U.S. Sen. Ron Wyden, D-Ore., along with 25 other Senate colleagues, has introduced the Clean Energy for America Act, which would consolidate the current 44 energy incentives into three technology-neutral provisions that encourage clean electricity, clean transportation and energy efficiency.
According to Wyden, ranking member of the Senate Finance Committee, the bill would overhaul the federal tax code, which is currently “woefully inadequate to address today’s energy challenges,” he says.
“It’s a hodgepodge of temporary credits, anchored by advantages for Big Oil, that don’t effectively move us toward the goals of reducing carbon emissions or lowering electricity bills for American families,” Wyden continues. “It’s time to kick America’s carbon habit – and that means a complete transformation of the tax code to reward clean electricity, transportation and conservation.”
To incentivize clean electricity, the bill would provide a production tax credit (PTC) or investment tax credit (ITC) to facilities that are at least 35% cleaner than average. It would be available as either a PTC with a maximum of 2.4 cents per kilowatt-hour or an ITC of up to 30%.
In addition, it would repeal tax incentives for fossil fuel production and, instead, ensure the tax code rewards clean energy. The new incentives – which are long-term but not permanent – would be phased out once greenhouse-gas emissions have been reduced by 50%.
Tom Kiernan, CEO of the American Wind Energy Association (AWEA), voices his support for the bill’s clean electricity provision:
“Senator Wyden’s Clean Energy for America Act includes an innovative, technology-neutral tax credit that would move national tax policy in the right direction to reduce greenhouse-gas emissions and create long-term stability for businesses to make new investments in American energy production,” says Kiernan.
“Congress should seize this opportunity to have a thoughtful conversation about specific policies, like Senator Wyden’s bill, that can meaningfully address climate change through market-based, technology-neutral solutions while keeping costs low for consumers and growing the U.S. economy.”
Likewise, Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, applauds Wyden’s proposal:
“Senator Wyden’s legislation would provide a stable and long-term set of incentives and parameters to foster greater deployment of solar energy and technology. The bill is a significant step forward, and we commend Senator Wyden for this effort,” she says, adding that the bill, as it advances, should also consider improvements for incentives for solar heating and cooling technologies.
Gregory Wetstone, president and CEO of the American Council on Renewable Energy (ACORE), says the bill “would, at long last, modernize the federal tax code for 21st-century power generation.”
“The proposal would drive economic growth by creating a level playing field in electricity markets, improving affordability and reliability for consumers, creating plenty of good-paying American jobs, and reducing greenhouse-gas emissions,” Wetstone continues. “ACORE welcomes the opportunity to work with Senator Wyden and others in Congress to advance the Clean Energy for America Act through the legislative process this year.“
To encourage clean transportation fuel, the bill would provide a tax credit for fuels that are at least 25% cleaner than average, with the maximum credit of $1 per gallon available for fuels with zero-carbon emissions. The bill would also eliminate the per-manufacturer cap on the tax credit for electric vehicles and extend the credit for fuel cell electric vehicles.
Further, to incentivize energy conservation, the bill would provide a performance-based tax credit for energy-efficient homes and a tax deduction for energy-efficient commercial buildings. The value of the tax credit would increase as more energy is conserved.
The bill is co-sponsored by U.S. Sens. Chuck Schumer, D-N.Y.; Debbie Stabenow, D-Mich.; Maria Cantwell, D-Wash.; Robert Menendez, D-N.J.; Tom Carper, D-Del.; Ben Cardin, D-Md.; Michael Bennet, D-Colo.; Sheldon Whitehouse, D-R.I.; Maggie Hassan, D-N.H.; Catherine Cortez Masto, D-Nev.; Dianne Feinstein, D-Calif.; Dick Durbin, D-Ill.; Amy Klobuchar, D-Minn.; Jeanne Shaheen, D-N.H.; Kirsten Gillibrand, D-N.Y.; Richard Blumenthal, D-Conn.; Brian Schatz, D-Hawaii; Mazie Hirono, D-Hawaii; Martin Heinrich, D-N.M.; Angus King, I-Maine; Tim Kaine, D-Va.; Cory Booker, D-N.J.; Gary Peters, D-Mich.; Chris Van Hollen, D-Md.; and Tina Smith, D-Minn.
“Our tax code should be encouraging the deployment of all clean energy technologies that are good for public health and our climate,” says Carper, top Democrat on the Senate Environment and Public Works Committee. “Instead, however, the tax code we have today incentivizes the very sources that fuel climate change and make our air harder to breathe. Too often, the incentives that actually push us in the right direction expire too quickly or erratically, making it difficult for business leaders to plan long-term investments.
“The Clean Energy for America Act will eliminate outdated incentives for fossil fuels and, instead, provide long-term, technology-neutral incentives for the investment and production of electricity and vehicles that help drive down our country’s greenhouse-gas emissions.”