U.S. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., announced the Clean Energy for America Act Thursday, May 4.
This legislation is intended to “measurably reduce carbon pollution over the next decade through a series of incentives for clean energy and the promotion of new technologies in the private sector.” The act includes technology neutral tax credits for domestic production of clean electricity and clean transportation fuel, as well as performance-based tax incentives for energy-efficient homes and office buildings. The credits are open to all resources, including fossil fuels that capture carbon or make efficiency improvements.
“This bill is built around the proposition that the law ought to reward innovative energy technologies with incentives that spark investment in the private economy,” Wyden said. “These investments will shrink electric bills for American families and create new clean energy jobs in Oregon and across the country.”
Currently there are 44 different energy tax incentives, more than half of which are too short-term to effectively stimulate investments, while also providing different subsidies to different technologies with no clear policy direction, according to a press release from the U.S. Senate Committee on Finance. Wyden’s bill proposes a dramatically simpler set of long-term, performance-based energy tax incentives that are technology neutral and promote clean energy production and storage in the U.S.
In essence, “The bill creates a performance-based incentive that would be neutral and flexible between clean electricity technologies. Taxpayers are able to choose between a production tax credit (PTC) and an investment tax credit (ITC), which are scaled based on the carbon emissions of the electricity generated – measured as grams of carbon dioxide equivalents (CO2e) emitted per kilowatt hour (KWh) generated. Power plants that emit at least 35 percent less carbon than the current nationwide average begin qualifying for a small incentive, which increases for power plants that are progressively cleaner. Zero emission facilities qualify for the maximum credits – a 2.3 cents per KWh hour PTC or a 30 percent ITC. The PTC is available for the 10 years after a facility is placed in service.”
Specific to hydropower, the bill says that: “Power plants placed in service before January 1, 2019 that add energy storage technology or carbon capture equipment are able to claim the maximum 30 percent ITC for those investments, which can enhance grid stability and reduce the emissions of current fossil fuel power plants. Storage technologies include hydroelectric pumped storage, thermal energy storage, fuel cells, and batteries, among others.”
For the full text of the bill, click here.