The U.S. Senate Finance Committee has passed, by a 15-5 vote, a package of tax incentives to encourage energy efficiency, carbon sequestration and renewable energy. The package is expected to be added to the energy bill which is under consideration in the Senate.
“With the right emphasis on renewable fuels and alternative energy, we can turn the corner toward energy independence for our country,” said Sen. Max Baucus, D-Mont., chair of the Finance Committee.
Included in “The Energy Advancement and Investment Act of 2007” is a five-year extension of the clean energy production tax credit for solar and wind, new tax credits to encourage CO2 sequestration from coal and to encourage development of cellulosic ethanol, and incentives to connect renewable energy to the power grid. It also extends credits for ethanol and biodiesel production.
It also extends tax credits for the purchase of alternative fuel vehicles, and establishes a new credit for purchasing plug-in hybrid vehicles or converting existing vehicles to use plug-in hybrid technology.
It would cost almost $10 billion to extend the renewable energy production tax credits through 2013. It authorizes $3.6 billion from 2008-2011 for clean renewable energy bonds.
The bill proposes spending almost $7.5 billion on coal-to-liquid and gasification technologies which would sequester CO2.
Almost $1 billion would go toward clean energy coal bonds; $3.8 billion over 10 years for credits for clean coal facilities; $434 million for accelerated depreciation of CO2 pipeline investments; and credits for CO2 capture. A $10-a-ton credit would be given to firms that stored the CO2 in oil or gas reservoirs, which increases petroleum recovery, and a $20-a-ton credit would be given for permanent storage underground. The alternative fuels credit would be extended 39 months to 2012, costing nearly $1 billion.
The total cost of the package is estimated at $28-$32 billion, which would be funded by such measures as repealing the tax credit for the major oil and gas companies’ domestic energy production ($9.4 billion).
It would also charge a severence tax for removing taxable crude oil or natural gas produced from leased lands in the Gulf of Mexico, which would raise an estimated $10.7 billion.
The amendment tacking on the tax package to the comprehensive energy bill may face a cloture vote – which would limit the debate on the amendment but require a 60-vote margin – because of the $21 billion in oil taxes.
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