Bill introduced to overhaul renewable fuel, energy tax credits

By Erin Voegele | May 02, 2019

Sen. Ron Wyden, D-Ore., and 25 colleagues introduced legislation May 2 that aims to overhaul the federal tax code and consolidate the current 44 energy incentives into three technology-neutral provisions that encourage clean electricity, clean transportation and energy efficiency.

The bill, titled the Clean Energy for America Act, would incentivize clean energy by providing a production tax credit (PTC) or an investment tax credit (ITC) to facilities that are at least 35 percent cleaner than average, with a maximum of a 2.4 cents per kilowatt hour PTC or a 30 percent ITC available for facilities with zero carbon emissions.

To encourage clean transportation fuel, the bill would provide a tax credit for fuels that are at least 25 percent cleaner than average, with the maximum credit of $1 per gallon available for fuels with zero carbon emissions. The bill also eliminates the per-manufacturer cap on the tax credit for electric vehicles and extends the credit for fuel cell electric vehicles.

To incentivize energy conservation, the bill would provide a performance-based tax credit for energy efficient homes and tax deduction for energy efficient commercial buildings. The value of the tax credit would increase as more energy is conserved.

The bill is cosponsored by Sens. Chuck Schumer, D-N.Y.; Debbie Stabenow, D-Mich.; Maria Cantwell, D-Wash.; Robert Menendez, D-N.J.; Tom Carper, D-Del.; Ben Cardin, D-Md.; Michael Bennet, D-Colo.; Sheldon Whitehouse, D-R.I.; Maggie Hassan, D-N.H.; Catherine Cortez Masto, D-Nev.; Dianne Feinstein, D-Calif.; Dick Durbin, D-Ill.; Amy Klobuchar, D-Minn.; Jeanne Shaheen, D-N.H.; Kirsten Gillibrand, D-N.Y.; Richard Blumenthal, D-Conn.; Brian Schatz, D-Hawaii; Mazie Hirono, D-Hawaii; Martin Heinrich, D-N.M.; Angus King, I-Maine; Tim Kaine, D-Va.; Cory Booker, D-N.J.; Gary Peters, D-Mich.; Chris Van Hollen, D-Md.; and Tina Smith, D-Minn.

The American Biogas Council, Biomass Power Association, Growth Energy, the Renewable Fuels Association, and the Biotechnology Innovation Organization are among the groups that have issued statements in support of the bill.

John Fuher, vice president of government affairs at Growth Energy, said the bill signals “that renewables will play an important role in our nation’s energy future by extending current law in the short term, providing long-term stability for those who produce low-carbon biofuels, and rewarding investments in clean fuel alternatives.

“With many exciting advancements in cellulosic ethanol and higher-biofuel blends on the horizon, we are pleased to see biofuels included as a key contributor in reducing carbon emissions and providing a greener future for generations to come,” Fuher continued.

The RFA applauded the bill, noting it improves the current tax incentives for biofuels. “Today, our nation’s biofuel producers continue to struggle with the commercialization of advanced and second-generation biofuel technologies as a result of a tax system that continues to favor incumbent and finite, carbon intensive energy sources like oil and gas, and fails to provide a long term solution for incentivizing the production and commercialization of new, clean burning biofuel technologies,” said the RFA. “Without a long-term tax policy solution, the biofuels industry will continue to face challenges in securing critical investment and developing efficiencies to help it reduce costs and compete against other energy sources that have received, and continue to receive, a lifetime of valuable government and tax support.  We believe the Clean Energy for America Act is a step in the right direction. The RFA is committed to a collaborative working relationship with Ranking Member Wyden to develop a long-term tax policy that best helps our industry meet its goals in commercializing advanced and second generation biofuels and biofuel technologies.”

BIO has also spoken out in support of the bill, noting it “will stimulate investment and growth in biofuels and other forms of clean energy.” BIO also urged congress to extend the tax incentives for the development of advanced and cellulosic biofuels that expired at the end of 2017 to provide a short-term solution as Wyden continues to develop a long-term solution through his bill.

Patrick Serfass, executive director of the ABC, stressed that history has shown energy tax measures do accelerate provide sector investment, create new jobs and contribute to the growth of domestically produced energy. “But those tax measures have also been technology specific which boosts some industries while placing others at an immediate competitive disadvantage,” he said. “Senator Wyden’s legislation will level the playing field for all renewable energy technologies and as a result provide a significant acceleration to the biogas industry.”

“This will create an environment where the biogas industry can grow and mature,” Serfass continued. “We appreciate Senator Wyden’s smart solution to this long standing issue. The American Biogas Council salutes these efforts and looks forward to working with Senator Wyden during the 116th Congress.”

The BPA has also spoken out in support of the bill. “In the absence of a national energy policy, tax policy has become the tool that Congress uses to incentivize new energy production,” said Carrie Annand, executive director of the BPA. “For too long, tax policy has favored the growth of certain technologies at the expense of other technologies. By basing tax incentives on carbon emissions, Senator Wyden's proposal levels the playing field for new renewable energy production, including for biomass power. It also offers credits for energy storage and carbon capture capabilities paired with biomass plants. We support Senator Wyden's proposal and look forward to helping him build support."

Additional information, including a full copy of the bill, is available on the Senate Committee on Finance website.