House bills would tap bonds for renewable energy, carbon capture
Three House lawmakers have introduced bills this month that would duplicate efforts in the U.S. Senate to encourage carbon capture and the production of renewable energy through new authority for issuing bonds.
Freshman Republican Rep. Tim Burchett of Tennessee, whose Carbon Capture Improvement Act is a mirror version of a bipartisan Senate bill, touts the legislation as “a good example of giving businesses an incentive to lower carbon emissions without forcing it upon them with regulations.”
“This common-sense legislation allows the free market, rather than the government, to determine innovative ways to go green,” Burchett said in a press statement.
Bennet, who is among the many Democrats seeking their party’s nomination for president in 2020, introduced the same legislation in the last two Congresses in 2017 and 2015 with Portman as an original cosponsor.
Portman previously served as director of the White House Office of Management and Budget as well as the U.S. Trade Representative during the administration of President George W. Bush.
Under the bill, if more than 65% of carbon dioxide emissions from a given facility are captured and injected underground, then 100% of the eligible equipment can be financed with tax-exempt private activity bonds. If less than 65% is captured and sequestered, then tax-exempt financing is permitted on a prorated basis.
PABs already have been used to partly finance the world’s largest carbon capture facility at the coal-powered Petra Nova plant in Houston, Texas that became operational on Dec. 29, 2016.
NRG, one of the country's largest power companies, entered into a 50-50 partnership with Japanese oil giant JX Nippon to build Petra Nova after receiving $190 million U.S. Department of Energy grant and qualifying for tax-exempt disaster PABs that were authorized by Congress in the wake of a hurricane that struck Texas in 2008.
The other recently introduced House bill would create Clean Renewable Energy Bonds to finance biogas and qualified manure resource recovery facilities.
Biogas is a type of natural fuel produced by the decomposition of organic matter such as discarded food and animal waste.
That bill, the Agricultural Environmental Stewardship Act (H.R. 3744) is sponsored by Rep. Ron Kind, D-Wis. It has five Republican and three Democratic original cosponsors.
Both Kind and his lead Republican cosponsor, Rep. Tom Reed of New York, highlighted how the bill would offer tax incentives for dairy farmers and rural electric cooperatives to invest in biogas technology.
“By providing these tax incentives, we are making it more affordable and accessible for Wisconsin dairy farmers to pursue biogas technology and ensuring they can continue to create jobs and grow their businesses, while protecting our natural resources,” Kind said in a press statement.
According to the American Biogas Council, there currently are no tax incentives to encourage biogas or nutrient recovery systems.
“A previous production tax credit under section 45 of the federal tax code which promoted the use of renewable electricity expired at the end of 2017,” the council said. “This new credit would promote the production of pipeline quality natural gas and compressed renewable natural gas vehicle fuel as well as nutrients which are essential to agricultural production.”
The American Biogas Council estimates there are more than 2,200 sites producing biogas and another 13,500 sites could be developed to produce enough renewable energy to power 7.5 million American homes.
In the Senate, the proposed Clean Energy Act for America, S. 1288, would become the template for all federal tax preferences for the energy sector, replacing temporary tax credits for wind and solar and repealing existing tax breaks for oil and gas production.
The bill proposed by Sen. Ron Wyden, D-Ore., and 25 other Senate Democrats would authorize public power companies, electric cooperatives and local governments to sell Clean Energy Bonds. It also would give private energy producers new tax incentives to produce clean energy.
Wyden proposed similar legislation in the last Congress, but the latest version adds tax provisions to encourage energy storage and carbon capture.
Under the Senate bill, issuers of the Clean Energy Bonds would have the option of offering the bond as either a tax credit or as a direct-pay bond, where the Treasury Department reimburses the bond issuer at a rate of up to 70% of the interest cost, according to a summary of the bill.
The bonds would be available for clean electricity or fuel facilities that would qualify under the electricity or transportation fuel credits. Clean Energy Bonds would be subject to the same issuance and arbitrage rules as those in effect for tax credit bonds prior to the 2017 tax law.
The House bill proposing Clean Energy Bonds has no details as to how they would work.