The House of Representatives achieved a bipartisan advanced energy victory last week when the House passed energy efficiency legislation (H.R. 2126) championed by House Energy and Commerce Committee members Rep. Peter Welch (D-VT) and Rep. David McKinley (R-WV). Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) hope the Senate will follow suit and pass their recently reintroduced bill (S. 2074), which includes all of the House provisions along with additional pieces. That would set the stage for a conference between the two chambers to work out the differences in the bills and move to the President's Desk.
The House bill, which won overwhelming approval (375-36), contains a number of programs to advance efficiency, including a new “Tenant Star” program to encourage energy saving improvements in leased offices and rental apartments, as well as programs to improve efficiency in federal data centers, modify requirements for grid-connected water heaters, and establish energy benchmarking in commercial buildings. According to the Alliance to Save Energy, the bill would yield roughly $640 million in annual energy savings by 2030.
On the Senate side, Senators Shaheen and Portman are working with leadership on how amendments will be handled when their bill comes to the floor. They are confident that recently added amendments to their bill have earned it the 60 votes necessary to secure cloture and passage. One of the amendments included in the new bill, offered by Senators John Hoeven (R-ND) and Joe Manchin (D-WV), eliminates a provision from the 2007 energy bill that would require new and some renovated federal buildings from using fossil fuels for heat or power by 2020.
Also, the Obama administration released its budget proposal last week, which offered a different take on energy tax policy than recent proposals from House Ways and Means Chairman Dave Camp (R-MI) and former Senate Finance Chairman Max Baucus.
The President’s budget proposal makes many advanced energy tax credits permanent, while eliminating tax benefits for fossil fuels. The administration would make the production tax credit (PTC) for wind energy permanent, refundable, and also available to solar developments. The budget would also modify and permanently extend the deduction for energy-efficient commercial buildings, as well as the tax credit for the construction of new energy-efficient homes. The tax credit for cellulosic biofuels would be extended through 2020 and excise taxes on liquefied natural gas (LNG) would be reduced to bring it to parity with diesel.
These proposals in the President’s budget – which is generally seen as more of a political statement than a framework Congress is likely to follow – are just the latest contributions to the ongoing, if laconic, conversation on tax reform in Washington. For the advanced energy industry, the most pressing matter is reviving the energy tax credits that expired at the end of 2013. In January, AEE submitted a letter signed by 60 advanced energy business leaders calling on Congress to retroactively extend these tax credits, such as the PTC and various biofuels and energy efficiency provisions. Businesses need policy certainty if we are going to reap the benefits of a more secure, clean, and affordable energy system. After all, U.S. government support for fossil fuels totaled nearly $600 billion over the last 50 years.