House Democrats have proposed a sweeping package of green energy tax incentives that includes a multiyear extension of the expired biodiesel credit, but it raises new questions about whether the House and Senate can agree on a tax deal before the end of the year.
The biodiesel industry has gone nearly two years now without its $1-a-gallon tax subsidy, but hopes for getting the incentive renewed at least temporarily have been dimming amid House Democrats’ insistence on doing more than reviving expired tax breaks.
On Tuesday, the chairman of the House Ways and Means Committee’s subcommittee on taxation, Mike Thompson, introduced a sweeping package of expanded tax credits for renewable energy and energy efficiency.
The cost of the tax provisions would have to be offset by unspecified tax increases or other increases in federal revenue. That would create a sharp divide with Republicans, who argue that existing tax incentives, including the biodiesel credit, can be extended without spending offsets or tax increases.
Senate Finance Chairman Chuck Grassley, who has proposed reinstating the biodiesel credit for 2018 and 2019, has repeatedly expressed frustration with his inability to reach a deal with Democrats on a narrow bill addressing tax breaks that are expiring this year or have already expired.
The Democrats’ new Growing Renewable Energy and Efficiency Now (GREEN) Act includes the multiyear extension and phaseout of the biodiesel tax credit, something the biodiesel industry supports because of the policy certainty it would provide.
The bill would extend the credit at $1 a gallon through 2021 and then reduce it to 75 cents in 2022, 50 cents in 2023, and 33 cents in 2024.
The credit, which has been expired since the end of 2017, would disappear starting in 2025.
National Biodiesel Board Vice President of Federal Affairs Kurt Kovarik said the previous lapse in the credit means the industry is now in need of a long-term extension.
"We appreciate the recognition — through this proposed long-term extension — that the biodiesel industry is integral to our domestic energy needs," he said in a statement. "We look forward to working with our supporters on Capitol Hill to ensure that consumers, producers and marketers benefit from a long-term, forward-looking pro-growth tax policy."
The bill goes much further to expand credits for wind and solar power ad electric vehicles as well as create tax breaks for green energy jobs and subsidize “environmental justice” educational programs.
House Agriculture Chairman Collin Peterson, D-Minn., told Agri-Pulse he didn’t see how an extenders bill could pass this year.
"They don't have the money. Nobody is going to raise taxes,” he said. “The only way to get money is to cut some other programs.”
But Liam Donovan, a lobbyist with the Policy Resolution Group, said the House bill both lays out a wish list for items to be considered in any end-of-the-year deal while also setting the table for further energy and tax legislation.
The bill also puts leading Democrats on record supporting the multiyear extension of the biodiesel credit.
Even if the credit is ultimately only revived and extended through this year, “the conversation immediately goes to how to resolve these issues so we aren't in the same position two years down the road,” Donovan said.
Grassley, R-Iowa, welcomed the biodiesel provision, something he has supported himself, but he questioned why House Democrats were insisting on expanding green energy incentives rather than reviving those already on the books, like the biodiesel subsidy.
“I am not exactly sure what the motive is particularly bringing out a whole bunch of new tax policy when we can’t even reach an agreement on existing tax policy that’s been around for decades that should be automatically extended like it has in the past,” he said.
He also questioned why the House bill would permanently extend the solar industry’s investment tax credit, which is supposed to phase out in 2021. The credit would be extended at 30% through the end of 2024, phased down to 26% in 2025, 22% in 2026, and then maintained at 10% after that.
The production tax credit for wind energy, which is due to end at the end of this year, would be extended at 60%, up from the current 40%, through the end of 2024.
The bill also would extend the tax credit for alternative fuel vehicle refueling property, which includes ethanol blender pumps, and starting in 2020 electric charging infrastructure would be eligible for a 20% credit for expenses above $100,000.
Ben Nuelle contributed to this report.
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