Ways and Means Democrats Eye Green Energy Tax Package

The House Ways and Means Committee is likely to start negotiations in the coming weeks on a clean energy tax package that would likely focus on extending and expanding breaks like the one for electric vehicles.

A centerpiece will likely be Rep. Dan Kildee’s (D-Mich.) bill (H.R. 2256) to extend tax benefits aimed at encouraging electric car purchases, and expanding them for car manufacturers like Tesla Inc. that have already hit the credit’s threshold. Still, Congressional, lobbying, and industry sources cautioned that a package hasn’t been fully hashed out yet.

Some combination of an extension and expansion of investment and production tax credits for the solar, wind, and energy storage industries would also be included, although talks are still fluid.

Rep. Don Beyer (D-Va.) said that members will likely be looking at energy sources such as geothermal, solar, and wind that could stimulate the non-fossil fuel industry.

The clean energy package could form part of the basis for broader ongoing negotiations between Democrats and Republicans over extending certain expiring or already-expired industry-specific tax breaks, which include the alternative energy tax breaks.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) has repeatedly pushed to extend tax incentives for the biodiesel industry that expired at the end of 2017.

The solar energy industry has pushed for extension of the solar investment tax credit, which begins phasing out at the end of 2019. The current law provides a 30% tax credit for both residential and commercial solar systems. Multiple renewable groups also want expansion of the investment tax credit to more fully benefit energy storage.

Going Bigger

Kildee and Ways and Means Chairman Richard Neal (D-Mass.) told reproters on Sept. 10 that they would introduce an energy package of some kind.

“I’m pretty committed to getting the EV tax credit extension done,” Kildee said.

The current $7,500-per-vehicle tax credit starts to phase down once a manufacturer sells 200,000 qualifying vehicles. The bill would would grant automakers the credit for an additional 400,000 vehicles beyond the cap.

When asked if the package could also include provisions to make permanent some renewable energy tax credits, Neal said, “I could go bigger on it. Let’s put it that way.”

Beyer said that a green energy package might be an easier lift than a carbon pricing bill in Congress.

“I think a green energy package could be the kind of thing that could appeal much more to Sen. Grassley and some Republicans over there,” he said, adding that the electric vehicle credit would likely be the centerpiece of the package.

Though it’s unclear if the legislation would be drafted to be revenue-neutral, sources indicated that the package should reduce tax benefits for fossil fuel industries—although which benefits hasn’t been decided. That would be a nonstarter for congressional Republicans and the Trump administration.