Senator Wyden Proposes ‘Clean Energy for America’ Tax Credits

https://www.energymanagertoday.com
By: Cheryl Kaften

Senate Finance Committee Ranking Democrat Ron Wyden (D-Oregon) and his colleagues introduced a Clean Energy for America Act on May 5 that includes technology-neutral tax credits for domestic production of clean electricity and clean transportation fuel, as well as performance-based tax incentives for energy-efficient homes and office buildings. These credits are open to all resources, including fossil fuels that capture carbon or make efficiency improvements.

“This bill is built around the proposition that the law ought to reward innovative energy technologies with incentives that spark investment in the private economy,” Senator Wyden said in sponsoring the new legislation. “These investments will shrink electric bills for American families and create new clean energy jobs in Oregon and across the country.” 

According to Wyden, the current system of energy incentives in the tax code is overly complex and far less effective than it should be.

“Today,” he noted, “there are 44 different energy tax incentives. More than half are too short-term to effectively stimulate investments, while also providing different subsidies to different technologies with no clear policy direction.”

To address these issues, the bill proposes a dramatically simpler set of long-term, performance-based energy tax incentives. Almost all existing renewable energy tax incentives are consolidated into three new provisions:

Incentives for Clean Electricity

• A technology-neutral tax credit for domestic production of clean electricity. The cleaner the facility, the larger the credit.
• Open to all resources – renewable, fossil fuel, or anything in between.
• Available as either a production tax credit of up to 2.3 cents per kWh or an investment tax credit of up to 30 percent.

Incentives for Clean Transportation Fuel

• A technology-neutral tax credit for domestic production of clean transportation fuel. The cleaner the fuel, the larger the credit.
• Open to all resources – renewable, fossil fuel, or anything in between.
• Provides a production tax credit of up to $1 per gallon.

Incentives for Energy Conservation

• A performance-based tax credit for energy efficient homes and a tax deduction for energy efficient commercial buildings – the more energy conserved, the larger the incentive.
• Promotes conservation in both new and existing buildings.

The Renewable Fuels Association, a trade association for America’s ethanol industry, commended the effort. “RFA and its members are truly thankful to Senator Wyden for having the foresight and commitment to propose a clean energy package that encourages the development of a broad range of technologies to produce clean fuels in the United States,” commented RFA CEO Bob Dinneen. “By reforming the existing tax credit into a technology neutral incentive, it will help stimulate investment among a wider range of production technologies and help promote the growth of the second-generation biofuels industry.

“We look forward to working with Senator Wyden and his colleagues in the Senate Finance Committee to ensure that any final clean energy tax reform proposal is crafted in a way that incentivizes performance-based improvements in the production of biofuel, and at the same time promotes industry growth,” Dinneen added.

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