Agreement won’t be last word on biofuel tax extenders

Source: Geof Koss, E&E News reporter • Posted: Friday, February 9, 2018

The decision by negotiators to scale back a broad tax extenders package in this week’s landmark budget deal all but assures a renewed push to lengthen the duration of a host of tax incentives in the coming weeks, key lawmakers said yesterday.

While the deal unveiled late Wednesday extends an assortment of breaks for biofuels, alternative vehicles and energy efficiency, the roughly $300 billion deal only made that extension retroactive for 2017 for most of the breaks (E&E Daily, Feb. 8).

That falls short of the extenders package unveiled by Senate Finance Chairman Orrin Hatch (R-Utah) in December, which would have made an assortment of energy breaks that expired in 2016 retroactive for 2017, continuing through the end of this year (E&E Daily, Dec. 21, 2017).

Sen. John Thune (R-S.D.), a member of GOP leadership and the Finance Committee, said the fight would probably resurface in the coming weeks, as negotiators look to assemble an omnibus spending bill.

“It really needed to be two years,” Thune told E&E News yesterday. “We’re going to have to figure out how to provide some certainty and this really doesn’t do that for the expired ones.”

Sen. Chuck Grassley (R-Iowa), who had championed longer extensions for a key biodiesel break, slammed the deal as “contrary to the promise I got from both the leadership of the Senate and the House,” noting a Nov. 9 phone conversation with Speaker Paul Ryan (R-Wis.).

Oregon Sen. Ron Wyden, the top Democrat on the Finance Committee, laid blame for the truncated extenders duration squarely on House Ways and Means Chairman Kevin Brady (R-Texas).

“His chickens are coming home to roost,” Wyden told E&E News yesterday. “He had talked for years about how he was going to take care of things in tax reform, and we weren’t going to have all kinds of questions about extenders any longer.”

For his part, Brady was unapologetic about his longstanding resistance to extenders, which he said would be the focus of upcoming hearings on their “relevance in a world where the tax code has changed dramatically.”

“And then we will invite those industries to explain why these are still needed,” he told E&E News. “Some may, and if so and if they have value then they need to be made permanent.”

Senate Majority Whip John Cornyn (R-Texas), also a Finance member, said yesterday that he too expects extenders to resurface. However, he echoed Brady’s weariness of the familiar ritual.

“I hate the tax extenders process because in order for somebody to get one tax extender they basically have to vote for all of them and I think it’s a bad process because it doesn’t cause us to focus on the individual merits of an extender,” Cornyn said yesterday.

Industry gripes

Industry groups registered their own complaints yesterday.

“While we are pleased that both bills include extensions of these critically important tax incentives, the deal to only retroactively extend the provisions would be disastrous for the biofuel industry,” said Renewable Fuels Association general counsel Ed Hubbard.

“These incentives are designed to help drive investment and innovation in the biofuel industry,” he said, “but by definition only extending them for 2017 does not allow them to have any prospective benefit for the industry.”

Alliance to Save Energy President Kateri Callahan called the budget deal “a step in the right direction,” adding, “but what we really need to incentivize … is predictable, stable, forward-looking policy.”

“These incentives encourage energy efficiency in homes and buildings, which account for about 40 percent of U.S. energy consumption,” she said in a statement.

Other sectors lamented the fact that their breaks will again be expired when the budget deal becomes law.

“Tax credits for a year that has already ended do nothing to encourage investment in our technology,” said Biomass Power Association President Bob Cleaves in a statement.

“Biomass is again expired while wind and solar continue to enjoy below market rates — creating additional inequity by causing our existing facilities to face unfair competition in the power market,” he said.

The National Hydropower Association echoed that point, noting that the budget deal added a host of other “orphaned” renewable sources to the scheduled phaseout under a 2015 tax law.

“At a time when we are seeking ways to strengthen grid reliability and resiliency, why would Congress seek to disadvantage a premier flexible renewable baseload technology like hydropower?,” said NHA Executive Director Linda Church Ciocci. “This isn’t just playing renewable energy favorites, it’s fundamentally missing hydropower’s role, and the benefits it brings, to our nation’s electricity grid.”

Reporter George Cahlink contributed.