Baucus, Grassley Unveil Renewable Energy Bill With $5B More in Bonds

A new bill introduced by the Senate's top two tax writers yesterday would authorize an additional $5 billion in tax credit bonds, as well as other bond-related provisions, to support increased efforts to produce and conserve renewable energy.

Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, the chairman and ranking minority member of the Senate Finance Committee, unveiled the energy tax package yesterday, and called for Congress to ensure it is enacted into law before the end of the fall session.

"The American people want Congress to act," Baucus said at a press conference for the measure. "We've got to move, we can't wait."

The senators said they do not know if the package will be considered as separate legislation, or weaved into a larger energy bill currently being formulated in the Senate. That bill is expected to be unveiled and voted on by the full Senate sometime during the next several days.

If approved, the bill would authorize $2 billion of new clean renewable energy bonds, which are tax-credit bonds that can be used to finance renewable energy facilities. The bill would split the CREB authorization into thirds, with equal portions going to state, local, and tribal governments, public power providers, and electricity cooperatives.

In addition, the bill would extend the ability to issue previously allocated CREB bonds by one year. Under current law, any existing CREBs allocations expire on Dec. 31 of this year. The estimated cost of the provision is $551 million over 10 years.

The bill also would create a new category of tax-credit bonds, called qualified energy conservation bonds, and authorize $3 billion of them to be used by state, local, and tribal governments. The debt could be used to finance initiatives to reduce greenhouse emissions. The cost estimate of the proposal is $1.025 billion over 10 years.

The third bond-related provision would extend the qualified green building and sustainable design project bond program. Under the bill, the authority to issue the bonds would be extended through the end of 2012, at an estimated cost of $45 million over 10 years. The authorization for the bonds is currently set to expire on Sept. 30, 2009.

Tax-credit bonds provide holders with an income tax credit in lieu of tax-exempt interest payments.

Several of the provisions in the bill mirror provisions found in legislation that would extend expiring tax breaks, which has been pending in the Senate but has repeatedly failed to clear procedural hurdles. Baucus said earlier this week that consideration of that package will be postponed until after the Senate weighs in on the energy legislation.

The costs of the bill would be fully offset with revenue-raising provisions aimed mainly at removing tax breaks for oil companies or adding new taxes, as well as closing some tax loopholes.

While Democrats have repeatedly called for revenue-neutral legislation, Republicans have blocked bills in recent months - particularly tax legislation - that contain tax hikes as offsets.

Grassley said yesterday that although tax hikes as offsets should not serve as a "piggy bank" for Senate spending, he supports the bill, including its offsets, because the tax breaks and hikes are all energy-related, and historically high gas prices have made the need for such legislation more urgent.

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