WASHINGTON (Reuters) - Democrats in the House of Representatives want to include provisions in pending energy legislation that would strip about $21 billion in tax subsidies from oil and gas companies and put them toward subsidies for renewable energy sources like wind and solar.
Democrats are still drafting the energy package, which also will include a boost in automobile fuel efficiency standards and requirements to use more renewable fuel sources like ethanol.
According to a letter sent to Democrats by House leadership on Tuesday, the bill will include a controversial tax package that was included in a bill the House passed this summer. The bill still must be finalized before a vote, which is expected on Wednesday or Thursday.
According to the letter, the bill “strengthens and extends existing renewable energy tax credits, including solar, wind, biomass, geothermal, hydro, landfill gas and trash combustion, while creating new incentives for the use and production of renewable energy.”
Several Republicans in the Senate oppose paying for those renewable tax credits by raising taxes on oil and gas companies, and the White House has threatened to veto the bill over the issue.
To pay for the renewable incentives, the House bill is expected to repeal about $21 billion in tax subsidies extended to big oil and gas producers like Exxon Mobil Corp, ConocoPhillips and Chevron Corp.
According to the Democratic staff letter, the bill would repeal reduced tax rates for major integrated oil companies, drop foreign income tax deductions for companies that produce oil and natural gas overseas and drop a tax break for companies to write off some exploration expenses.
If the bill becomes law, it would provide a big boost to solar producers like SunPower and First Solar, whose customers would be able to claim a 30 percent investment tax credit for installing solar arrays.
Wind producers like Vestas of Denmark, the world’s biggest maker of wind turbines, could also get a boost from a 1.8-cent-per-kilowatt-hour producer tax credit, also expected to be included in the bill.
According to Democrats, the bill would also provide “clean renewable energy bonds” to prompt electric cooperatives and public power providers to install facilities that generate electricity from renewable resources.
Wall Street took notice of the incentives. On the New York Stock Exchange, shares in LDK Solar, which manufactures solar wafers, were up nearly 18 percent and Trina Solar gained 4.8 percent.
On Nasdaq, Solar Power Holdings was up 25 percent and Canadian Solar was up 5.5 percent.
Additional reporting by Steve James in New York; Editing by Christian Wiessner