Evergreen Energy Inc EEE

Tax Credit''s Pass House , Good for EEE

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RENEWABLE ENERGY: House tax bill extends credits, punishes oil (02/13/2008) Katherine Ling, E&E Daily reporter House Democrats yesterday introduced their highly-anticipated $18 billion renewable energy tax credit extension funded in part by repealing oil tax benefits. But the House will not vote on the measure until after the Presidents' Day recess. "It remains a top priority at a time of economic difficulty, and the House will act on it shortly," said Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi (D-Calif.). Elshami said Democrats had the votes needed to pass the measure. The plan is very similar to a tax package the House passed in August that was ultimately taken out of the 2007 energy bill in order to garner Republican votes. Senators doubtful Although most senators wanted to reserve judgement of the House bill until it came out, they expressed doubt as to its chance for success in the Senate. "It's going to have to be reworked," said Finance Committee Chairman Max Baucus (D-Mont.). "We'll have to scrub it so that we see if we can find a way to get 60 votes, basically." Baucus said he wasn't sure when his committee would take up the bill, although he has previously stated he would like to get a renewable energy tax credit extension passed this year. Aside from the oil tax repeal, another early point of contention could be the cap on production tax credits placed on wind. Sen. Charles Grassley (R-Iowa), ranking member of the Finance Committee, removed an identical cap last time, calling it "misdirected." Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) said while he favored the tax provisions, he wasn't sure the votes were there to pass it. He said he favored the Senate version of the tax package last year, which did not include the aforementioned cap or the 6 percent freeze on smaller oil and gas producers, and would only extend production tax credits for two years (Greenwire, Dec. 12, 2007). The energy bill that included this revised tax package failed to achieve cloture in the Senate by only one vote last year. Budget Commitee Chairman Kent Conrad (D-N.D.) said, "I think just going with the exact same package probably doesn't maximize its chances of success. To me it is always wise to listen to those in opposition and try to adjust." Targeting oil taxes House Democrats quickly rolled out the tax package after major oil companies announced record-breaking profits over the last couple of weeks. ExxonMobil shattered another record profit, earning $11.7 billion in the last quarter and totaling over $40 billion in profits in 2007. Democrats again financed 50 percent of the renewable credit extensions by ending deduction eligibility for the five biggest integrated oil companies -- BP, ExxonMobil, ChevronTexaco, Royal Dutch Shell, and ConocoPhillips -- on income from domestic manufacturing. And the House would again also freeze these "section 199" benefits for all other oil and natural gas producers at 6 percent. The bill also includes an identical proposal of "clarification" on how oil and gas companies claim foreign tax credits. Democrats estimate the clarification would be worth $4 billion over ten years. The repeal of these oil tax measures drew heavy criticism from Republicans and a veto threat from the White House during the last go-around in December and do not appear to be any more popular this time around. Red Cavaney, the president of the American Petroleum Institute, said yesterday in Houston that the proposed bill would siphon money that would have been used to develop new energy supplies. "If you are going to penalize the industry with punitive taxes, that is investment that will not get made," he said at the annual Cambridge Energy Research Associates conference. The bill would extend production tax credits for wind, biomass, geothermal, small hydropower, landfill gas and trash combustion facilities through 2011. But after 2009 the bill would cap credits to 35 percent of a facility's cost. Solar energy and fuel cell property would receive a 30 percent investment tax credit for eights years under the act. Tax credits for residents who take measures to improve the energy efficiency of their homes would be extended for two years. Those who generate their own renewable power would receive an additional six years of credit. The bill would also authorize $2 billion in clean renewable energy bonds to help electric cooperatives and municipals construct new green generation, establish a new credit for plug-in hybrid vehicles that draw from a battery that holds at least 5 kilowatt hours of capacity, and extend production tax credits for domestically produced and consumed cellulosic ethanol and biodiesel. Biofuels Also included in the House bill is a provision that directs the Treasury, Agriculture and Energy departments and the U.S. EPA to request the National Academy of Sciences produce an analysis of "current scientific findings relating to the future production of biofuels and the domestic effects of a dramatic increase in the production of biofuels." Two reports published on Thursday in the journal Science reported that producing ethanol could generate more life-cycle carbon emissions than are saved in its usage because of carbon absorbing plants that are lost due to land conversion to plant the crops (E&E Daily, Feb. 7). The 2007 energy bill included a provision that required the country to use 36 billion gallons of ethanol and other biofuels by 2022.