Tax Cut Horsetrading Likely to Pay Dividends for Alternative Fuels

As the Senate bill to extend a series of Bush-era tax cuts passed its first procedural vote on Monday, 83-15, details began to emerge of add-ons to the bill that President Obama and his Republican negotiating partners may be forced to accept if they hope to beat the December 31, 2010 deadline for extension.

Among the possible green energy and transportation provisions in the bill:

  • The extension of federal incentives for the purchase and installation of electric vehicle charging stations. Originally created under 2009’s American Recovery and Reinvestment Act, the 50 percent tax credit was inexplicably scheduled to expire at the end of this year—just as the first wave of modern electric vehicles are being delivered.
  • A one-year extension of $7 billion per year in ethanol subsides, including a 45-cent per gallon producers credit and a 10-cent per gallon supplemental “small producers credit.” The amendment would also extend a 45-cent per gallon tariff that has effectively served to bar foreign ethanol from the American market.
  • An proposed amendment to extend the Alternative Motor Vehicle Credit “for certain hybrids,” which likely refers to medium and heavy duty hybrids designed for commercial use—though details of the provisions have not been released and it’s not clear that leadership will allow the bill to the floor for a vote.
  • A range of energy incentives and grants, including an energy efficient home credit, and adjustments to how way clean energy subsidies are paid out to utilities and municipalities.
  • Incentives for biodiesel and renewable diesel.

According to Politico, the 27 amendments that are currently up for consideration are targeted mostly toward appeasing congressional Democrats, many of whom have been critical of the administration’s decision to capitulate on the extension of lucrative tax cuts for the wealthiest Americans.

The bill’s estimated $858 billion price tag also creates political problems for Capitol Hill’s numerous, born-again deficit hawks, but many analysts predict that weak opposition to the law in the Senate—coupled with a litany of giveaways to popular line item causes like ethanol—should generate enough support from Democrats in the House to ensure passage.

So which amendments will make it to the President’s desk? It’s likely that nobody will know for sure until all of the sausage is in its casings and ready to ship.

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  • Shines

    Another 7 billion for ethanol subsidies?!?


  • Samie

    The 45-cent per gallon tariff on imported ethanol irks me the most. Tariffs like this one can make U.S. producers less efficient and less willing to move past corn based ethanol. At some point, imports will be allowed in as the tariff will shrink to zero which will allow for more efficiencies but unintended environmental consequences. A no win solution for a dead-end alternative fuel…

    On a personal note I wish EV subsidies would have been brought forth in a comprehensive energy package instead of this. It is hard to defend spending when voters don’t have a clear understanding of what government spends their/borrowed money on or the the amount of revenue government receives. Simply put an energy bill would have had clear direction and would have been easier to wart off misguided attacks of “out of control spending” because voters would have understood easier the focus of such spending.

    In ten years this tax rate extension will mean nothing as we continue to increase debt. Personally, we are in a dangerous time when voters are told to love the benefits of government (entitlement programs, employment, military protection, society welfare, tax cuts, bailouts, & subsides) but are told not to fairly share in the cost of government, maintaining a “me” type of persona while caring less for others.

    Ok a bit too much sorry for the rant….

  • MrEnergyCzar

    All of this is meaningless unless there is a price floor put on a gallon of gas of $4 to $5 to start…..


  • ACAgal

    We rented a car that allowed ethanol use, when traveling in Colorado. I asked a rental yard employee about how well that fuel works. The reply was basically fine in warm weather, but behaves like molasses in the winter. It wasn’t winter, so we didn’t notice anything odd.