of events followed discussion of another amendment from Bennet and Sen. Richard Burr (R-N.C.) intended to fix a discrepancy in how diesel fuel and liquefied natural gas are taxed. Both sources are subject to the same 24.3-cent-per-gallon tax, although natural gas provides less than 60 percent as much energy content per gallon. That means it is effectively paying a much higher tax rate, discouraging the switch to LNG-fueled vehicles, Burr said.

“Do we really want to discourage folks from making the switch to a cleaner and cheaper domestic product?” Burr asked.

Sen. Orrin Hatch (R-Utah), the committee’s ranking member, called fixing the problem a “no brainer,” but the amendment was determined to be outside of the scope for inclusion with extenders. Wyden promised to return to the issue when the committee addresses fuel tax issues in the context of the highway trust fund, which it will be considering soon.

Sen. John Thune (R-S.D.), whose state is among the windiest in the nation, offered an amendment that would phase out the PTC by gradually reducing its value over five years. He withdrew it because it was outside the scope of the two-year extenders bill but stressed that it would be crucial to provide a longer-term, soft landing for the wind industry in the context of tax reform. He also noted that the Joint Committee on Taxation determined a similar proposal he submitted earlier would cost $6 billion over a decade, less than half the $13 billion JCT said today’s two-year extension would cost over the same period.

Among the few amendments that were added was one reinstating deferral rules related to transmission property sales to implement Federal Energy Regulatory Commission or state restructuring policies; it passed via voice vote.

The committee also weighed in on the suite of energy tax breaks when Sen. Pat Toomey (R-Pa.) sought a vote on his amendment that would have eliminated the PTC, biofuels incentives, credits for electric vehicle infrastructure and others. It failed on a 6-18 vote with Republican Sens. Chuck Grassley of Iowa, Mike Crapo of Idaho, John Cornyn of Texas, Rob Portman of Ohio and Thune joining all Democrats in opposing it.