On Wednesday, the House of Representatives voted 236-182 to pass an energy tax bill that would shift nearly $18 billion in tax breaks away from oil and gas companies to renewable energy. The President has stated that he would veto the bill (H.R. 5351) if passed by the Senate. Congress attempted to include a very similar set of tax provisions in last year's law improving fuel efficiency standards, but failed -- by just one vote -- to obtain the sixty votes needed to defeat a filibuster and keep the tax provisions in the law. This year that vote could go very differently, as Democrats may use the budget reconciliation process for an energy tax bill. Under this process, the budget resolution could spell out some fiscal goal and then Congress could later pass a bill meeting that goal with just a simple majority of votes in the Senate instead of the usual 60 needed to overcome a filibuster.
If passed by both chambers of Congress, this maneuver would set up a very public fight with the White House over whether tax breaks should be targeted toward big oil and gas companies or renewable energy.
H.R. 5351 would extend and modify the "section 45 credit" for energy from renewable sources like wind, geothermal and hydropower, at a cost of $6.6 billion over ten years. Other provisions costing over a billion dollars each include a $4,000 credit for hybrid vehicles that can be plugged into an electric socket for recharging, bonds for state and local conservation programs, the extension and modification of a $300 credit for energy efficiency improvements in homes, and bonds for infrastructure in and around the World Trade Center. Several other provisions would promote the production and use of renewable fuels and other goals.
The costs of these initiatives would be offset by provisions that reduce or eliminate tax breaks for oil and gas companies. The largest of these provisions would raise $13.6 billion over ten years by barring large oil and gas companies from using the deduction for domestic manufacturing (often called the Section 199 deduction) and limiting the deduction for smaller oil and gas companies.