Washington — On Sept. 11, Senate Finance Committee leaders unveiled a sweeping package of energy tax incentives worth roughly $40 billion over 10 years to spur development of renewable fuel sources and conservation initiatives, largely at the expense of oil and gas companies, reported Jessica Johnson Bennett, government relations director for Plumbing-Heating-Cooling Contractors - National Association.
Finance Chairman Max Baucus (D-Mont.) referred to the legislation as the largest-ever energy tax bill, dwarfing a $30 billion version his panel produced in June. That bill failed to advance in the Senate. The current piece of legislation, which will be considered by the Senate this week, includes provisions for plumbing and HVAC products.
During the months of June and July, the Senate attempted to pass legislation which would include tax incentives meant to encourage consumers to purchase appliances and equipment that promote energy conservations. All attempts to reach a compromise over the summer failed, Bennett noted.
“What's the difference this time?” Baucus said. “Gasoline is hovering between $3 and $4 a gallon. Oil is more than $100 a barrel. Americans want a future free from high gasoline prices.” Plus, added Baucus, “We're closer to the election now.”
Finance ranking member Charles Grassley (R-Iowa) said that the bill's offsets are appropriate because new tax policies are created, and would simply shift production incentives from one set of industries to another.
The legislation includes an extension and modification of the tax credit for energy-efficiency improvements to existing homes. The bill extends the tax credits for energy-efficient existing homes for 2009, 2010 and 2011, and includes energy-efficient biomass fuel stoves as a new class of energy-efficient property eligible for a consumer tax credit of $300. The proposal also clarifies the efficiency standard for water heaters.
A broad array of environmental and industry groups, including PHCC-NA, back the bill. Its largest piece is a three-year extension of the production tax credit for wind energy, estimated at $15.4 billion. Solar tax credits are extended for eight years, while credits for biodiesel and renewable diesel would see three-year extensions. Extensions of incentives for energy-efficient homes, buildings and appliances are included, as well as a new $1.7 billion credit for smart meters and smart grid electric systems. A consumer credit of up to $7,500 for plug-in electric drive vehicles is included, as well as incentives for installation of idling reduction units and advanced insulation in heavy trucks.
The procedure for debate remains uncertain, with competing plans to be offered by the GOP leadership and the bipartisan group led by Budget Chairman Kent Conrad (D-N.D.) and Agriculture ranking member Saxby Chambliss (R-Ga.). Based on the Baucus-Grassley bi-partisan partnership, Bennett reported, there is renewed optimism that the tax measure could get through the Senate.