Republicans and Democrats Cannot Agree on Clean Energy Tax Credits

The Senate bill reauthorizing the Federal Aviation Administration will move forward without a provision extending tax credits for renewable energy sources, after conservative groups waged a campaign against the provision.

Democrats had previously threatened to block the entire bill without the tax credits for geothermal, fuel cell and other alternative sources, but they relented on Tuesday when it became clear that the bill would not pass because of Republican opposition. Democrats said they will let the relatively bland FAA measure move forward and work with Republicans on another tax credit bill sometime in the future.

The exact tax credits in question fluctuated, but the negotiations were generally focused on geothermal, fuel cell, combined heat and power systems, and small wind energy. Democrats claimed from the start that the clean energy tax credits they were asking to extend were part of an agreement they reached with Republicans last year. They said these credits were accidentally left out of a year-end deal on taxes and spending. Republicans claim it was actually Democrats’ error in the last-minute back-and-forth rather than a drafting mistake by staffers.

Even though Democrats ostensibly only wanted to fix the orphan measures left over from last year, it was never entirely clear how many clean energy tax credits were going to be included in the FAA bill. Coal companies and environmental groups asked that carbon-capture technologies be included in the tax title of the bill, even though that wasn’t part of the original agreement. Schumer said Republicans supported that measure, along with one supporting natural gas systems.

While party leaders worked behind the scenes on a tax title to the FAA bill, Sen. Heidi Heitkamp (D-N.D.) introduced an amendment extending the tax credit for carbon-capture technology. And Sen. Sheldon Whitehouse (D-R.I.) filed one calling for a tax credit for investment in equipment that captures and reuses greenhouse gases at industrial facilities.

The tax provisions aren’t necessarily dead, even though they couldn’t be latched on to the must-pass FAA bill. Senate Minority Leader Harry Reid (D-Nev.) said Senate Majority Leader Mitch McConnell (R-Ky.) told him they would work something out later. Thune said they could come back up at the end of the year. If the Senate follows its typical pattern, that will likely be after the election, in the lame-duck session.

“There’s always something that happens late in the year,” Thune said. “Generally there’s a tax or some sort of a bill, a tax vehicle that comes out of here that could carry stuff. But I think this is just an acknowledgement that this wasn’t the time and the place to do it.”

The provision lost support when a band of 34 conservative groups, including Americans for Prosperity and Freedom Partners, called on Republicans to oppose the entire FAA bill if any of the clean energy tax provisions were included.

This entry was posted on Sunday, May 1st, 2016 at 6:04 pm. Both comments and pings are currently closed.

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