Wednesday, March 05, 2008

Diverse Coalition Calls For Senate Action On Energy Tax Credits

Mar 4: A release from the Union of Concerned Scientists (UCS) highlights the actions of a coalition of more than 100 business, trade and advocacy groups that have called on the U.S. Senate to pass bipartisan legislation as soon as possible that extends renewable energy and efficiency tax credits that have already expired or will expire at the end of this year. They say the tax incentives would strengthen the renewable energy industry and expand the market for energy-efficient products, which ultimately would reduce residential and commercial energy costs, generate new domestic jobs, and boost a flagging economy, according to the coalition. Rhone Resch, president of the Solar Energy Industries Association said, "Renewable energy sources like solar and wind are a proven economic engine for our country. They've created tens of thousands of green collar jobs and billions of dollars in investment. Congress and the administration should seize this opportunity to support this high-growth sector."

The business-consumer coalition includes 47 manufacturers, including Dow Chemical, DuPont, Owens Corning and Whirlpool; eight retailers, including Best Buy, Home Depot, Lowe's and Wal-Mart; 23 trade associations, including the Association of Home Appliance Manufacturers, the National Association of Homebuilders and the National Small Business Association; 25 advocacy groups, including Environment America, Natural Resources Defense Council, Sierra Club and Union of Concerned Scientists; and 10 utilities, including Constellation Energy, Exelon and Florida Power & Light.

Historically, Congress has extended clean energy tax incentives in only two-year increments, creating a boom-bust cycle that impedes industry development. The groups said the ideal Senate tax incentive package would extend incentives for wind, solar and biomass for a number of years to provide the stability financial investors need to back new projects. In addition to extending tax credits for renewable energy sources, the coalition urges the Senate to extend tax incentives for constructing energy-efficient buildings, investing in solar electric systems, installing efficient home heating and cooling equipment, manufacturing efficient home appliances, and retrofitting existing homes to save energy.

On February 27, the U.S. House passed by a vote of 236 - 182, the Renewable Energy and Energy Conservation Tax of 2008 (H.R. 5351) [See WIMS 2/28/08]. The bill, sponsored by Ways and Means Committee Chairman Charles Rangel (D-NY), contains revenue provisions that are expected to raise approximately $18 billion over 10 years. Among those opposing the bill are the American Petroleum Institute (API), the White House and Senator Pete Domenici (R-NM), Ranking Member of the Senate Energy and Natural Resources Committee

The major revenue portions of the bill include: (1) Denial of "section 199 benefits" for certain major integrated oil companies (freeze current law section 199 benefits at 6% for oil and natural gas production income of other taxpayers). Otherwise, section 199 benefits would increase to 9% by 2010. Freezing the rate at 6% would save 13.57 billion over 10 years. (2) Clarification of foreign oil and gas extraction income. The tax code limits the ability of oil and gas companies to claim foreign tax credits with respect to foreign oil and gas extraction income. The bill would require oil and gas companies to use the ascertainable independent market values at the nearest point to the well for which an independent market exists in calculating their foreign oil and gas extraction income (FOGEI) and foreign oil related income (FORI). The bill would also require that where a foreign country collects foreign taxes that are limited in their application to taxpayers engaged in oil or gas activities that oil and gas companies treat these taxes as oil and gas extraction taxes subject to the FOGEI limitation. The proposal is estimated to raise $4.08 billion over ten years.

Access a release from UCS including a list of all coalition members (
click here). Access legislative details for H.R. 5351 (click here). Access a fact sheet on H.R. 5351 (click here). [*Energy]