WASHINGTON Dec 18 The U.S. Senate's top tax
writer unveiled a proposal on Wednesday to change the way the
government promotes clean energy by streamlining dozens of
federal tax incentives for electricity and fuel production.
Senator Max Baucus released a "discussion draft" calling for
simplifying 42 separate energy tax incentives. Left as is and
renewed, these incentives, he said, will cost the government
nearly $150 billion over 10 years.
"Our current set of energy tax incentives is overly complex
and picks winners and losers with no clear policy rationale. We
need a system of energy incentives that is more predictable,
rational, and technology-neutral," the Democratic chairman of
the Senate finance committee said in a statement.
The Baucus plan comes at a time when hopes for comprehensive
U.S. tax code reform before 2015 have all but vanished. Most
analysts agree there is little chance of such an ambitious
project succeeding in the fractious Congress.
That has not stopped Baucus pressing forward with proposals.
Last month, he released discussion drafts on international tax
reform, tax administration, and cost recovery and accounting.
Over the past three years, the finance committee has held
six hearings on energy tax reform, and it has issued a white
paper on some of the options outlined in the discussion draft.
To encourage cleaner electricity production, the plan would
establish a "technology-neutral and performance based" tax
credit for domestically produced clean electricity. The credit
would replace a number of different temporary credits, such as
the production tax credit for wind energy.
The plan would allow any facility that produces electricity
that is 25 percent cleaner than the average production, based on
a ratio of greenhouse gases it emits relative to its electricity
output, to get a tax credit.
The credit would be phased out over four years once the
greenhouse gas intensity of U.S. electricity generation declines
to the point that it is 25 percent cleaner than 2013, according
to the draft.
The proposal offers a similar consolidated approach to clean
fuels by offering a tax credit for any fuel produced that is 25
percent cleaner than conventional gasoline.
The credit would phase out over four years once the
greenhouse gas intensity of all transportation fuels in the
United States has declined to a level 25 percent cleaner than
The plan would end, allow to expire, or set up for repeal a
number of other energy-related tax incentives, including credits
for electric plug-in vehicles, a carbon dioxide sequestration
credit and a residential energy efficiency credit.
(Reporting by Valerie Volcovici; Editing by Kevin Drawbaugh and