Sen. Baucus is headed for Japan. He's going to take some heat from Big Ethanol for his energy tax reform plan.
Baucus's proposal would be to get rid of those 42 energy tax incentives and, in their place, create two broad credits:1) First, any facility producing electricity that is at least 25 percent cleaner than the average for all electricity production facilities would receive a tax credit. The cleaner the facility, the larger the tax credit. (By "clean," Baucus is referring to greenhouse-gas emissions per unit of electricity produced.)This credit starts at 2.3 cents per kilowatt of generation and rises to a maximum of 20 percent of the total cost of the investment. Companies couldn't get the credit until they started producing power, and then they'd get the break for 10 years.All of these credits, meanwhile, would phase out in four years once the greenhouse-gas intensity of the entire U.S. electricity sector is 25 percent below current levels. So there's an overall limit.2) Likewise, any transportation fuel that is at least 25 percent cleaner than conventional gasoline will generally receive a credit. Again, the cleaner and more energy-efficient the fuel, the larger the credit — and the bill would take the entire life-cycle into account when judging the fuel. So if, say, corn-based ethanol wasn't cleaner than gasoline, no tax credit.(Note that the credit for transportation fuels would likely need to be paired with a repeal of the Renewable Fuel Standard that requires refineries to blend a certain amount of ethanol into gasoline. It wouldn't make sense otherwise. But Baucus's committee doesn't have jurisdiction over that fuel standard, so this part isn't in the proposal.) [More]
Ya live by the mandate, ya perish by the mandate.