Governors' Wind Energy Coalition

The White House’s opposition to a key electric vehicle tax break is further complicating efforts to extend an assortment of energy tax breaks in the lame-duck session.

Although the EV credit is not scheduled to expire, the annual extenders exercise has been viewed for months as a possible vehicle for changes to the law sought by lawmakers from both parties.

Under the Obama-era break, EV buyers are eligible to receive a federal tax credit of up to $7,500. However, the credit begins to phase out after a U.S. automaker has sold 200,000 eligible vehicles.

The EV credit was not addressed in the House tax package that was pulled from the floor last week after it became apparent there weren’t enough votes to pass the measure, and Ways and Means Chairman Kevin Brady (R-Texas) said he did not expect the credit to be addressed in the lame-duck session (Greenwire, Nov. 30).

But expanding the EV credit in year-end talks was viewed as one means of attracting Democratic support for a limited extenders bill in the lame duck. The House package, which also included other tax matters, would simply extend the energy incentives retroactively for 2018 — a move that affected sectors and Democrats say would do little to incentivize investment.

The House bill also contains a multiyear phaseout of a key biodiesel blending incentive.

President Trump’s recent suggestion that he’d like to eliminate subsidies for EVs to punish General Motors Co. for shuttering U.S. plants has put Republicans on notice not to entertain such a deal and possibly draw a veto threat.

Outside conservative groups and GOP critics of the break have warned against tinkering with it, which they say should instead be terminated — as White House economic adviser Larry Kudlow called for this week (Greenwire, Dec. 4).

Republicans appear to have gotten the message.

Senate Finance Chairman Orrin Hatch (R-Utah) noted yesterday that although he supports the EV credit, it will be an uphill fight to revise it in the lame-duck extenders debate.

“They may be a push too far, but I’d like to see it done myself,” Hatch told E&E News.

The retiring Hatch was otherwise optimistic that an extenders package would be enacted in the lame duck.

“We’re going to get them done,” he said. “The question is what are they going to be like.”

Senate Majority Whip John Cornyn (R-Texas), who also sits on the Finance Committee, said yesterday that he hasn’t been involved in any discussions about the EV credit but was aware of Trump’s opposition.

“I saw the White House is weighing in on that,” he said.

Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee, was irked by the White House’s position on EVs, which Kudlow on Monday said also extends to unnamed renewable energy subsidies.

Wyden noted the dire predictions included in the recent National Climate Assessment released the day after Thanksgiving.

“I think this is going to move to a very different level, and it comes right after the president’s scientists — the federal government’s scientists — have said, ‘Hey folks, wake-up call, urgent business to start moving to renewables and clean transportation fuels like EVs,'” Wyden told E&E News.

He downplayed the likelihood of any deal on extenders in the lame duck, saying Republicans have cut Democrats out of the talks.

“There aren’t any negotiations going on,” he said. “The Republicans don’t talk to us.”

Mixed signals

Sen. Bill Cassidy (R-La.), a member of the Finance Committee, said Monday that he believes the extenders are the sole tax issue that has legs in the lame duck.

“I can’t think we’re going to do anything more substantial than that,” he said.

But Finance Committee Democrats were pessimistic about extenders.

“I don’t hear a lot of discussion about finding common ground there,” Sen. Tom Carper (D-Del.) told reporters. “If there’s encouraging work that’s being done, it’s out of my view.”

Sen. Ben Cardin (D-Md.) said Republicans’ decision to cut Democrats out on tax talks makes it “very unlikely we’re going to have a tax bill, and that’s unfortunate.”

Although there’s “some urgency” to the extenders given their expired status, Cardin said it’s not a given that lawmakers will revisit the issue early in the new Congress, given the complexities of a host of unresolved tax issues and new members in key positions.

“I know how tax bills go,” he said. “I’d be surprised if we have something early.”

But Carper was more optimistic that extenders could be revived early in the 116th Congress if nothing happens in the coming weeks.

“I think that the folks in the new majority in the next Congress, they’ll be interested in doing some real things,” he said, praising both Wyden and incoming Finance Chairman Chuck Grassley (R-Iowa) as experienced in finding consensus. “My hope is that they will encourage the rest of us to start looking for the middle right away.”

Wyden noted Grassley’s long-standing interest in wind energy, as well as his own past proposals to consolidate the various energy tax breaks into a handful of technology-neutral incentives.

“I think tax policy becomes very different in the next Congress,” he said. “This debate is going to accelerate.”