A Republican congressman from Kansas plans to introduce a bill this week to end all tax credits for the energy sector, saying he believes it’s time for conventional and alternative sources alike to show their worth without government help.
Rep. Mike Pompeo, R-Kan., told lawmakers in a letter last week that his bill would save the U.S. government up to $90 billion over 10 years in what he says is spending that distorts the market. He pointed to the ongoing scandal over the Energy Department’s $535 million loan guarantee to the now-bankrupt Fremont, Calif., solar-panel maker Solyndra LLC.
“The Solyndra scandal has demonstrated the danger of government interference in energy markets,” he wrote, calling his bill “a reasonable approach to ending the decades-long practice of trying to pick winners and losers.”
Among the credits the bill would end are the renewable electricity production tax credit, which rewards companies for each kilowatt-hour of generating capacity they install from sources such as wind, biomass, geothermal, landfill-gas, municipal-waste or hydroelectric. Credits for plug-in electric and fuel-cell vehicles and alternative fuels would also end.
The bill would also end credits for enhanced oil recovery and technologies that reduce emissions from coal.
Pompeo wrote that his bill would preserve “general deductions available to multiple industries.”
But his legislation is sure to face resistance. Democrats, who control the Senate, have sought to target tax breaks for oil-and-gas companies but may be hesitant to end federal support for alternative sources, which they say can help address pollution and climate change.
The American Wind Energy Association, a wind-power trade group in Washington, has issued a statement blasting Pompeo’s bill.
“Representative Pompeo seems to misunderstand how a key federal tax incentive has built a thriving American wind manufacturing sector and tens of thousands of American jobs,” CEO Denise Bode said in a statement, referring to the production tax credit for wind electricity, which will expire after Dec. 31, 2012, without action from Congress.
Bob Deans, associate director of communications for the environmental group Natural Resources Defense Council, has criticized Republicans for using the Solyndra scandal to target all clean energy: “We should learn the lessons of Solyndra, to be sure, but then move forward – because, as China and our other global competitors have grasped all too well, solar energy, wind, and other emerging technologies hold the promise and potential to help power the world into the 21st century.”
Pompeo also said his bill would be revenue-neutral by including a corporate tax rate reduction that corresponds to the money his bill saves.
The bill isn’t meant to raise money for the government, Pompeo said, “but rather to correct decades of taxpayer funded handouts to industries more than capable of thriving in the open market.”
A list of tax credits his bill will target, according to the letter:
Plug-in electric and fuel cell vehicles
Alternative fuel and alternative fuel mixtures
Cellulosic Biofuel Producer Credit
Alternative fuel infrastructure
Production Tax Credit for electricity produced from renewable sources, including wind, biomass, and hydropower
Investment Tax Credit for equipment powered by solar, fuel cells, geothermal or other specified renewable sources
Enhanced oil recovery credit, and credit for producing oil and gas from marginal wells
Advanced Nuclear Power Generation Credit
Clean coal investment credits
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