US Senate Finance Committee plans to revise energy tax code – MNE Tax

By Cordia Scott Hennaman, MNE Tax

The U.S. Senate Finance Committee is due to consider May 26 the Clean Energy For America Act, sponsored by Chairman Ron Wyden (D-OR), which would eliminate a number of temporary tax credits and replace them with energy credits. technology-neutral emissions. credits to stimulate investment in so-called “clean” technologies.

The current system of energy incentives in the United States is too complex and much less efficient than it should be, with more than 40 different energy tax incentives, including permanent subsidies for “Big Oil”, according to the law Project.

“Energy policy is tax policy, and the federal tax code is woefully inadequate to address our energy challenges. It’s a hodgepodge of more than 40 temporary credits that don’t effectively move us toward the goals of reducing carbon emissions and lowering American families’ electricity bills. Simply extending the status quo will not get the job done,” Wyden said. “The Clean Energy Act for America throws those 40 temporary credits aside, replacing them with emissions-based, technology-neutral credits to spur investment in clean electricity, clean transportation, and energy conservation. This would put us both on the path to meeting our emissions reduction targets and creating well-paying jobs, and should be the backbone of our clean energy efforts as we review the agenda. of President Biden’s jobs.

More than half of current tax credits are too short-term to effectively stimulate investment and provide different subsidies to different technologies without a clear policy rationale, according to the bill’s authors. The Clean Energy for America Act creates a simpler set of long-term, performance-based, technology-neutral energy tax incentives that promote clean energy in the United States, they said.

To that end, the bill provides for an emissions-based, technology-neutral tax credit for clean electricity generation. It would be open to all resources — renewables, fossil fuels, “or anything in between” — but would only apply to facilities with zero or net negative carbon emissions.

Any new zero-emissions facility could choose either a production tax credit of up to 2.5 cents per kilowatt hour or an investment tax credit of up to 30%. According to the bill, investments in network improvements would qualify for the full value investment tax credit.

In terms of energy conservation incentives, it offers performance-based tax credits for energy-efficient homes and a tax deduction for energy-efficient commercial buildings – with larger incentives granted for more energy efficient.

The bill also provides incentives for clean transportation with long-term incentives for battery and fuel cell electric vehicles and electric vehicle charging. It also provides a technology-neutral tax credit for the domestic production of clean transportation fuel. It would be available for all resources, but only for fuels that are at least 25% cleaner than average, according to the bill.

It specified that taxpayer-assisted projects must meet federal labor requirements. And it eliminates tax incentives for fossil fuels, shaping the tax code to only reward clean energy.

“This proposal is important because it simplifies our tax code and shifts tax incentives from oil and gas to clean energy,” said Sen. Debbie Stabenow, D-Mich, one of the bill’s co-sponsors.

Source link

Comments are closed.