Finance Panel Approves Energy Tax Breaks
Friday, June 17, 2005
A Senate committee yesterday approved a package of tax breaks for energy production that would cost about $14 billion over 10 years.
The Finance Committee measure, which was sent to the full Senate for consideration as part of an energy bill, provides some tax breaks for traditional forms of energy but focuses heavily on incentives for renewable and cleaner burning forms of energy. The measure is far more costly than the White House has requested and is almost entirely different from a package of energy tax breaks approved by the House in April.
On the Senate floor, where debate over energy legislation began this week, lawmakers yesterday narrowly approved an amendment by Sen. Jeff Bingaman (D-N.M.) that would require 10 percent of electricity sold to consumers to come from renewable sources by 2020. The Senate also narrowly rejected an amendment by Sen. Maria Cantwell (D-Wash.) that set a goal of reducing U.S. dependency on foreign oil by 40 percent in 20 years. The United States imports about 58 percent of its oil.
With soaring energy prices, the Bush administration has made passage of energy legislation a top priority.
The tax breaks, approved by voice vote in the Finance Committee, are far different from those in a House energy bill that passed in April, which cost less and focused more on incentives for the oil and natural gas industry. The Senate tax breaks are far more expensive than the $6.7 billion in tax breaks sought by the Bush administration.
Before approving the tax breaks, Democrats and Republicans spoke in support of the measure, saying it would help reduce dependency on foreign oil and cut pollution. One dissenter, Sen. Jon Kyl (R-Ariz.), said he was concerned about giving away too much money to encourage energy production that might happen anyway. "It almost seems to me like folks think it's free money," Kyl said.
But others on the committee said the measures would encourage more domestic energy production and make the United States less reliant on other countries. "What we're trying to do is get the United States a little more independent of oil," said Sen. Charles E. Grassley (R-Iowa), chairman of the committee.
The measure provides production tax credits for several electricity sources, including nuclear, wind, geothermal and biomass. The legislation also provides tax incentives for turning coal into natural gas and for cleaner-burning coal plants.
For the oil industry, the legislation includes tax breaks for producers who inject carbon dioxide into wells to increase the amount of oil that can be recovered. It also provides a tax break for drilling onshore for natural gas deeper than 20,000 feet.
The legislation also provides tax breaks for energy-efficient commercial buildings, homes and appliances. Also included are tax credits for the purchase of hybrid vehicles.
On the Senate floor, the requirement that electric companies provide a percentage of renewable energy -- such as wind or solar power -- passed after debate about its impacts. Some lawmakers argued that it would inflate consumers' electricity bills, while supporters said the requirement would lead to lower energy costs, reduce pollution and make the country less dependent on foreign energy sources.