Sen. Ron Wyden, D-Ore., on Wednesday introduced a bill that would eliminate tax breaks for fossil fuels and create new incentives for zero-emissions energy resources.
The policy is technology-neutral and would create tax incentives for resources that emit zero or net-zero emissions, while providing a 30% investment tax credit for qualifying grid improvements like energy storage and transmission. It also increases the electric vehicle tax credit for commercial vehicles to 30% of the vehicle's purchase price.
Wyden's bill complements President Joe Biden's efforts to eliminate fossil fuel subsidies, and proposals by the administration to extend tax credits for wind and solar power, while creating new credits for energy storage, transmission and other resources.
Wyden had pushed to include wind and solar tax credits extensions and new credits for electric vehicles and other clean energy resources in the Senate Energy and Natural Resources Committee's comprehensive clean energy bill, passed at the end of last year under a broader federal stimulus package.
Though the bill ultimately extended tax credits for wind and solar, and added an additional credit for offshore wind, incentives for storage and EVs were not included. But Biden, in his budget request for fiscal year 2022 included a proposed storage and transmission credit.
Now, Wyden, who chairs the Senate Finance Committee, is proposing a broad overhaul of U.S. energy tax incentives, to ensure any resource or technology that allows the grid to become greener is incentivized, and any tax breaks specific to fossil fuels are eliminated — though emitting resources could still qualify if paired with carbon capture technology. It also includes performance incentives for making buildings more energy efficient and moving the U.S. vehicle fleet toward more electric vehicles.
President Barack Obama had also tried to eliminate fossil fuel tax credits in his fiscal year 2011 budget proposal.
"America's tax code is rigged in favor of dirty fossil fuels and Big Oil," Wyden said in a tweet. "It's time to bring our energy tax credits into the 21st century to promote clean energy jobs and renewable energy."
Power producers can qualify for either an investment or production tax credit for their zero or net-zero power facilities, and homeowners can qualify for a tax credit by installing onsite clean energy generation, such as rooftop solar. The bill would also incentivize broader grid improvements such as high-voltage transmission and energy storage; and incentivize fuels 25% cleaner than the current nationwide average.
Clean energy, efficiency and renewables advocates praised the proposed legislation.
"With full-value credits pegged to emissions reduction targets, the Clean Energy for America Act is structured to unleash the private sector investment necessary to decarbonize the power sector," said Gregory Wetstone, president and CEO of the American Council on Renewable Energy, in a statement. "The bill's forward-looking inclusion of critical grid-enabling technologies like energy storage and high-voltage transmission will enhance reliability and lower consumer costs, while its direct pay option will maximize deployment by the broadest universe of stakeholders."