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Thursday, December 14, 2006

Congress Includes Energy Measures In Tax Bill Then Adjourns

The final Senate vote was 79-9 and the final House vote was 367-45. The legislation included a provisions to open 8.3 million acres in the Gulf of Mexico to oil and gas drilling, which has been off-limits to exploration. The new law also provides tax credits for alternative energy producers and purchases of solar energy equipment by homeowners and businesses.

The drilling measure provides 37.5 percent of the royalties from oil and natural gas produced from Lease Area 181 of the Gulf of Mexico to Gulf producing states. The stateside Land and Water Conservation Fund would receive 12.5 percent. The other 50 percent would go to the federal treasury.

The Gulf of Mexico Energy Security Act is part of a massive tax-trade-health care package measure, HR.6111. The energy tax provisions in the HR.6111 package include:

* Extending of credit for electricity produced from certain renewable resources. This extension for one year is critical to continued installation of commercial electricity generation projects from wind and solar sources. Extending the credit a full year before it was set to expire on December 31, 2007
* Extending a 30 percent tax credit for the purchase of residential solar water heating, photovoltaic equipment, and fuel cell property. Expires after December 31, 2008.
* Extending 30 percent business credit, established in the Energy Policy Act of 2005, for the purchase of fuel cell power plants, solar energy property, and fiber-optic property used to illuminate the inside of a building. After December 31, 2008, the credit reverts to a permanent 10 percent level.
* Extending of tax credit to holders of clean renewable energy bonds.
* Modifying of the clean coal gasification tax credit by providing a technical fix to the 2005 Energy Policy Act by setting a different reduction target for sulfur dioxide emissions from sub-bituminous coal, which already is a low-sulfur coal, in order to qualify for investment tax credits for installing clean coal technology.
* Extension of deduction for energy efficient commercial buildings extending for one year a deduction for energy-efficient commercial buildings that reduce annual energy and power consumption by 50 percent.
* Extension for one year of a business credit to eligible contractors for building energy efficient new homes.
* Extending for one year a residential credit of 30 percent for purchasing qualified photovoltaic property and solar water heating property, and for qualified fuel cell power plants.
* Extending for one year a 30 percent energy credit for the business installation of qualified fuel cells, stationary microturbine power plants, and solar equipment.
* Extending a reduced excise tax rate for qualified methanol or ethanol fuel produced from coal.
* New special depreciation allowance for cellulosic biomass ethanol plant property.
* Modification of the coke and coke gas production tax credit. (Source: Environment News Service)

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