The Senate Finance Committee voted yesterday to provide several hundred million dollars a year in tax breaks for companies that produce unconventional forms of energy such as synthetic fuels and gasohol.
The measure, sponsored by Sen. John C. Danforth (R-Mo.) would allow producers a tax credit amounting to $3 a barrel of the equivalent amount of oil. It would apply to all forms of energy except oil, gas, coal and nuclear power.
The legislation is an outgrowth of a proposal by Sen. Herman E. Talmadge (D-Ga.) that would have granted a similar credit for production of shale oil. After Talmadge's plan was defeated, 11-8, Danforth expanded it.
The vote amounted to the panel's first full-fledged action on President Carter's proposed windfall profits tax bill, which has been bogged down in the finance panel since its passage by the House last July.
So far, Finance Committee members have shown little enthusiasm for dealing with the windfall-profits-tax portion of the bill despite a pledge by Long to have the legislation on the president's desk by late October. If the committee passes any bill, it most likely will water the measure down.
The Carter administration opposes Danforth's proposal, arguing that the tax credit would conflict with the subsidies and loan guarantees for development of synthetic fuels that Carter has asked the lawmakers to provide under a new Energy Security Corp.
Nevertheless the committee approved the proposal unanimously, making one loan concession that would allow the Energy Security Corp. to reduce the tax credit if it also is providing grants or loan guarantees.
The measure also would trim the size of the tax credit if the producer also obtained a direct federal subsidy for manufacturing gasohol.
Congressional staffers estimated the Danforth measure would cost the Treasury just under $1 billoin in lost revenues by 1985 and up to $2.5 billion by 1980. The$3-a-barrel credit would be adjusted over the years to take inflation into account.
Besides the four basic forms of energy used widely now, the tax credit wouldn't apply to energy produced from unprocessed wood and from hydropower over a 25-megawatt capacity. However, it would apply to processed coal that yields synthetic fuel, to ocean thermal power and to gas from coal seams, shale and geopressurized brine.
The credit would take effect in 1980 and would apply to all facilities actually in service between April 20, 1977 -- the date of President Carter's first energy speech -- and 1990. It would be phased out after oil prices rise to $29.50 a barrel.