Sen. Chuck Grassley is continuing his long-standing campaign to foster development of a wide range of alternative energy sources that would benefit Iowa's economy and reduce U.S. dependence on finite, foreign source of energy.
"It makes sense to use the tax code to develop renewable energy. Cutting taxes is an effective way to encourage positive, environmentally conscious ways to produce electricity and fuel," Grassley said. "Harvesting renewable farm-ready resources to meet our growing domestic energy needs is smart public policy. The time is right to tap American agriculture to offer solutions to our energy problems.
Grassley said the renewable energy tax package he introduced last night includes a number of provisions he's championed over many years to encourage positive, environmentally conscious ways to produce energy. Grassley is chairman of the Senate committee responsible for federal tax policy.
"Iowa has been a leader in renewable fuels and will benefit greatly from these tax incentives such as the ones in my bill. Iowa is full of alternative energy sources," Grassley said. "The possibility of war with Iraq requires us to look at America's energy needs and the need to reduce our dangerous dependence on foreign oil and expand our use of alternative sources of energy."
The Energy Tax Incentives Act of 2003 (S. 597) is substantially similar to the energy tax incentives bill, developed by Grassley and Sen. Max Baucus, of Montana, that received overwhelming support by the full Senate in April 2002. The bill never received final approval because negotiations between the House and Senate over a broader energy policy bill never yielded a final product before Congress adjourned. The Energy Tax Incentives Act of 2003 includes:
- Wind energy. The package includes an extension of the wind energy production tax credit until 2007. Grassley authored the Wind Energy Incentives Act of 1993, which established the first-ever wind energy production tax credit.
- Biomass. The bill extends the tax credit for the production of biomass, which became law in 1992, and expands the definition of biomass to include saw dust, tree trimmings, agricultural byproducts and untreated construction debris. Also included is the extension of the tax credit for the production of electricity from poultry waste and closed loop biomass co-fired with coal, including an important Iowa switch grass project.
- Biodiesel. The bill provides an income tax credit and excise tax rate reduction for biodiesel fuel mixtures. These new incentives will encourage the production of biodiesel, a clean-burning alternative fuel made from domestic renewable sources, such as soybean oil. The income tax credit applies to biodiesel made from vegetable oil and animal fats.
Grassley noted that Iowa is the nation's largest producer of soybeans and is home to two biodiesel plants. "Our vegetable oils are plentiful, and our energy needs are great," Grassley said. "Biodiesel is an environmentally sound way to fill the gap between energy supply and demand."
- Small ethanol producer credit. The legislation expands the definition of an eligible small ethanol producer so small cooperative producers of ethanol will receive the same tax benefits as large companies. It also clarifies that the tax credit can flow through to the patrons of the cooperatives.
Grassley has a long history of promoting ethanol as a clean-burning, renewable, domestically produced energy source. He scored a major victory for the Midwest when he not only blocked anti-ethanol efforts, but also countered by orchestrating congressional approval to extend the ethanol excise tax exemption to 2007.
- Fuel taxes. The bill moves a portion of the taxes from gasohol ? gasoline blended with ethanol ? from the general fund into the Highway Trust Fund to ensure that fuel taxes are used for highways, not unrelated government programs.
- Energy-efficient appliances. The bill encourages the manufacture and use of super energy-efficient washing machines and refrigerators with a tax credit for the production of those appliances. Grassley originally authored and co-sponsored this in the 107th Congress, the Resource Efficient Appliance Incentives Act.
- Swine and bovine waste. The package provides new opportunities for energy production, a useful method of waste disposal and increased farm income by creating a production tax credit for electricity generated from swine and bovine waste. Grassley originally sponsored this legislation in the 107th Congress, the Providing Opportunities With Effluent Renewables (POWER) Act of 2001.
- Multiple tax incentives to increase traditional oil and gas production, including provisions for marginal well production and tax benefits from the production of fuel from non-conventional sources such as coal bed methane and heavy oil.
Grassley said he hopes for Finance Committee consideration and approval of the Energy Tax Incentives Act of 2003 as soon as possible.
The bill was sponsored by Grassley, Baucus, Finance Committee ranking member, Sen. Pete Domenici, chairman of the Committee on Energy and Natural Resources, and Sen. Jeff Bingaman, ranking member of the Energy Committee.
