Renewable tax fight resurrected in aviation bill debate

Source: Geof Koss and Christa Marshall, E&E reporters • Posted: Tuesday, April 5, 2016

Senate Democrats are pushing to extend a key renewable tax break for a number of power sources in legislation to reauthorize the Federal Aviation Administration that is slated to receive a vote later this week.

Majority Leader Mitch McConnell (R-Ky.) yesterday filed cloture on a House-passed tax measure, H.R. 636, that will be the vehicle for the FAA bill, with the procedural vote expected tomorrow.

Sen. Ron Wyden (D-Ore.), the ranking member on the Finance Committee, said yesterday that discussions continue on including an extension of the investment tax credit for qualifying energy sources, including combined heat and power systems, geothermal, small wind and fuel cells, that were left out of the end-of-year omnibus spending and tax package enacted in December.

That package extended the ITC for solar for five years but, due to what Minority Leader Harry Reid (D-Nev.) has called a mistake, did not extend to other sources (E&E Daily, March 18).

“It’s extraordinarily important those credits pass,” Wyden told reporters. “They provide crucial certainty and predictability in a key area of energy, and all sides acknowledge that this was an omission. And it’s time to get on with it.”

Senate Commerce, Science and Transportation Chairman John Thune (R-S.D.) said yesterday that the FAA bill will feature a tax component but said no decisions have been made as to what it includes. He’s concerned that Democrats will filibuster the bill.

“We’re hoping that the Democrats will let us proceed to it; that’s the goal,” Thune told E&E Daily. “They want a tax package … there obviously has to be a tax package because we’ve got to finance all this stuff, but what shape that takes remains to be seen.”

The political winds are already blowing against an extension of the ITC.

A coalition of conservative groups opposed to renewable tax credits last night sent a letter to senators urging them to oppose adding the omitted extensions to the FAA measure.

“The $1.4 billion in expiring tax provisions currently under consideration — pertaining to wind power, geothermal heat pumps, fuel cell facilities and combined heat and power (CHP) properties — are a distortion of the tax laws for special interests in the renewable energy industry and were wisely left out of this package,” wrote the coalition of 34 groups, including Americans for Prosperity, Freedom Partners and Heritage Action for America.

Many of these groups have been battling the renewable tax credits for years.

Meanwhile, the geothermal heat pump industry is calling for a broad fix to the credit.

In a letter sent to Wyden over last week’s congressional recess, the Geothermal Exchange Organization, or GEO, called for two extensions of federal tax credits to ensure support for both residential and commercial applications of geothermal heat pumps. The technology harnesses geothermal energy for heating and cooling. Wyden signaled before the Easter recess that he would like to expand renewable tax breaks as part of the FAA reauthorization bill

According to GEO, it’s critical that there be an extension of both the Section 48 Investment Tax Credit — which oversees commercial applications — and a separate residential energy efficiency credit, Section 25D. The incentives are scheduled to expire at the end of the year.

“While many GHPs [geothermal heat pumps] are used in a variety of commercial and institutional applications, including those by federal and state governments, fully half of GHPs manufactured for our domestic market are used in residential applications,” the letter states.

The letter is the latest push from industry to broaden the reach of tax credits extended last year for the wind and solar industry. Carbon capture advocates, for example, also have been pushing for similar tax extensions to boost technology that would lower emissions from fossil fuels (E&E Daily, Feb. 4).

Flint aid still stuck

Meanwhile, Michigan Democratic Sens. Debbie Stabenow and Gary Peters last night signaled that there had been no progress on finding a compromise to allow votes on the Senate’s energy bill and a package to provide assistance to residents of Flint, Mich., to cope with the city’s drinking water crisis.

The pair have been negotiating for weeks with Sen. Mike Lee (R-Utah) on a compromise that would address Lee’s demand that the offset — a rescission of the Energy Department’s advanced vehicles technology loan program — be paid for in the same year that funds are disbursed.

“Right now, we have one senator from Utah who is holding things up, and the people of Flint still can’t drink their water or bathe their children,” Stabenow told E&E Daily.

Peters told reporters he has another vehicle in mind for the Flint package but declined to identify it beyond saying he doesn’t think the issue will resurface during the FAA debate.