NEW ENERGY INCENTIVES IN THE HOUSE

Affirming rumors reported 2 days ago by NewEnergyNews, the House of Representatives has written new legislation providing $17.5 billion for New Energy and energy efficiency measures. It will be funded by shifting tax breaks and subsidies from the fossil fuels industries.

This is exactly the same kind of legislation, with exactly the same kind of financing, that the House passed and the Senate rejected last year. There is no indication any political circumstances have shifted that would change the outcome of the process this time around. But Speaker of the House Nancy Pelosi (D-CA) and House leaders apparently expect political mileage from having the fight.

As predicted by NewEnergyNews, the legislation was introduced with assertions highlighting high gas pump prices and huge oil and gas company profits.

Probably just as part of the political theater but perhaps as a bargaining position, the legislation extends vital New Energy tax credits for wind, geothermal and biomass for 3 years and solar tax credits for 8 years. The tax credits would cumulatively cost $6.57 billion over 10 years.

The bill also gives tax credits for buying hybrid cars and installing energy-efficient appliances. It increases tax credits for gas stations that build pumps for biofuels.

Republicans are expected to respond with calls for drilling in Alaska and other protected federal areas. The National Petrochemical and Refiners Association called the shifts of tax breaks from oil and gas producers “punitive.”

How a bill becomes a law: Once more into the abyss! (click to enlarge)

House Democrats Unveil Energy Tax Package
Siobhan Hughes, February 12, 2008 (Dow Jones Newswires via CNN Money)
and
House to take up energy tax package after break
Tom Doggett, February 13, 2008 (Reuters)

WHO
Speaker of the House Nancy Pelosi, D-CA; House Ways and Means Committee Chairman Charles Rangel, D-NY; Charles Drevna, president, National Petrochemical and Refiners Association

WHAT
H.R. 5351, the Renewable Energy and Energy Conservation Tax Act of 2008.

It hasn't come to this yet, but the bill hasn't hit the House floor... (click to enlarge)

WHEN
- The bill was “unveiled” February 12 but House Democratic leaders say they will not bring the new legislation to the floor until after the President’s Day break.
- Among the oil company benefits rescinded by the legislation in order to fund the New Energy measures are $13.6 billion in tax breaks for domestically produced oil and gas passed in 2004. The tax break rate is now 6% and is scheduled to go up to 9% in 2010.
- The bill’s wind, geothermal and biomass tax credit extensions would expire December 31, 2011.
- The solar tax credits would expire December 31, 2016.
- A tax credit for home solar installations would expire in 2014.

WHERE
- A specific provision of this legislation is tax credits for transportation projects in the lower Manhattan “New York Liberty Zone” impacted by the World Trade Center attack of September 11, 2001.
- Texas would lose the most because it is the corporate headquarters of many of the affected oil and gas companies. On the other hand, it is the home of many wind energy companies who will benefit greatly.

WHY
- Exxon Mobil, Chevron Corp., ConocoPhillips, Royal Dutch Shell and BP Plc would lose the 2004 tax breaks.
- Smaller oil and gas companies would still get the present 6% tax break.
- Oil companies would also lose a cumulative $4.1 in a cut of protections for foreign oil and gas income.
- The bill’s tax credit provisions would cover a maximum of 35% of cost for wind, geothermal and biomass projects running by 2010.
- It also has a tax credit for home solar installations that doubles from $2000 to $4000.

We know exactly how you feel, Harry... (click to enlarge)

QUOTES
- Rangel (D-NY), House Ways and Means Committee Chairman: "The American taxpayer should not be subsidizing oil and gas companies during times of record profits and record prices at the pump…We need an energy plan that reduces our dependency on foreign oil and invests in clean, renewable technology that will create jobs here in America."
- Drevna, National Petrochemical and Refiners Association: "[The legislation isolates the domestic oil and gas industry for punitive taxes that would discourage reinvestments in new technologies and facility efficiency upgrades, to say nothing of hurting its competitiveness with state-owned oil companies in unstable regions of the world."