FRIENDS OF THE EARTH & U.S. PIRG ANAYLSIS
Final Energy Tax Package Overwhelmingly Favors Polluting Industries:
The Energy Tax Title (Title XIII) of H.R.6—the energy conference report—provides more than twice as many tax breaks to the nuclear, coal, oil and gas industries as it does to clean alternatives and energy efficiency. This continues a long history of the federal government favoring polluting energy sources over renewables, underscoring again how the energy bill will do little to shift America toward a clean energy future.
Although the energy bill officially includes $14.5 billion in tax breaks, the true cost of the bill is more than $20 billion since the bill includes a tax credit for nuclear power that is worth $6 billion, which is unaccounted for. Of the $20 billion in tax breaks more than $12.8 billion (or 64 percent) benefit fossil fuels and nuclear power. Comparatively, the bill includes $5.3 billion (or 26 percent) for renewables, energy efficiency, and clean vehicles combined. To make matters worse, the bill makes Indian coal eligible for the renewable energy tax credit and significantly scales-back the incentives for energy efficiency that were included in the Senate-passed bill.
Nuclear Power Incentives – Cost: $7.3 billion
The energy bill provides the nuclear industry with $7.3 billion in tax breaks including a production tax credit worth $6 billion. The production tax credit provides an annual credit of up to $125 million per 1000 MW plant. Each plant is eligible to receive the credit for eight years, which could amount to $1 billion tax credit per 1000 MW plant. The credit is available for 6000 MW of nuclear capacity. This credit is addition to the loan guarantees, risk insurance, limited liability insurance, deployment subsidies and research and development subsidies that the nuclear industry also receives in the final energy bill. The industry also receives a $1.3 billion decommissioning tax break.
Coal Incentives – Cost: $2.8 billion
The final energy tax package includes $2.8 billion in tax breaks for the coal industry including a $1.6 billion investment tax credit for new coal facilities. The bill establishes three new investment tax credits for coal that range from 15 to 20 percent of the cost of the facility. The bill also includes tax deductions for installing polluting control facilities. These billions of dollars in tax credits are in addition to the $6 billion in subsidies already included in the bill through the Clean Coal Program, the Clean Air Coal Program and research and development. The energy bill also provides loan guarantees for at least 16 new coal plants.
Oil and Gas Incentives – Cost: $1.7 billion
Although oil and gas companies are enjoying record profits, the energy tax package provides the industry with nearly $2 billion in additional tax breaks. One of the most egregious giveaways would enable the oil and gas companies to deduct the costs associated with exploring for oil and gas. Even in instances when the industry discovers oil they would be eligible for the deduction. These tax breaks are in addition to the several other giveaways that are already included in the energy bill for the oil and gas industry. For example, the final bill now includes a $1.55 billion ultra-deepwater program, of which $550 million would be mandatory spending that would be guaranteed to the industry.
Utilities – Cost: $1 billion
The energy bill includes a $1 billion giveaway to the utilities that would enable them to write-off the cost of natural gas distribution lines over a 15 year period instead of a 20 year period, as required under current law. Given the price of natural gas this is an unnecessary give away to the utilities.
Renewable Energy Incentives – Cost: $3.2 billion
The energy bill extends the production tax credit for renewable energy for only two years—the Senate bill extended the credit for three years. The credit is extended to geothermal and biomass facilities but unfortunately also includes Indian coal and hydropower. This tax credit is one of the few provisions in the energy bill for renewable energy and it is only an extension of existing policy. The bill includes virtually no new policies for renewable energy.
Energy Efficiency and Vehicle Incentives– Cost: $2.1 billion
The final energy tax package includes significantly fewer tax credits for energy efficiency and clean vehicles than were included in the final Senate bill. The bill includes a 10 percent investment credit for improvement in energy efficiency to existing homes, a small manufacturing credit energy efficient appliances, and significantly scaled-back credits for cleaner, more efficient vehicles.
For more information contact:
Navin Nayak, 202-546-9707, U.S. Public Interest Research Group
Erich Pica, 202-222-0739, Friends of the Earth