Senate committee approves tax credit extension package

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Monday, April 7, 2014

The Senate Finance Committee approved tax credit extension package on April 3 that includes several biofuel and bioenergy provisions. During the markup process, the committee voted down an amendment that aimed to strip biofuel and renewable energy credits from the bill.

summary of the Expiring Provisions Improvement Report and Efficiency (EXPIRE) Act published by the committee prior to the April 3 markup session included two year extensions of the $1.01 per gallon production tax credit for cellulosic biofuels, the $1.00 per gallons production tax credit for biodiesel and renewable diesel, and the 10 cent per gallon small agri-biodiesel producer credit. It also provided two year extensions of the 50 cent per gallon alternative fuel tax credit and alternative fuel mixture tax credit, along with a two year extension of the bonus depreciation for cellulosic biofuel facilities. In addition, the 30 percent investment tax credit for alternative vehicle refueling property was assigned a two year extension.

Additional documentation published by the committee as part of the hearing makes additions to the package. A document that describes the chairman’s modifications to the EXPIRE Act includes a two year extension of the renewable electricity production credit, which lists wind, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy as qualified energy resources.

The document also provides a two year extension of a tax credit for nonbusiness energy property, which provides a 10 percent credit for the purchase of qualified energy efficiency improvements to existing homes. The credit includes a provision related to biomass fuel property. The provision defines biomass fuel property as a biomass-fired stove that is used to heat the principal residence of a taxpayer. The unit must have a thermal efficiency rating of at least 75 percent.

During his opening statement on the markup, Committee Chairman Ron Wyden, D-Ore., spoke about the need for comprehensive tax reform. “The very fact that the committee is marking up the EXPIRE Act today shows the urgency of tax reform. Now, I understand why Americans who flip on C-SPAN and watch this proceeding are skeptical about the prospect of improvement. There have been loads of promises in the past of tax reform. When I joined the Finance committee nearly a decade ago, I couldn’t possibly have imagined chairing Congress’ fifteenth time renewing the stop-and-go tax cuts called ‘extenders,’” he said. “Many of these extenders are well-intentioned and ought to be permanent. Their stop and go nature obviously contributes to the lack of certainty and predictability America needs to create more family wage jobs. It doesn’t have to be this way.”

Wyden also stressed that this will be the last tax extenders bill the committee takes us so long as he is chairman. “That’s why the bill is called the EXPIRE Act.  It is meant to expire,” he said. According to Wyden’s statement, he will start holding hearings this spring to work on fixing the broken tax code.

During the markup session, Sen. Pat Toomey, R-Pa., offered an amendment that aimed to strike the production tax credit for companies “that produce electricity from wind, solar and other politically favored forms of energy,” along with tax credits for biofuel, biodiesel and renewable diesel. His amendment also targeted tax credits benefiting electric vehicles and alternative fueling properties.

“I don’t think we should force tax payers to subside inefficient, uncompetitive sources of energy,” he said, claiming that such tax credits destroy jobs.

Sens. Chuck Grassley, R-Iowa, and Debbie Stabenow, D-Mich., strongly argued against the amendment before the committee ultimately voted to reject it.

“I am obviously sympathetic to the argument that the tax code has gotten too cluttered with too many special interest provisions. That is the reason many of us have been clamoring for tax reform for years now. But, just because we haven’t cleaned up the tax code in a comprehensive way doesn’t mean that we should pull the rug from under our domestic and renewable energy producers. Doing so would cost jobs, harm our economy, the environment and our national security,” said Grassley.

He added that while the proponents of the amendment want to have the renewable tax credit debate in in a vacuum, that shouldn’t be the case. “We ought to do it with regard to many incentives and subsidies that exist for other sources of energy,” he said, including those in permanent law not subject to repeated extension needs.

Grassley offered an extensive list of tax credits that are specifically designed to benefit the oil and gas industries and the nuclear energy industry. “Are these crony capitalist handouts?” he asked. “Why is repealing a subsidy for oil and gas or nuclear energy production a tax increase on energy producers and consumers, while repealing an incentive on alternative energy is not? This is all part of an intellectual dishonest argument.”

Stabenow noted that the tax code has included special provisions for oil since 1916. “They are not part of the extenders. They are not required to be renewed every year or every two years,” she said. “Whenever we talk about picking winners and losers in energy, I would argue that congress has picked a winner in the oil industry—and they won. What we’re trying to do is level the playing field and give other American energy opportunities to be able to complete for home-grown energy here at home.”