US tax reform update: Max Baucus issues energy tax reform proposal
Senate finance committee chairman Max Baucus has issued a sweeping energy tax reform proposal, which calls for eliminating or phasing out dozens of existing tax incentives related to renewable and alternative energy production and efficiency.
The proposal calls for renewable electricity (e.g. wind, biomass and solar) production and investment tax credits (PTCs or ITCs) to be extended beyond 2013 but phased out by the end of 2016. These would then be replaced, beginning in 2017, by a more technology-neutral regime providing either a production or an investment tax credit for any electricity generation facility deemed at least 25 per cent cleaner than the average electricity production facility. ‘Cleaner’ is determined by the ratio of CO2 emissions of the facility compared with its kilowatt-hours (kWh) of electricity production. The maximum PTC under this new regime (which would apply to wind and solar) would be 2.3 cents/kWh, which is equivalent to the current wind PTC. The maximum ITC would be 20 per cent, which is 10 percentage points lower than the current ITC (applicable to solar under current law through the end of 2016 and wind through the end of 2013)…
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