Senate tax-writing committee advances clean energy tax bill that puts the kibosh on fossil fuel tax breaks

May 26, 2021

The Senate Finance Committee on Wednesday approved legislation along party lines that repeals several fossil fuel tax breaks while providing tax incentives for clean technologies in the electric, transportation and energy sectors.

The bill passed out of committee by a 14-14 vote, i.e., a tie. It takes some explanation as to why the legislation was approved when an equal number of Committee Members opposed and supported the bill.

The Senate is evenly divided between the political parties, so the committees are also evenly divided, with Republicans and Democrats occupying the same number of committee seats. Under Senate rules, a bill that receives a tie vote on passage is successfully approved by the committee (after clearing a few procedural hurdles).  

Amendments, on the other hand, abide by a different rule.  A tie vote means that an amendment fails to be added to legislation because it wasn’t supported by a majority of Committee Members.  

During today’s meeting, more than a dozen amendments were offered as Committee Republicans tried and failed to strike from the bill the language repealing tax breaks for fossil fuels. 

The termination of certain fossil fuel tax provisions in the bill include:

  • The amortization of geophysical and geological costs;
  • The deduction for tertiary injectants;
  • Percentage depletion of oil and gas wells, coal, lignite, and oil shale;
  • The enhanced oil recovery credit;
  • Credit for producing oil and gas from marginal well;
  • The passive loss rules for working interests in oil and gas property;
  • The corporate tax exemption for publicly traded partnerships with qualifying income and gains from activities relating to fossil fuels.

Still, three GOP amendments exceeded the voting threshold by being unanimously supported and were added to the bill. They were:

  • An amendment sponsored by Sen. John Cornyn (R-Texas) that excludes Chinese-produced electric vehicles from the EV Credit.
  • An amendment sponsored by Sen. John Crapo (R-Utah) that requires the IRS to consult other agencies when making regulations that fall within those agency’s jurisdiction.
  • An amendment sponsored by Sen. Bill Cassidy (R-La.) that would prohibit forced labor or child labor from being used to create clean energy technology.

Committee Chairman Ron Wyden (D-Ore.) was the primary author of the bill, which is titled the “Clean Energy for America Act.” And while the legislation was successfully passed by his committee, it is not expected to be the subject of a Senate floor vote.  Instead, the bill is expected to be the foundation for an infrastructure bill that President Joe Biden hopes Congress will eventually pass.

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