Congress appears poised to pass a sweeping overhaul of the federal tax code this week, and while controversial House provisions targeting key renewable breaks were dropped from the final bill, renewable interests remain concerned over its possible long-term effects on investment.
As expected, the final conference report unveiled Friday rejected the House’s push to trim the value of the renewable production tax credit, impose new construction qualification terms for renewable projects and sunset part of the investment tax credit (E&E Daily, Nov. 3).
The top solar trade group hailed the omission of these provisions. “This is a great victory for the solar industry and its 260,000 American workers and we commend our bipartisan solar champions in Congress for their diligent efforts to maintain solar’s critical role in America’s economy,” said Solar Energy Industries Association CEO Abigail Ross Hopper in a statement.
Also gone from the final bill is the House’s effort to repeal the $7,500 credit for electric vehicles, as well as extensions of a handful of “orphaned” renewable technologies that were left out of a 2015 tax deal.
The focus on the orphaned tax credits, which include fuel cells and combined heat and power facilities, will shift to a separate so-called tax extenders legislation, which could emerge as soon as this week, as advocates look to attach it to spending legislation.
Other possible offerings for the extenders package include a key nuclear production tax credit and a revised incentive to boost carbon capture and sequestration technologies (E&E Daily, Dec. 15).
Despite compromise language intended to ease the potential impact of base erosion anti-abuse tax (BEAT) provisions on renewable investment, green business groups warned over the weekend that the fix will continue to inject uncertainty.
While the final bill would allow key renewable tax breaks to offset up to 80 percent of the BEAT, American Council on Renewable Energy (ACORE) CEO Gregory Wetstone noted the “applicability of the new tax” was expanded by conferees, a change whose long-term consequences will take time to fully understand.
“We are uncertain how the marketplace will react to the fact that more multi-national firms may now be covered by the BEAT, and tax credits may not all be useable in any given year,” he said in a statement.
“We note that many tax equity investors are potentially subject to the BEAT tax and will only [be] able to determine if they are covered under the complex formula in the new law once they have completed their year-end tax calculations,” he said.
Additionally, ACORE noted the compromise exemption for renewables ends after 2025, when only the research and development tax credit can be used to offset BEAT liability.
Sen. Cory Gardner (R-Colo.), one of several pro-renewable GOP senators who were working to address BEAT concerns, said last week that effort could continue in the expected extenders debate.
For their part, Senate Democrats vowed to push for bipartisan fixes to any renewable issues that emerged from the tax push (E&E Daily, Dec. 13).
Those efforts could also materialize in an expected push to make “technical corrections” to the broader tax bill in the new year.
Despite protests across Alaska late last week, the final tax bill also would open a portion of the Arctic National Wildlife Refuge to oil and gas drilling, which was hailed by the Frontier State’s congressional delegation.
“If we can successfully pass this legislation, the ultimate result will be more domestic jobs, larger paychecks, and greater energy security – and that is exactly what Alaska and our country need right now,” said Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska).
Should the bill pass as expected, environmentalists are certain to challenge in court any efforts by the Trump administration to establish drilling rules and schedule lease sales.
Republicans appear to have the votes locked up in both chambers. In an appearance on ABC’s “This Week,” Senate Majority Whip John Cornyn (R-Texas) said yesterday he was “confident” the Senate would pass the bill as early as tomorrow.
While the health of Sen. John McCain has been of concern after the Arizona Republican missed votes last week as he recovers from treatment for brain cancer, the announcement by Sen. Bob Corker (R-Tenn.) on Friday that he will support the final bill may not require McCain’s presence to provide a majority.
“I won’t speculate on Senator McCain’s health,” Cornyn said. “We hope he comes back.”
In the House, where the Rules Committee is slated to meet this afternoon to prepare the bill for floor debate, Ways and Means Chairman Kevin Brady (R-Texas) struck an upbeat tone yesterday on Fox News.
“I think we are headed – the American people are headed – for a big win on Tuesday,” Brady said.
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