Senate Finance Committee Chairman Max Baucus (D-MT) today unveiled a proposal to streamline energy tax incentives.
“It is time to bring our energy tax policy into the 21st century,” Senator Baucus said. “Our current set of energy tax incentives is overly complex and picks winners and losers with no clear policy rationale. We need a system of energy incentives that is more predictable, rational, and technology-neutral to increase our energy security and ensure a clean and healthy environment for future generations.”
The discussion draft released today focuses on reforming the current set of energy related tax preferences. Under current law, there are 42 different energy tax incentives, including more than a dozen preferences for fossil fuels, ten different incentives for renewable fuels and alternative vehicles, and six different credits for clean electricity. Of the 42 different energy incentives, 25 are temporary and expire every year or two, and the credits for clean electricity alone have been adjusted 14 times since 1978 – an average of every two and a half years. If Congress continues to extend current incentives, they will cost nearly $150 billion over 10 years.
Advanced Ethanol Council (AEC) Executive Director Brooke Coleman commended the proposal. “Senator Baucus has rightly put all existing policies on the table while proposing a new path that will achieve these goals and ensure that the United States leads instead of follows when it comes to developing new technologies and producing less carbon intensive energy,” said Coleman in a statement.
Coleman said they look forward to working with Chairman Baucus and the Senate Finance Committee to ensure that any new piece of legislation covers the critical bases when it comes to maximizing investment. He also called for immediate energy tax extenders in the context of the proposal’s 3-year extension of existing law. “The proposal admirably calls for a 3-year extension of existing law for cellulosic biofuels to provide a reasonable ramp to a new tax regime. We commend the Chairman for recognizing the hazards of frequent expirations and change of law. That said, tax provisions for cellulosic biofuels still come off the books in two weeks while those offered to the fossil fuel industry persist. We recommend that Congress invoke the ‘do no harm’ principle going forward and pass extenders in 2013.”