November 15, 2010 / 9:24 PM / in 7 years

SCENARIOS-US lawmakers may tackle energy in lame duck session

WASHINGTON, Nov 15 (Reuters) - A handful of energy tax credits could be extended when the U.S. Congress returns this week, but most energy legislation -- from renewables to climate -- will be punted to 2011.

Ethanol producers, along with the solar and wind industries, are pushing lawmakers to extend tax credits that are set to expire at the end of this year.

Supporters of the tax breaks feel they have a better shot of getting them extended this week during a “lame duck” session -- the period between the November elections and the start of a new Congress in January -- than with the next Congress, which will include newly-elected Tea Party Republicans who want to cut the deficit and may target tax breaks.

The fate of the energy tax credits could be tied to a deal between President Barack Obama and Republicans over Bush-era personal income tax cuts.

“A compromise on the Bush tax cuts increases the likelihood that expired and expiring energy taxes could be extended before year end,” analysts at Robert W. Baird & Co. said in a research note.

Here are energy tax credits and other energy issues that could be addressed during the lame duck session.

SOLAR, WIND MAY GET NEW LIFE (possible)

Solar and wind developers, like First Solar (FSLR.O) and NextEra Energy (NEE.N), can get cash rebates for up to 30 percent of cost of projects that begin construction by the end of this year. Extending the tax break is vital for new business as private sector financing is still difficult to obtain, according to solar and wind company executives.

Many Democrats, like Senators Dianne Feinstein of California and Maria Cantwell of Washington, favor the renewable energy tax credits, as their states are among the top five wind producers. There is support among Republicans for wind and solar too, but Republicans also want to expand traditional energy sources, such as oil, coal and nuclear.

The main hope for extension is to include the credits in a bill to keep the Bush tax cuts.

ETHANOL TAX BREAKS CONTINUE (likely)

Fuel blenders currently get a 45-cent tax credit for each gallon of the biofuel they mix with gasoline. To save money, there is a proposal to lower the tax credit by 9 cents.

There also is a 54-cent tariff on imports of ethanol from Brazil. It expires on Dec 31, as does the blender credit.

Congress has always extended ethanol tax breaks, though they may be reduced this year as part of a push to reduce the deficit. Many farmers who grow the corn used to make the ethanol are in Republican states, and that could boost the odds of extension.

Lawmakers will turn their attention to biofuels after they decide what to do with the Bush tax cuts, said Tom Buis, head of the trade group Growth Energy, which represents ethanol producers like privately-owned POET, the largest U.S. ethanol maker. With a short-term extension, ethanol could be part of broad-scale tax reform next year, he said.

CLEANER ELECTRICITY, MORE NATGAS VEHICLES (not likely)

Democratic Senator Jeff Bingaman, who heads the chamber’s energy panel, wants to pass legislation to generate more U.S. electricity from renewable sources such as wind and solar.

A coalition of Democrats and Republicans supports the measure, but Senate Majority Leader Harry Reid did not include it in the narrow energy bill he wants to bring up for a vote during the lame duck session.

Reid will try this week to move his energy bill that would create the infrastructure and provide government assistance to have more U.S. vehicles run on natural gas. It also would promote plug-in electric cars.

Oil tycoon T. Boone Pickens promoted this plan, aimed at reducing U.S. oil imports from the Middle East.

The legislation is viewed as too expensive to implement and is not expected to get out of the procedural voting gate.

BLOCKING EPA‘S GREENHOUSE GAS RULES (not likely)

John Rockefeller, a Democrat from coal-rich West Virginia, wants to introduce a measure that would stop the Environmental Protection Agency’s climate regulations for two years, though it is doubtful there will be time to consider the measure before the end of the year.

Even if the legislation were taken up, it is unlikely there are 60 votes in the Senate to pass such a controversial measure. In June, the Senate blocked a bill offered by Republican Lisa Murkowski to permanently stop the EPA from regulating greenhouse gases. (Additional reporting by Timothy Gardner and Charles Abbott; Editing by Alden Bentley)

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