A group of Senate Democrats have unveiled a bill to provide more incentives for clean energy, including tax breaks.
Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, unveiled a set of tax incentives at a news conference Tuesday with Senate colleagues as part of a joint energy bill sponsored by Sen. Maria Cantwell, D-Wash., Senate Minority Leader Harry Reid, D-Nev., and Sen. Chuck Schumer, D-N.Y. The proposal aims to measurably reduce carbon pollution over the next decade through a series of incentives for clean energy and the promotion of new technologies in the private sector.
Among Wyden’s proposed clean-energy tax incentives are technology-neutral tax credits for domestic production of clean electricity and clean transportation fuel, along with performance-based tax credit for energy efficient homes and tax deduction for energy efficient commercial buildings. The more energy that is conserved, the larger the incentive would be.
“The tax code plays an enormous role in energy policy, but the current system is a crazy quilt of laws that suffocates innovation,” Wyden said in a statement Tuesday. “This bill is built around the proposition that the law ought to reward clean energy with incentives that spark innovation in the private economy. Our proposal makes it possible to get more clean, renewable energy for less money and I’m looking forward to working with my colleagues to get it through the Senate.”
The bill would create a performance-based tax incentive that is supposed to be neutral and flexible between clean electricity technologies. Taxpayers would be able to choose between an investment tax credit, or ITC, and a production tax credit, or PTC, which would be scaled based on the carbon emissions of the electricity generated–measured as grams of carbon dioxide equivalents emitted per kilowatt hour generated. Power plants that emit at least 25 percent less carbon than the current nationwide average would begin qualifying for a small incentive, which increases for power plants that are progressively cleaner. Zero emission facilities would qualify for the maximum credits of 2.3 cents per KWh PTC or a 30 percent ITC. The PTC would be available for the 10 years after a facility is placed in service.
The bill would also create a technology-neutral incentive for the domestic production of renewable transportation fuels. The level of the incentive would depend on the lifecycle carbon emissions of a given fuel. Fuels would begin receiving incentives if their lifecycle emissions are at least 25 percent less than the U.S. nationwide average in 2015. Zero and net-negative emission fuels would qualify for the maximum incentive of $1.00 per energy equivalent of a gallon of gasoline. Qualifying production would be restricted to production in the U.S. of fuel that is used or sold. The bill would provide a 10-year production credit for facilities that are placed in service on or after Jan. 1, 2018. Facilities placed in service prior to Jan. 1, 2018 would be able to qualify for a 10-year credit stream beginning on Jan. 1, 2018.
The wide-ranging energy bill also includes provisions to advance policies that give consumers access to their electricity data; create a federal Energy Efficiency Resource Standard to support research and development on smart buildings; invest in energy storage; integrate clean energy onto the grid; improve the security of the grid; help manage electricity demand; cut greenhouse gas emissions equivalent to all passenger vehicles and a third of U.S. homes; secure carbon reduction targets from other countries; and triple funding for basic energy science and technology research.
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