hybrid-vehicles

From the popularity of Al Gore’s uber-Power Point “An Inconvenient Truth” to the explosion of hybrid and energy efficient vehicles, the US population is paying more attention to the environment. And Congress is finally catching on (well, sort of).

One of the driving forces behind the interest in going green is the increase in oil and energy prices. As the conflict in the Middle East heats up, gas prices are edging ever upwards. In the US, some states are seeing gas prices reach $4/gallon – $3/gallon in Philly where I live – making websites like this one popular. With no relief in sight, people are taking notice of our dependency on foreign oil; the US possesses only 3% of the world’s oil but consumes 25% (UDelaware).

So, when growing pressures to address energy issues, it was a surprise to hear that Senate Finance Committee Chair Max Baucus (D-MT) was releasing a $13.7 billion package of energy tax incentives for markup by the Finance Committee just after it had been announced that the bill was to be temporarily shelved last week. I haven’t heard any official word regarding why the decision was made to shelve and then release the bill, but it was on the docket for review on June 19. It has been rumored that GOP opposition to the bill had contributed to the delay in its release.

The bill, S. 1419, has several goals:

- to promote the development of wind and solar power;
- expand alternative vehicles and biofuels;
- focus on uses for coal that control carbon;
- energy savings for homes and “green” buildings; and
- expanded refinery capacity.

A central feature of the bill is the repeal of major oil companies’ big tax breaks that were pushed through in recent years – thought to be worth over $9 billion. Those tax breaks have proven unpopular in a year where big oil has reported record profits.

The bill also includes provisions to extend the production tax credit for wind power projects; create a 30% investment tax credit for residential wind energy projects, and extensions of tax credits for solar and fuel cell installations.

The plan also includes several provisions to promote “clean coal” projects and establish Clean Coal Bonds to encourage clean coal efforts by co-ops, tribes, and municipalities.

Taxpayers driving hybrids would see extensions of existing credits for hybrids and the creation of a $2,500 credit for plug-in hybrids. Residents and companies who used energy-efficient building materials and “green” technology would also receive tax incentives.

Alternative fuel producers would be rewarded with fifty-cent/gallon credits for cellulosic ethanol production (works like ethanol and is produced from sugar or corn) and an extension of credits to cover the cost of the installation of E85 ethanol – a blend of ethanol and gas – pumps. The bill would also extend the $1/gallon biodiesel credit for fuels produced from soy, camelina, and other plant materials and extend the $1/gallon renewable diesel credit. The latter is the fuel created from such compounds as… chicken fat. Who knew?

The Bush administration has reportedly threatened to veto the version of the bill. Specifically, the administration is opposed to language that would make gasoline price gouging a federal crime and the proposed increase in the fuel economy standards. Much of the remainder of the bill is, according to the administration, “uneconomic, impractical, counterproductive, or unnecessarily duplicative of existing authority.”

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