Wyden, Colleagues Introduce Legislation to Overhaul Energy Tax Code, Create Jobs, Combat Climate Crisis

Bill would consolidate more than 40 energy incentives into three emissions-based incentives to create jobs and combat climate crisis

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., and 24 colleagues today introduced legislation to overhaul the federal energy tax code, create jobs and combat climate change. The Clean Energy for America Act would consolidate current energy tax incentives into emissions-based provisions that incentivize clean electricity, clean transportation and energy efficiency. The incentives would be available to all energy technologies as long as they meet emissions reduction goals.

The bill is cosponsored by Senators Debbie Stabenow, D-Mich., Chuck Schumer, D-N.Y., Maria Cantwell, D-Wash., Tom Carper, D-Del., Ben Cardin, D-Md., Michael Bennet, D-Colo., Sheldon Whitehouse, D-R.I., Maggie Hassan, D-N.H., Catherine Cortez Masto, D-Nev., Dianne Feinstein, D-Calif., Dick Durbin, D-Ill., Amy Klobuchar, D-Minn., Jeanne Shaheen, D-N.H., Kirsten Gillibrand, D-N.Y., Richard Blumenthal, D-Conn., Brian Schatz, D-Hawaii, Mazie Hirono, D-Hawaii, Martin Heinrich, D-N.M., Tim Kaine, D-Va., Cory Booker, D-N.J., Chris Van Hollen, D-Md., Tina Smith, D-Minn., Tammy Baldwin, D-Wis., and Jacky Rosen, D-Nev.

“Energy policy is tax policy, and the federal tax code is woefully inadequate to address our energy challenges. It’s a hodgepodge of more than 40 temporary credits that don’t effectively move us toward the goals of reducing carbon emissions and lowering electricity bills for American families. Simply extending the status quo will not get the job done,” Chair Wyden said. “The Clean Energy for America Act tosses those 40 temporary credits aside, replacing them with emissions-based, technology-neutral credits to turbocharge investment in clean electricity, clean transportation and energy conservation. It would both put us on the path to achieving our emissions reductions goals and create good-paying jobs, and should be the linchpin of our clean energy efforts as we consider President Biden’s jobs package.”

To incentivize clean electricity, the bill would provide an emissions-based, technology-neutral tax credit for facilities with zero or net negative carbon emissions. Any new zero-emission facility may elect either a production tax credit of up to 2.5 cents per kilowatt hour, or an investment tax credit of up to 30 percent. In addition, investments in critical grid improvements, like stand-alone energy storage and high-capacity transmission lines, would qualify for the full-value investment tax credit.

To encourage clean transportation fuel, the bill would provide long-term incentives for battery and fuel cell electric vehicles and electric vehicle charging. It would also provide a technology-neutral tax credit for domestic production of clean transportation fuel that are at least 25 percent cleaner than average, with clean fuels required to reach net zero by 2030 in order to qualify.

To incentivize energy conservation, the bill would provide a performance-based tax incentives for energy efficient homes and for energy efficient commercial buildings. The value of the tax incentives would increase as more energy is conserved.

Updates

The Clean Energy for America Act makes significant improvements from previous versions of the bill.

To ensure clean energy jobs are good-paying jobs, the bill requires projects above residential size that receive tax credits to comply with federal labor requirements, including Davis-Bacon Act prevailing wage and apprenticeship requirements.

To achieve our emissions goals, the bill includes stricter requirements to receive the incentives. While prior versions of the bill allowed facilities that emitted up to 300 grams of carbon dioxide per kilowatt hour to receive proportionately reduced credits, the current version limits credits to only facilities with zero or net-negative emissions, and requires clean fuel producers to reach zero or net negative emissions by 2030.

To make the incentives more accessible, power projects and grid improvement projects have the option to claim the tax credits as ‘direct payments,’ and the electric vehicle credit is made refundable for consumers.

To speed up the electrification of the transportation, the bill expands the electric vehicle credit to provide a 30 percent credit for medium and heavy duty electric vehicles. And to accelerate grid improvements, the storage credit would be expanded to incorporate transmission investments.

Text of the legislation is available here.

A one-page summary of the bill is available here.

A section-by-section summary of the bill is available here.

Statements from cosponsors

“This proposal is important because it simplifies our tax code and shifts tax incentives away from oil and gas to clean energy,” Senator Stabenow said. “This shift from the past is long overdue and is the bold step we need to address the climate crisis and meet the future energy needs of Michigan and our country.”

