Are the ‘bells tolling’ for green energy give-aways?

December 21, 2013 by  
Filed under Green Energy News is reporting that tax breaks (a.k.a as corporate welfare) for Big Energy are in trouble on Capitol Hill, in both the House and the Senate. Richard Rubin reports::

U.S. energy tax incentives would be cut by more than half under a draft plan released by Senate Finance Committee Chairman Max Baucus.

Baucus’ proposal would consolidate more than 40 breaks into two incentives for cleaner production of electricity and fuel. Today’s proposal would end tax breaks for energy efficiency, electric cars and appliances that benefit companies including Whirlpool Corp. (WHR) and Nissan Motor (7201) Co.

“Our current set of energy tax incentives is overly complex and picks winners and losers with no clear policy rationale,” Baucus said in a statement. “We need a system of energy incentives that is more predictable, rational and technology-neutral.”

The draft is Baucus’ fourth proposal in the past two months as he seeks to build momentum for the biggest U.S. tax-code changes since 1986. His effort has been stymied by partisan divides over whether the plan should increase taxes and resistance from industries that would lose long-time breaks.

Baucus, a Montana Democrat, is leaving Congress at the end of 2014. He hasn’t set a specific schedule for advancing his entire plan, which would reduce tax rates and limit tax breaks. Baucus has said he wants to reduce the corporate income tax rate to less than 30 percent from the current 35 percent.

The draft on energy is part of a proposed reshuffling of tax breaks that currently cost the U.S. government $150 billion a decade. The plan would reduce the government’s total cost by more than half. Baucus is seeking comments by Jan. 31.

House Proposal

Representative Dave Camp of Michigan, the Republican chairman of the House Ways and Means Committee, also wants to limit breaks and lower the corporate tax rate. He hasn’t been as specific on energy policy as Baucus is in this draft.

The proposal would allow 11 tax breaks to expire or be repealed. Those include a credit for building new energy-efficient homes, a credit for plug-in electric cars and a credit for training equipment for mine rescue teams.

The remainder, including the production tax credit for wind, would remain in place until 2017. They’d then be replaced by the new two-credit system.

The clean electricity credit would be awarded to facilities that are at least 25 percent cleaner than the national average, as measured by the Environmental Protection Agency.

Companies would be able to choose between a production tax credit as large as 2.3 cents per kilowatt-hour or an investment tax credit of as much as 20 percent of the investment.

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On the surface this appears to be a wise move by Congress. We’re not convinced they are serious about eliminating this bad public policy. Why? Because they are simply shifting the marbles around. Why not just eliminate these giveaways?

The answer: This is a lobbyist dream come true. Watch and see what actually comes out. We predict after all is said and done, more will be said than done.

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