The Senate Finance Committee on May 26 advanced a comprehensive clean energy bill that would overhaul the current system of energy-related tax incentives. The legislation, called the Clean Energy for America Act, includes provisions for clean electricity, clean transportation, home and building energy efficiency, and clean energy bonds.
In addition, the bill would repeal existing tax incentives for the fossil fuel industry, including expensing of intangible drilling costs and credits for enhanced oil recovery, marginal oil wells, coal gasification, and advanced coal projects.
The bill’s clean electricity incentive is emissions-based and proposed to be neutral and flexible between clean electricity technologies. Taxpayers would be able to choose between a production tax credit or an investment tax credit, based on the carbon emissions of the electricity generated. The credits would phase out once emissions targets are reached.
The incentive for the domestic production of clean fuels would be based on the “lifecycle carbon emissions” of a given fuel. To qualify for the credit, a fuel’s lifecycle emissions would have to be at least 25% less than the current US average. A maximum incentive would apply for zero and net-negative emission fuels.
Incentives for electric transportation options would include a non-refundable credit for commercial operators worth 30% of the purchase of an electric vehicle. The credits would be available until electric vehicles represent more than 50% of annual vehicle sales.
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