“Our tax code should be working to help our nation lead the global fight against climate change and create good paying American jobs. I’m proud to join Chairman Wyden in introducing the Clean Energy America Act, which will do just that, putting our tax system on track to help protect our planet,” Senator Carper, Chairman of the Senate Environment and Public Works Committee, said. “It’s time we update our tax code to support American innovation, reduce pollution, and foster economic growth. To that end, I’m particularly pleased that this legislation draws on a number of commonsense tax policies I authored that will support our nation’s clean energy infrastructure and move our economy to a brighter future.”

“To bolster our country’s efforts to fight climate change and cut climate pollution, we need a tax code that supports clean energy,” Senator Bennet said. “The Clean Energy for America Act will help us build a 21st century clean energy economy and support good-paying jobs by encouraging energy conservation, clean electricity, and clean transportation through streamlined, performance-based energy tax incentives. I look forward to working with my colleagues on the Senate Finance Committee to move this legislation forward.”

“This bill will improve our tax code to incentivize investments in clean energy,” Senator Blumenthal said. “Current tax incentives are temporary and often give the upper hand to energy sources that fuel climate change and pollute our environment. The Clean Energy for America Act would update tax incentives to help promote long-term, stable investments in cleaner energy sources for the sake of our planet.”

“Nevada is a leader in the clean energy sector, and I’m focused on addressing the climate crisis by ensuring the renewable energy industry in the Silver State continues to thrive,” said Senator Cortez Masto. “This legislation will bolster our economy, support more good-paying jobs, and help us protect our environment by increasing our capacity for clean energy production, development and deployment. I’m proud to cosponsor this bill and will continue working in Congress on responsible solutions that create Nevada jobs while combating climate change and investing in our future.”

“Climate change continues to be the most serious threat to humanity today, and we need to take immediate and bold action to address it before it’s too late,” Senator Gillibrand said. “Updating and streamlining our tax code in a way that helps incentivize clean energy deployment and job creation is an integral part of combatting the climate crisis. I am a proud cosponsor of the Clean Energy for America Act, and will continue to support efforts that reduce our nation’s energy reliance on fossil fuels and shift to renewables.”

“With our incredible potential for both solar and wind alongside innovative research and development at our national laboratories and universities, New Mexico is poised to become a major producer and exporter of clean power,” Senator Heinrich said. “This bill rewards innovation to promote clean energy production and storage, and will help create clean energy careers in New Mexico.”

“I am proud to join this effort, which will help usher the United States into a future that is cleaner on carbon emissions tomorrow than it is today. In order to combat the effects of climate change, we must take these important steps to elevate technologies in the clean energy production and transmission, transportation, and building efficiency sectors. These changes are critical to build a clean energy economy, through good paying jobs, that will support generations to come,” Senator Kaine said.

“Climate change is an existential threat that demands a robust action plan to address every sector of our economy and society. The Clean Energy for America Act would play an important role in that strategy by incentivizing investments in clean energy technology and energy efficiency measures that reduce emissions,” Senator Shaheen said. “I’m very pleased to join Senator Wyden to introduce this legislation, which would incorporate more than three dozen energy tax incentives into three emissions-based, technology incentives for clean electricity, clean transportation and energy conservation. As the United States reasserts its role on the world stage as a global leader acting on climate change, this commonsense legislation would help bolster our efforts at home and abroad.”

“This bill will break our cycle of last-minute, short-term energy tax extensions, and instead give companies and individuals the certainty they need to make long-term investments in clean energy and transportation. It will go a long way towards ensuring we build the clean energy future Americans deserve,” Senator Schatz said.

Statements from supporters

Heather Zichal, CEO, American Clean Power Association: “The American Clean Power Association applauds the collective efforts in Congress to promote economic investment and address climate change. Chairman Wyden’s Clean Energy for America Act goes a long way towards addressing both of these pressing needs in America. This bill would be important to deploying more renewable energy and facilitating economic growth and job creation across the country. In addition, this legislation’s focus on transmission infrastructure and project financing flexibility will help enable the U.S. to remain on the cutting edge of clean power development and to deliver additional clean energy to communities across the country. The wind, solar, energy storage, transmission, and hydrogen industries look forward to working on a bipartisan basis to help move towards an affordable, reliable, and clean electric system for America.”

