Mixed signals in Senate on year-end energy talks

Source: BY Geof Koss, E&E News reporter • Posted: Wednesday, November 20, 2019

Key senators are signaling that a possible year-end agreement on energy taxes is likely to be narrowly focused, despite the emergence of a sweeping clean energy tax package floated by House Democrats yesterday.

Senate Finance Chairman Chuck Grassley (R-Iowa) spoke positively of ongoing bicameral negotiations to extend an assortment of lapsed or soon-to-be energy tax breaks by the end of the year, which he said would be aided by the expected passage this week of a continuing resolution to keep government funded until Dec. 20.

“The good news is there’s still good feeling among the group that some compromise can be worked out,” Grassley said, reiterating his desire to attach a tax package to whatever spending bill emerges next month.

But he struck a largely pessimistic tone about the broad proposal unveiled yesterday by House Ways and Means Democrats, which would extend key renewable tax breaks slated to phase out under current law while simultaneously expanding tax breaks for electric vehicles and energy storage, among other items (Greenwire, Nov. 19).

House Ways and Means Chairman Richard Neal (D-Mass.) has suggested some of the provisions in his committee’s draft bill — dubbed the “Green Act” — could be in play in year-end talks.

But Grassley questioning the timing of its introduction when Congress has struggled since the end of 2017 to extend incentives for biofuels and energy efficiency.

“If you can’t get that done, why come out with a whole bunch of new extenders?” he asked.

While he welcomed the House’s inclusion of a multiyear phaseout of a biodiesel blenders credit that is a top personal priority as “good news,” Grassley pointedly questioned the extension of key wind and solar breaks that Congress enacted in 2015 on the condition they be phased down.

“Both were considered a mature industry that could get by without a tax credit,” he recalled of the 2015 negotiations that led to the phaseout of the wind production tax credit and investment tax credit most commonly associated with solar. “I’m not sure why they’re extending that when the industry agreed to that.”

‘More clean for less green’

Echoing the warning of an uphill fight ahead, two longtime Republican critics of the wind PTC — Sens. Lamar Alexander of Tennessee and Pat Toomey of Pennsylvania — took to the Senate floor yesterday to criticize the breaks.

After his remarks on the floor, Toomey told E&E News he would work to defeat a new extension of the PTC, which would be on the books for several more years under the House Democrats’ new bill.

“I think it would be very good to just phase out the PTC, which is exactly what current law contemplates, and I’m quite happy to leave it at that,” said Toomey, who sits on the Finance Committee.

Oregon Sen. Ron Wyden, the top Democrat on Finance, told reporters he had not studied the draft bill floated by his Democratic House colleagues but said that if he becomes Finance chairman in the next Congress, he would push his own proposal to consolidate all the energy tax code provisions into three technology-neutral tax breaks for clean energy, clean transportation fuels and efficiency — which he’s calling “more clean for less green” (E&E Daily, May 2).

“My preference is to focus on that,” he said.

‘Fairly minimalist’ deal

South Dakota Sen. John Thune, the No. 2 Senate Republican who is also a senior Finance Committee member, said yesterday that he hopes to see an extenders deal enacted by the end of the year but threw cold water on costly add-ons sought by Democrats.

“My guess is if we do get a deal, it will probably be fairly minimalist,” Thune told E&E News. “I suspect it would be a lot of the traditional extenders as opposed to new policies that they want to introduce.”

Finance member Debbie Stabenow (D-Mich.) said yesterday that one top Democratic priority — an expansion of the EV tax credit that was included in the House Ways and Means bill along with several other incentives to encourage cleaner vehicles — “absolutely” remains under discussion in year-end talks.

Stabenow struck a more upbeat tone on the negotiations. “I feel like there’s a lot of interest on both sides,” she said in an interview. “And so we’ll have to see how all-encompassing it is. But I think that there’s a lot of positive discussion.”

But at least one Democrat on Finance — Sen. Maria Cantwell (D-Wash.), who has found common cause with Grassley in extending the biodiesel breaks — said that lawmakers should temper their expectations for next month.

“Big is our enemy, narrow is our friend,” she said of the scope of a year-end tax bill. “People use that as a big, grand negotiation to rewrite everything. And there’s not enough time for that.”

Cantwell called it “very problematic” if biodiesel companies and other sectors affected by the lapse of key tax breaks have to enter a third year of uncertainty if extenders linger into the new year.

“I think it starts to get very complicated,” she said.

Reporters Jeremy Dillon and Marc Heller contributed.