The House finally passed the energy bill last week. The substantive energy bil is H.R. 3221, which requires utilities to get 15% of their energy from renewable resources. It passed the House 241 - 172. See this article by J.R. Pegg on the Environmental News Service. Energy tax measures are in H.R. 2776 but will be folded into H.R. 3221 on engrossment. The tax measures passed by a surprisingly strong 221-189. Eleven Democrats voted against the bill, and nine Republicans voted for it.
Perhaps the most controversial measure in the energy tax bill is the elimination of the manufacturing deduction under section 199 for oil and gas companies. If you are not a tax person, you are probably doing a double-take along the lines of "Manufacturing deduction? Why would oil and gas companies ever have been invited to that game in the first place? They've already got all those other tax subsidies as extractive industries." And of course, you'd be exactly right. It appears a majority in the House has finally realized that there can in fact be too many subsidies for Big Oil, especially when Big Oil is enjoying windfall profits.
Among the other measures in the bill is an extension of the section 45d renewable energy tax credits and the investment credit for solar and other alternative energies. The bill also increases the depreciation allowance for energy-saving devices, as an incentive to encourage their use. The two controlled foreign corporation provisions dealing with oil companies (sometimes fondly called FORI and FOGEI) will be essentially merged, resulting in additional tax revenues of about $3.2 billion. All in all, the bill "diverts" about $15 billion in taxes from oil and gas to support alternative and efficient energy. Id.
The House and Senate (H.R. 6, passed in mid-June) energy bills will be difficult to reconcile. The House included the 15% renewable energy requirement, but the Senate did not. The Senate requires a 40% increase in fuel economy and increased ethanol use, but the House did not pass any such standard. The Senate didn't pass any energy tax provisions at all. The final bill is not written yet and there will be much discussion before we know whether the United States will finally increase auto fuel efficiency standards after 30 years of neglect.
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