Tax credits that would benefit biofuel producers and a nuclear reactor project being constructed by Southern Co. are among the energy incentives in a budget deal that Congress must pass by midnight to keep the government open.
The tax incentives, which were left out of the broad package of tax cuts passed by Congress in December, were added to a bipartisan, two-year agreement, unveiled by Senate Republicans late Wednesday. The legislation is slated for a Senate vote Thursday before it moves to the House where it faces a much steeper climb.
The inclusion of the credits, which range from incentives for energy efficiency to fuel cell vehicles, represents a victory for energy industry lobbyists, who unsuccessfully fought to get them into the tax bill. At the same time, it represents a compromise as many of the credits will only apply to 2017 production, instead of the two years they had advocated for.Among the tax credits that were retroactively extended through 2017 after expiring at the end of 2016 is the $1-a-gallon tax credit for mixing biodiesel, an incentive that helps producers like Ames, Iowa-based Renewable Energy Group Inc. A $1.01-a-gallon tax credit for the production of cellulosic ethanol — which, unlike traditional corn ethanol, is made from garbage, algae and corn stover — would also receive a retroactive extension through 2017.A separate measure extending a production tax credit for nuclear power that would benefit Southern Co., which is struggling to complete new nuclear reactors in Georgia, is also included in the package.
Following the bankruptcy of the project’s contractor, Westinghouse Electric Co., the plant isn’t likely to be in service before 2021, when the federal production tax credit for new nuclear power generation is due to expire. The bill also tweaks the credit so that Southern’s non-profit municipalities, which include Oglethorpe Power Corp. and Municipal Electric Authority of Georgia, can take advantage of the credit, which is worth hundreds of millions of dollars.
Oil companies, labor unions, and environmental groups also successfully persuaded lawmakers to renew –and expand — a tax credit that rewards businesses for every ton of carbon dioxide they capture.
Under current policy, the credit for that captured gas — worth $10 or $20 per ton, depending on how it is stored — runs out once 75 million tons worth of credits are used. The provision is seen as benefiting companies like Exxon Mobil Co. and Occidental Petroleum Corp., which use captured CO2 in enhanced oil recovery projects, said Cheryl Wilson, a Bloomberg Intelligence energy policy analyst.
The package also includes a multi-year extension and phaseout of tax credits for technologies like small wind projects, geothermal heat pumps, fuel cells and other energy sources. The credits known as “orphans” after being left out of a 2015 deal that that extended credits for wind and solar, would be phased-out starting in 2020 before expiring in 2022.
Source: Bloomberg
