September 29, 2015 |
A More Sensible Tax System for Our Energy Industry
Diversifying our energy portfolio helps reduce carbon emissions and cut costs while also stimulating our economy and increasing national security. A provision in the American Energy Innovation Act can help us meet our goals.
Under current law there are more than 40 energy tax incentives with different subsidies for different industries, many of which are renewed at the last minute on a year-to-year basis. This makes these credits less effective because it creates uncertainty for businesses across Colorado and the nation. And there is also no clear rationale for differing subsidies for each technology. The new provision would create a simpler energy tax incentive that is technology and industry neutral. Electricity generation, transportation fuels, and energy efficient buildings would receive tax incentives based on their carbon emissions, with the cleanest forms of energy and the most energy efficient buildings receiving the largest credits. These credits would be in place for 10 years to provide market certainty and allow time for them to work effectively.
All electricity generation technologies could choose to receive either a production tax credit or an investment tax credit. Any facility, whether it’s a wind farm, a natural gas combined cycle plant, or coal-fired power plant with carbon capture and storage would receive a credit if it emits at least 25 percent less carbon dioxide than the national average.
A similar credit would also be available for domestically produced transportation fuel and energy efficient buildings. Fuels that emit at least 25 percent less carbon dioxide than the national average would qualify for a production tax credit. New energy efficient homes and efficiency retrofits in homes and commercial buildings would also qualify for tax credits, with larger credits for buildings with greater energy use reductions.
This “technology neutral tax credit” will stimulate cleaner, domestic energy production and more energy savings while also simplifying an outdated, complex, and inefficient energy tax policy. It would level the playing field for all industries and give consumers cleaner energy choices produced right here in America. Using less energy will also save money for consumers, homeowners, and businesses. Colorado, a leader in renewable energy development, clean burning fossil fuels, and energy efficient buildings, stands to benefit from more stable, technology neutral tax incentives.
This reform to our tax code would streamline our current energy tax policy, encourage clean energy development, and reduce our dependence on foreign oil. We will continue fighting to pass this commonsense proposal.