Senator Wyden Faces Obstacles To Permanent Clean Energy Tax Break Plan

The tax code for clean energy is broken, said Sen. Ron Wyden (R-OR) on Tuesday. Now that the Biden administration is in gung-ho Captain Planet mode, it is time to give clean power producers the same long-term tax incentives that oil and gas have been getting, steadily, for many consistent years, Wyden and other Senators believe.

“The energy tax code in America is a cluttered, old heap of more than 40 different tax breaks for a variety of energy sources and technologies, including clean energy and transportation. Most of those incentives are temporary,” Wyden said during a Senate Finance Committee hearing titled Climate Challenges: The Tax Code’s Role in Creating American Jobs, Achieving Energy Independence and Providing Consumers with Affordable Clean Energy. He is the Committee Chairman.

Wyden opened the hearing by saying in his testimony that temporary tax breaks “keep clean energy businesses in a state of limbo.” He faced some opposition from witnesses on “picking winners and losers”.

What Witnesses Said

Maria Pope, CEO of Portland General Electric said they were doing their part to reduce C02 from power generation but told the Senate that it was “imperative that federal policy does not pick winners and losers regarding technologies or which entities can deploy the new resources that will be needed. It’s clear that the nation needs all parties, especially those responsible for delivering reliable power, to be able to develop and deploy new resources.”

By all parties, Pope is talking about fossil fuel producers, which account for half of all power generation in the U.S. In Oregon, 61% of electric power is generated from natural gas (38.4%) and coal (23.4%).

From the American Enterprise Institute’s Senate Finance Committee testimony of April 27, 2021.

Witnesses representing the private sector, particularly the energy sector, are worried about Biden’s new tax plans. Federal tax and regulatory reform over the last four years have led to substantial wage growth across many occupations and new job creation. But the pandemic wiped a lot of that out.

Kevin Sunday, a government affairs officer for the Pennsylvania Chamber of Commerce said that the pandemic wiped out a “decade” worth of gains. “All sectors of Pennsylvania’s economy fared worse than national averages in terms of lost jobs in 2020,” he told the Senate in his opening testimony. “Congress must not burden our state with uncompetitive, anti-growth tax and regulatory policy,” he said.

Wyden used part of the day to tout his Clean Energy for America Act legislation.  The bill creates a technology-neutral incentive for the domestic production of clean fuels without specifying their source – meaning it could be nuclear as well as natural gas. It also encourages transportation electrification through long-term incentives for battery and fuel cell-powered cars, and electric vehicle charging stations.

The bill has no Republican co-sponsors and calls for the repeal of tax incentives for fossil fuels, “ensuring the tax code rewards only clean energy,” the bill states. It would also provide incentives for people with solar panels on their roofs that add electricity to the power grid, though the Senate should be made aware that those incentives would likely help promote the import of solar panels from China.

From the American Enterprise Institute Senate Finance Committee testimony of April 27, 2021.

For his part, Senate Finance Committee co-chairman Mike Crapo (R-ID) highlighted the 2019 Energy Sector Innovation Credit bill, which counts Democrats and Republicans as co-sponsors.

“I support taking a neutral approach to energy tax credits,” he said, adding that this bill–would target tax credits for innovative clean energy technologies.

There is no hard and fast outcome on any of these climate change-related policies. CPA will continue to advocate for a Buy American approach in order to make sure that tax benefits are going to support U.S. innovation and the long-term growth of the clean energy manufacturing base.