Washington – A proposal to hit oil companies with $29 billion in new taxes advanced Tuesday in the Senate, targeting the money to energy conservation, wind turbines, electric hybrid cars and clean coal technology.
The massive tax package, double what Democrats had talked about as recently as last week, is “designed to promote clean and sustainable energy,” said Sen. Max Baucus, D-Mont., chairman of the Finance Committee that approved the measure.
It will be added to energy legislation being considered by the full Senate.
Senators acknowledged that oil companies would howl over the new taxes.
But Sen. Chuck Grassley, R-Iowa, said, “We have entered a new era in energy markets … (that) requires a dramatic shift away from tax incentives for oil and gas production” and toward support for other energy sources and efficiency.
Sen. Ken Salazar, D-Colo., sits on the Finance Committee and put two tax incentives in the bill.
In the first, homeowners who purchase residential wind systems generating less than 100 kilowatts of electricity would qualify for a tax credit equal to 30 percent of the system’s cost, up to a maximum of $4,000. It may be extended to small businesses before a final vote.
Salazar also added a tax credit for businesses that make ethanol using plant matter. That subsidy would be 50 cents per gallon for up to 60 million gallons in a tax year. That will come on top of the 51-cents-per-gallon ethanol credit and 10-cents-per-gallon small-business credit already given to ethanol producers.
On the floor, meanwhile, senators rejected two proposals aimed at accelerating the development of liquefied coal for use as a substitute for diesel and jet fuel. Environmentalists say liquefied coal produces more than twice the greenhouse gases of conventional diesel.
Supporters argued that coal is America’s most abundant energy resource.
“It would be downright foolish not to take advantage of this resource,” said Sen. Mitch McDonnell, the Republican leader from Kentucky.
A proposal by Sen. Jim Bunning, R-Ky., that would have required the use of 6 billion gallons of liquefied coal a year by 2022, was rejected 55-39. A second measure that would have authorized $10 billion in federal loans to help build coal-liquefaction plants, offered by Sen. Jon Tester, D-Mont., was turned back 61-33.
The tax package that emerged from the Finance Committee would funnel about $11 billion over 10 years into the development of renewable fuels in a combination of extensions of existing tax breaks and new tax benefits. An additional $18 billion in tax breaks – from tax credits to clean and renewable energy bonds – also were approved.
To pay for the reductions in revenue, the legislation targeted the large oil companies, ending a number of tax benefits, some provided as recently as three years ago, and imposing new taxes.
The measure would extend and increase taxes paid under an oil-spill liability law and eliminate existing tax credits involving foreign oil production.
Denver Post staff writer Anne C. Mulkern contributed to this report.
