Senator leader Harry Reid included several "green" provisions in the controversial tax bill, which passed the Senate today.
It includes a one year extension of the Convertible Renewable Tax Incentive – a crucial program allowing investors in renewable energy projects to take their tax break in cash, rather than tax credits. According to a study by the U.S. Partnership for Renewable Energy Finance, the extension would create or preserve 100,000 jobs.
Now the bill goes to the House. Rep. Lloyd Doggett (D-TX) is circulating a letter to Democratic leadership asking for last minute changes to the House bill to include the renewable energy extension. 30 lawmakers have signed Doggett’s letter but expressed frustration that the bill doesn’t extend the clean energy manufacturing credit, they want the ethanol credits reduced, and they’re against including tax credits for coal-to-liquids technology. Read the details.
According to the NRDC blog, the offending provisions are tax credits for corn ethanol and liquid coal.
The bill extends a 50 cent per gallon tax credit for liquid coal transportation fuels – fuels produced by liquefying coal. This provision must be stripped from the bill. Congress should not be doing anything to help a liquid coal industry get off the ground.
The production and use of liquid coal fuels releases more than twice the carbon pollution as conventional fuels. Even if some of the carbon pollution from the production process is captured and disposed, the fuel could still result in more pollution than conventional fuels. There are also the severe environmental impacts from coal mining, which include habitat loss, groundwater contamination and mountaintop removal.
The bill extends the tax credit provided by Sections 6426 and 6427 of the federal tax code. While fuels qualifying for the credit have to come from production facilities that capture and dispose of 75% of their carbon pollution, that’s not enough to bring emissions down to parity with conventional fuels.
Moreover, this incentive is intended to commercialize a fundamentally flawed technology. Once commercialized, there is little evidence that the next generation of plants will perform any carbon and capture at all. See NRDC’s liquid coal fact sheet provides more information about the problems of liquid coal.
The bill includes a one-year extension of the Section 40 corn ethanol tax credit. The corn ethanol lobby went into this year demanding a 5 year extension of this credit (officially called the volumetric ethanol excise tax credit or VEETC).
The Senate and President Obama have seen fit to say no and only offer a one-year extension. This will save tax payers $25 billion. But this is still a huge waste of tax payer dollars. Ending the tax credit now would save an additional $6 billion. Reducing the tax credit by 20% would save $1.25 billion. Saying no to 5 years is a start, but Congress should go further and end this wasteful, environmentally harmful handout. Sending 70 cents of every renewable energy dollar to oil companies to use ethanol defies common sense.