Energy tax credits in final budget deal
- Tax credits for nuclear power, carbon sequestration and small natural gas and renewable energy technologies were included in a Congressional budget deal that passed in the early hours of Friday morning and was later signed by President Trump.
- The so-called tax extenders were included in a Senate version of the bill released Wednesday night, but had faced opposition from some Republican lawmakers in the House, making their inclusion in the final bill uncertain.
- Congressional lawmakers, however, kept the extenders in the final version of the bill. A spokesperson for the House Ways and Means Committee said dealing with the 2017 extenders now will help Congress move forward with a "clean slate" and assess which extenders are still necessary under the new corporate tax code.
The last-minute inclusion of a raft of energy tax extenders in a Congressional budget deal could give a boost to a variety of technologies that were left out of the Republican tax overhaul at the end of last year.
Those provisions include nuclear tax credits vital to the completion of the sole nuclear energy project under construction in the United States today. Under current law, the $0.018/kWh production tax credit for nuclear plants has an in-service deadline of Dec. 31, 2020, likely too soon for Southern Co.'s Vogtle plant, under construction in Georgia, to be completed.
The budget bill would lift that deadline for plants up to 6,000 MW, allowing Southern to pocket up to $2 billion in incentives for the expanded plant, according to Bloomberg.
The provision could also assist emerging nuclear technologies, such as small nuclear reactors (SMRs) in development today. This week representatives from the Department of Energy told a House committee those technologies could be a "game changer" for the troubled U.S. nuke sector.
The proposed bill would also extend property tax breaks for a number of small gas and renewable technologies. CHP, microturbines and fuel cells would all be given five-year extensions. Companies could also earn tax credits for every ton of carbon emissions they store through a carbon capture technology, potentially boosting a sector wounded by the cancellation of a major "clean coal" project last year. All included energy tax credits that lapsed at the end of 2017 would be retroactively reinstated for one year.
Some House lawmakers, such as Ways and Means Chairman Kevin Brady (R-TX), were reportedly skeptical of including tax extenders in the budget deal. But a spokesperson for the committee said Thursday that their inclusion will help will allow Congress prepare for a broader review of extenders this year.
"Taking care of these as quickly as possible gives the IRS time to be ready for tax filing season and prevents filing issues for taxpayers," the Ways and Means spokesperson said. "So now we have addressed the extenders under the old tax code – and members can move forward with a clean slate and ask themselves: What role should extenders play under our new tax code?"
"As Chairman Brady and Chairman Buchanan said at the gaggle on Tuesday, we will be examining these provisions closely moving forward," the spokesperson added.
The House voted to pass the budget deal at about 5:30 Friday morning after the Senate approved it hours earlier. President Trump signed the bill before 9 a.m. on Friday.
This post has been updated to reflect passage of the budget deal.
- US Senate Budget bill text
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