Geoscience Policy Monthly Review
december 2013
The Monthly Review is part of a continuing effort to improve communications about the role of geoscience in policy.
Current and archived monthly reviews are available online.Subscribe to receive the Monthly Review directly.
energy
Senate Finance Committee proposes new reforms to energy tax incentives
The Senate Finance Committee recently released a new proposal to overhaul some energy provisions in the tax code in the United States. The staff discussion draft, introduced by Finance Committee Chairman Senator Max Baucus (D-MT), aims to streamline regulations imposed on energy companies and discontinue a number of key tax credits available to them. The proposal is one of a series of discussion papers prepared by committee staff incorporating ideas from both Republican and Democratic members of the committee and is intended to stimulate discussions on reforming America’s tax code.
There are currently 42 energy tax incentives written into the U.S. tax code. Under the proposed regulations that number would be significantly reduced. The new regulations make four main proposals. First, the new code would consolidate almost all of the preexisting energy tax credits into two new credits. Next, it would make the timelines for the two new incentives longer, thereby instilling confidence in potential investors and businesses. And finally, the new rules would establish a new, technology-neutral tax credit for domestic production of clean energy and for domestic production of clean transportation fuel.
Sources: E&E News, Senate Committee on Finance
CRS report on energy tax credit
The production tax credit (PTC) for renewable energy, a corporate tax credit available to businesses producing renewable energy through a number of green technologies, expired at the end of 2013. The PTC provided a per-kilowatt-hour tax credit to businesses based on the amount of electricity generated through qualified energy resources, such as wind.
Although the tax credit has expired and been reinstated multiple times over the years (most recently in 2009 by the American Recovery and Reinvestment Act), Congress is still divided whether to reinstate it or not. Therefore, the Congressional Research Service (CRS) was asked to create a report outlining the pros and cons of the production tax credit for renewable energy sources as lawmakers consider whether to reinstate it once more.
The report analyzes the spectrum of outcomes: eliminating the tax credit, making it permanent, and various phase-out options for renewal. Opponents of the PTC view it as the federal government “picking winners,” whereas proponents view the PTC as an important tool to help kickstart the fledgling renewable energy industry. For more information and to read the full report click here.
Sources: Congressional Research Service, E&E News