Ben Geman and Alex Kaplun reported via E&E Daily on Friday, June 15, 2007 that the Senate Democrats unveiled an energy tax plan that would boost financial incentives for renewable power and motor fuels while repealing several oil industry tax breaks.   It was reported that Senate Finance Committee Chairman Max Baucus (D-Mont.) plans to mark up the package Tuesday and quickly attach it to a sprawling energy bill still on the Senate floor. The Baucus changes would provide $13.7 billion over a decade in financial tax incentives for wind and solar power, biofuels, coal projects that control carbon, and energy efficient homes and buildings. The money is offset with $14.6 billion over 10 years in taxes that would come mostly from the pockets of oil companies. A central piece would repeal major oil companies' eligibility for a deduction applied to domestic manufacturing, which the Joint Committee on Taxation estimates would bring in over $9 billion.

The United States House of Representatives moved to repeal this incentive for "big oil" earlier this year. Democrats say major oil companies do not need incentives at a time of high prices and profits. But the oil and gas industry says ending incentives works against the goal of boosting "energy security" by raising business costs in the United States because money is needed for investment in new infrastructure and without incentives it is difficult to get marginal players in the game.

Other major provisions in the tax bill include a two-year extension of the production tax credit for wind power projects -- a substantially shorter extension than the wind industry has been seeking. But Baucus, in a prepared statement yesterday, suggested it may be lengthened. "I'm working with my colleagues to extend some provisions, such as the clean energy production tax credit, even further when the Finance Committee votes," Baucus said. Other aspects of the bill include a new 30 percent investment tax credit for residential wind energy projects, and extensions through 2010 of tax credits for solar and fuel cell installations.

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