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The US House of Representatives has approved a package of tax incentives to encourage the use and production of renewable energy and energy conservation, and to repeal tax breaks for oil and gas companies.
The Renewable Energy and Energy Conservation Tax Act of 2007 includes tax credits and bonds to promote investment in renewable energy production from wind, solar, geothermal, cellulosic ethanol and biofuels, and other critical energy conservation initiatives. The measure passed by a vote of 221-189.
“This bill makes an investment in America’s energy independence through long-term incentives for the production and use of renewable energy and energy conservation,” explained Ways and Means Chairman Charles B. Rangel (D-NY).
“This bill sets an example by closing loopholes and repealing generous tax breaks to oil and gas companies enjoying record profits, to help American companies and communities lead the way in developing technologies to reduce greenhouse gas emissions and combat the harmful effects of global warming. H.R. 2776 will also help cities and states provide bonds and grants to make sure that working families and businesses can do their share to purchase energy efficient heat pumps, appliances and make home improvements to conserve energy,” he stated.
The House bill provides for a number of production incentives, including: the long-term extension and modification of renewable energy production tax credits and solar energy and fuel cell investment tax credits; $2 billion of new clean renewable energy bonds for public power providers and electric cooperatives; extension of the present-law deferral on sales of transmission property from electric utilities and their affiliates to a FERC-approved independent transmission company; and the removal of caps on the credit for residential solar property (currently capped at $2,000) and residential fuel cell property (currently capped at $500 per half kilowatt of capacity).
Clean transportation incentives include: a plug-in hybrid vehicle credit; a cellulosic alcohol production credit; the extension of a biodiesel production tax credit and the extension and modification of renewable diesel tax credit; the extension and increase of a alternative refueling stations tax credit; a fringe benefit for bicycle commuters; the modification of depreciation and expensing rules for certain vehicles; and the restructuring of New York Liberty Zone tax credits.
Other conservation provisions include: the creation of new qualified energy conservation and energy efficiency assistance bonds; the extension of the energy-efficient commercial buildings deduction; the modification and extension of energy-efficient appliance credit; and five-year depreciation for smart meters.
On the revenue side, the House legislation: denies a deduction for oil and gas firms for income attributable to domestic production of oil, natural gas or other primary products; increases the amortization of geological and geophysical expenditures for certain major integrated oil companies to seven years; limits the ability for US oil and gas companies to benefit from foreign tax credits; and clarifies eligibility for certain fuel credits.
The House bill must now be reconciled with companion legislation progressing through the Senate, where $32 billion in tax breaks have been dropped. However, President Bush has threatened to veto the final legislation because, he argues, it discourages domestic oil and gas production, and increases the tax burden on the oil industry.
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