Comparison of House and Senate energy tax titles

ISSUE

The House-passed New Direction for Energy Independence, National Security, and Consumer Protection Act (H.R. 3221), contains a $16 billion energy tax title.

The Senate failed to include a Finance Committee recommended $32 billion tax package in its comprehensive energy bill, H.R. 6, the Clean Energy Act of 2007.

It is uncertain as to whether the Senate will try to pass a free-standing energy tax bill before the start of the energy bill conference.

This Public Policy Bulletin compares the tax title of the House-passed bill and the Finance Committee approved bill.

RENEWABLE ELECTRICITY

Current Law: There is a tax credit (Section 45) for producing electricity from wind, open and closed loop biomass, small irrigation power and other sources.

House Bill: Extends the credit for four years, through 2012. Tax Savings: $6.58 billion.

Senate Bill: Extends the credit for five years, through 2013.

CELLULOSIC ETHANOL

Current Law: None.

House Bill: Creates a new 50 cent per gallon tax credit through 2010 for cellulosic alcohol made from energy crops, trees, wood and wood residues, plants, grasses, agricultural residues, fibers, animal waste and other materials. Expires after 2010. Tax Savings: $24 million.

Senate Bill: Creates a new production tax credit of 50 cents per gallon for up to 60 million gallons of cellulosic fuel production per facility in a taxable year. The credit terminates the latter of Dec. 31, 2012 or the end of the calendar year when 1 billion gallons of cellulosic alcohol has been produced.

BIODIESEL

Current Law:  There is a $1 per gallon credit for agri-biodiesel (derived from plants) and a 50 cent per gallon credit for biodiesel made from other sources. There is an additional credit of 10 cents per gallon for up to 15 million gallon of agri-biodiesel produced by a facility whose annual production is not over 60 million gallons per year.

House Bill:  Extends the biodiesel credits for two years, through 2010.

Senate Bill: Extends for two years, through 2010, the $1 and 50 cent production tax credits for biodiesel and extends for four years, through 2012, the 10 cent per gallon tax credit on the first 15 million gallons of biodiesel production for producers with annual capacity of not more than 60 million gallons.
 

RENEWABLE DIESEL

Current Law: There is a $1 per gallon credit for renewable biodiesel made from biomass.

House bill: Extends the renewable diesel credit for two years, through 2010. Clarifies that renewable biodiesel does not include fuel derived from co-processing biomass with petroleum.

Senate Bill: Extends for two years, through 2010, the $1 tax credit for renewable diesel and caps, on a per facility basis, the $1 credit at 60 million gallons per year.

DOMESTIC PRODUCTION ISSUES

House Bill: Clarifies that foreign-produced fuel that is used or sold for use outside the United States is ineligible for alcohol, biodiesel, renewable diesel and alternative fuel tax incentives.

Senate Bill: Extends the tariff on imported ethanol for two years, through 2010.

REFUELING STATIONS

Current Law: There is a 30 percent credit for the cost of installing clean-fuel vehicle refueling stations of up to $30,000 per year per business location. Clean burning fuel includes E85 ethanol and fuel containing at least 20 percent biodiesel.

House Bill: Extends the credit for one year, through 2010. Expands the amount of the credit to 50 percent up to $50,000 per year per business location.

Senate Bill: No provision.

ETHANOL

Current Law: There is a 51 cent per gallon tax incentive through 2010.

House Bill: No provision

Senate Bill: Reduces the 51 cent per gallon tax credit for ethanol by 5 cents beginning with the first calendar year after the year in which 7.5 billion gallons of ethanol has been produced.

Senate Bill: Extends for two years, through 2012, the 10 cent per gallon small ethanol producer tax credit on the first 15 million gallons of ethanol production for producers with annual capacity of not more than 60 million gallons.

Senate Bill:  Creates a new small producer alcohol credit of 25 cents per gallon for facilities that produce ethanol through a process that does not use a fossil-based resource through December, 2012.
 

SENATE NON-ENERGY PROVISIONS

Deduction for timber sales: Allows a tax deduction for up to 60 percent of the gains from certain sales or exchanges of timber for one year beginning on the date of enactment.

Rural Renaissance Bonds: Creates a new category of tax credit bonds with a total allocation of $400 million for projects such as rural electric and telemedicine, rural broadband and other community projects.

Secure Rural Schools and Payment in Lieu of Taxes: Reauthorizes the Secure Rural Schools program and extends it through 2011 and also provides for full funding for the Payment in Lieu of Taxes program from 2008 through 2012.
 

ACTION

No action necessary.