The bill — from Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat — replaces 44 energy tax breaks and incentives with three emissions-based incentives: clean power, clean fuels, and energy efficiency. The incentives wouldn’t endorse a distinct technology so long as it decreases carbon emissions. Technologies prompting bigger reductions would get a higher credit.
The legislation would further allow clean energy developers to maintain the tax incentives as direct cash payments, a request renewable energy organizations have long asked for to increase the scope of companies that can take advantage of the credits.
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On Wednesday, the Senate Finance Committee passed the legislation along party lines, with an even 14-14 vote, teeing up the measure for potential inclusion in any infrastructure package.
The bill “throws the old system in the waste bin,” Wyden said Wednesday throughout the markup of the bill. “It replaces the old rules with a free-market, technology-neutral system in which reducing carbon emissions becomes the lodestar of America’s energy future.”
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Wyden’s bill takes a somewhat different approach than President Joe Biden, who outlines attempts to reinforce existing incentives for clean energy as part of his massive infrastructure plan. Republicans have crashed those efforts, cutting them out of the infrastructure counteroffer they’ve proposed, along with most of the other climate funding.
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Biden’s fiscal year 2022 budget request proposes to spend over $265 billion on developed renewable energy tax credits, which he would increase by 10 years.
The White House further intends to spend $9.7 billion over 10 years for tax incentives for existing nuclear power plants, $10.6 billion on tax credits for zero-emissions trucks, $4.1 billion for incentives for low-carbon hydrogen, and $6 billion to expand and enhance tax credits for carbon capture technology.
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Wyden’s bill would spend $259 billion over the next 10 years, according to calculations from the Joint Committee on Taxation.
Environmental organizations and clean energy supporters say Wyden’s legislation would offer assurance to renewable energy and electric vehicle corporations, which in recent years have faced diminishing tax credits and last-minute political haggling over whether to extend the incentives in budget bills.
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“This bill is a key pillar of moving to President Biden’s goal of 100% clean power by 2035,” said Matthew Bearzotti, deputy legislative director for the Sierra Club.
Incentives for electric cars would also be substantial under Wyden’s bill. The legislation would permit consumers to get tax credits of up to $12,500 for electric cars made in the United States at facilities where workers are unionized.
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