Gregory Wetstone, President and CEO, the American Council on Renewable Energy (ACORE): “The Clean Energy for America Act offers a comprehensive and scientifically driven framework for accelerating the clean energy transition. 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. 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. We look forward to working with Chairman Wyden and lawmakers in both chambers of Congress to move beyond the endless cycle of temporary stopgap measures and enact a stable, predictable and long-term clean energy tax platform into law this year.”

Paula Glover, President, Alliance to Save Energy: “We thank Chairman Wyden for developing a comprehensive clean energy tax proposal that recognizes the tremendous role tax incentives can play in incentivizing energy efficiency, particularly in homes and buildings, which account for about 40% of U.S. energy consumption. This bill would drive energy efficiency into homes and buildings across the country, and in doing so it would sharply reduce greenhouse gas emissions, create hundreds of thousands of jobs, and reduce energy costs for households and businesses. We look forward to working with Chairman Wyden to continue refining and strengthening the bill, and with other energy efficiency champions in the Senate, including Sens. Hassan and Collins, to pass high-impact energy efficiency tax legislation into law this year.”

Bill Fehrman, President and CEO, Berkshire Hathaway Energy: “As Berkshire Hathaway Energy’s businesses look for additional opportunities to accelerate reductions in carbon emissions, there is a significant need for investment stability to advance all forms of clean energy. Chairman Wyden’s bill acknowledges this need, and we strongly support the clean technology-neutral, business model-neutral solution he has proposed. Commercial scale energy storage, new major transmission investments, and existing and future zero carbon technologies like carbon capture, utilization and storage and advanced nuclear are all key to achieving the clean and reliable energy future we desire, while keeping cost impacts as low as possible for electricity customers, which is exactly what this bill supports.”

Genevieve Cullen, President, Electric Drive Transportation Association: “EDTA applauds Chairman Wyden’s effort in the Clean Energy for America Act to update energy incentives that reduce greenhouse gas emissions and grow clean energy industries. Consistent and uncomplicated incentives are essential to speed the transition to e-mobility and we look forward to working with the Chairman and the Finance Committee to promote consumer and industry investment in electric vehicles and infrastructure.”

Matthew Davis, Legislative Director, League of Conservation Voters: “We applaud Chairman Wyden for leading a visionary bill to accelerate our transition to clean electricity, transportation, and buildings. Taking a holistic, decade-long approach to tax incentives for decarbonizing these three major sectors, and eliminating subsidies for fossil fuels, would help put us on track to meet the science-based carbon reduction goals needed to stave off the most severe impacts of climate change, which is hurting communities of color and low wealth communities the most. We’re happy to see inclusion of requirements that will ensure this clean energy transition maintains and creates good-paying union jobs and look forward to making sure these investments also translate into domestic manufacturing of clean energy components and grow the U.S. supply chain.”

Maria Pope, President and CEO, Portland General Electric: “Our customers want a clear and swift path to a clean energy future. We must all work together to drive this change – with policy being a critical piece. We applaud Sen. Wyden for shifting the traditional way we think about energy tax credits and championing an innovative approach that unleashes all players, including utilities, to invest in clean, reliable and affordable energy. As Oregon’s largest electric utility – committed to ambitious decarbonization goals – we need the right policies in place and an all hands on deck approach. Sen. Wyden’s bill will enable these ambitious goals and deliver results.”

Michael Brune, Executive Director, Sierra Club: “The Clean Energy for America Act is landmark legislation that will secure a clean energy economy that works for everyone and is powered by wind, solar, electric vehicles, energy efficiency, building electrification and battery storage. Sierra Club applauds Senator Wyden for this big, bold bill designed to build out the blueprint provided in President Biden’s American Jobs Plan through unprecedented investments in clean energy and clean transportation while eliminating wasteful subsidies for the fossil fuel and nuclear industry. Key equity, labor, and climate benchmarks ensure that these investments and incentives will create good jobs, tackle the climate crisis, and put us on the path to an equitable and just 100% clean energy economy. Senator Wyden has demonstrated that he is a cutting edge leader on clean energy policy in Congress.”

Joe Britton, Executive Director, Zero Emission Transportation Association: “ZETA's Roadmap to 2030 articulates the importance of strong electric vehicle and charging infrastructure incentives, and we thank Chairman Wyden for advancing these policies in the Clean Energy for America Act. With these investments we can provide benefits to consumers, create hundreds of thousands of jobs, and drive down emissions for frontline communities while addressing climate change.”

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