On Thursday, September 18, Rep. Earl Blumenauer (D-OR) led a group of 18 House Democrats in introducing the Bridge to a Clean Energy Future Act of 2014 (H.R. 5559). The bill would extend several energy tax incentives—many of which Congress allowed to expire at the end of 2013—through the end of 2015. The bill would also extend the production tax credit (PTC), as well as the election to receive an investment tax credit (ITC) in lieu of the PTC, for facilities producing energy from renewable resources through the end of 2016.
In particular, the bill includes the following provisions:
- Extension and modification of credit for nonbusiness energy property (Section 25C)
- Extension of credit for alternative fuel vehicle refueling property (Section 30C)
- Extension of credit for 2‐wheeled plug‐in electric vehicles (Section 30D)
- Extension of second generation biofuel producer credit (Section 40)
- Extension of incentives for biodiesel and renewable diesel (Section 40A)
- Extension and modification of production credit for Indian coal facilities placed in service before 2009 (Section 45(e)(10))
- Extension—through the end of 2016—of the PTC and the election to receive the ITC with respect to facilities producing energy from certain renewable resources (Sections 45 and 48)
- Extension of credit for energy‐efficient new homes (Section 45L)
- Extension of special allowance for second generation biofuel plant property (Section 168(l)(2))
- Extension and modification of energy efficient commercial buildings deduction (Section 179D)
- Extension of excise tax credits relating to certain fuels (Sections 6426 and 6427)
- Extension of credit for new qualified fuel cell motor vehicles (Section 30B)
- Extension of special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities (Section 451)
The Senate Finance Committee’s tax extenders package, called the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, would also extend these provisions. However, Rep. Blumenauer’s bill contains two additional provisions not included in the EXPIRE Act.
- Extension of the advanced energy project credit. The bill would fulfill the commitment of $5 billion of grants or tax credits under Section 48C to U.S. manufacturers of goods and components used in alternative energy projects.
- Extension of energy credit for certain property under construction.The bill would modify the 30 percent ITC under Section 48 to make solar, fuel cell, microturbine, combined heat and power, small wind, and thermal energy projects eligible for the credit as long as the construction of the project begins before January 1, 2017. Under current law, a facility must be “placed in service” by the end of 2016 in order for the taxpayer to be eligible for the ITC. Congress made a similar change to the PTC last year.
Although H.R. 5559 was introduced by a group of House Democrats, who remain in the minority, the bill is significant for a few reasons. Even though it is highly unlikely the House would pass the bill under regular order, proponents are attempting to position the bill as a marker indicating the consensus Democratic stance on energy tax extenders heading into the Lame Duck session at the end of the year. If these efforts are successful, it’s possible that Senate Democrats could use the bill as their negotiating position on energy taxes with the House—increasing the likelihood that Congress could enact this particular version of energy tax extenders into law. Additionally, the bill is significant in that it features the “commence construction” requirement for the ITC under Section 48. The solar industry, in particular, has advocated strongly for this provision since Congress amended the PTC in early 2013.
It remains to be seen how Congress ultimately handles the broader issue of tax extenders in the Lame Duck session. Businesses with an interest in these provisions should make sure their voices are heard as lawmakers debate the issue at the end of this year.