Report backs push on clean energy incentives

Source: By Jeremy Dillon and Geof Koss, E&E News reporters • Posted: Thursday, September 26, 2019

 

A new report is adding pressure to the push on Capitol Hill for extending an array of energy tax credits.

The Rhodium Group study said a five-year extension of incentives to benefit solar, wind and nuclear energy could provide the needed financial cover to fill some emission reduction gaps between current policies and the U.S. commitments under the Paris climate agreement.

Congressional leaders are preparing a so-called tax extender package this fall that is sure to have a heavy dose of energy-related measures, especially as House Democrats look to push tax measures to fight back against climate change.

While the prospects of agreement between the House and Senate remain murky, key lawmakers see the potential for some progress.

Senate Finance Committee member Ben Cardin (D-Md.) said yesterday that conversations are ongoing on extenders “at a higher level.”

The analysis by Rhodium, an independent research institute, said the extension of clean energy tax credits could fill the Paris Agreement gap by 25% by achieving reductions of up to 125 million tons compared with current policies.

The report found that a five-year extension of the solar investment tax credit and wind production tax credit — the two bedrock tax incentives for renewable energy deployment — could cause the technologies to blossom to 19% to 31% of total electric generation by 2030.

That could mean 21 to 35 more gigawatts of renewable power compared with current policies by 2025, and 31 to 97 GW by 2030. Much of the uncertainty is dependent on other factors like natural gas prices, the report noted.

“The push to extend clean energy tax credits represents a crucial opportunity to make progress towards decarbonization this Congress,” it said.

Mixed signals

Even so, the prospects for congressional action on an extenders package with the clean energy wish list remain unclear.

Senate Finance Chairman Chuck Grassley (R-Iowa) said yesterday discussions are ongoing with the House Ways and Means Committee with an eye toward attaching a package to whatever fiscal 2020 spending deal materializes this fall.

“I don’t know whether they will be successful, and I don’t know what it will contain,” Grassley told reporters, declining to discuss “what the possibilities are.”

But Cardin said, “It seems like there’s now an understanding that extenders may unlock a lot of other issues,” including pension and retirement bills, “technical corrections” to the GOP’s 2017 rewrite of the tax code, as well as energy tax break modifications.

“When you put all that together, there’s a lot of interest and, quite frankly, anxiety that it’s getting near the end of the year and we don’t have a vehicle,” Cardin said. “So there’s a hope that perhaps the extenders might be a package that could be the engine to get a lot of the stuff” enacted.

Cardin said he would like to see an extenders package go beyond the expired and expiring tax breaks and include modifications to existing energy incentives, including for electric vehicles.

A broader package “could be an important incentive to get the support you need to have a package make it to the finish line.”

Cardin said the best way to sort out the competing proposals aiming to hitch a ride with extenders is a committee markup, which he said he has requested (E&E Daily, April 11).

Grassley later said he was open to a markup. “If we can get it done, yes,” he said. “I think it shows a movement and unanimity on our part.”

‘Put on the president’s desk’

Grassley, however, accused Democrats of hampering a markup of extenders by floating changes to the 2017 tax overhaul.

“I think if we’re going to mark up a bill, we’re going to mark up a bill where there’s not going to be a lot of tough votes that Democrats might put forth to change the tax bill of 2017,” he said.

In the House, Ways and Means Committee Democrats have said plans remain unclear for moving a broad “green energy” bill Chairman Richard Neal (D-Mass.) promised earlier this year (E&E Daily, June 21).

Committee member Bill Pascrell (D-N.J.) suggested there might not be enough time for the panel to act. “We’re working on it,” he told E&E News earlier this month. “Whether there’s time left, that’s a tough one. I don’t know.”

Rep. Don Beyer (D-Va.), who also sits on Ways and Means, said he remained hopeful a package would materialize that addresses the EV tax credit, the scheduled wind and solar phaseouts, and other incentives for renewables.

“The good news is our Republican pals are now mostly agreeing that climate change is real and that we have to do something about it,” he told E&E News earlier this month. “Their ideas are innovation, and the best way to spur innovation is to make it pay.”

Extension of various other tax incentives for activities like offshore wind and carbon capture may help the financial viability of projects stalled because of administration delays, the Rhodium report said. More time gives them an opening to get permits and financing.

An extension of the EV tax credit could nearly double the number of EVs on the road right now, the report said.

Many of those policies have support from House Democrats. Senate Republicans, however, may need more convincing.

Beyer, speaking about a House energy tax package, said, “This may be the most plausible thing we can do that we could put on the president’s desk.”