What’s Happening
The Energy Sector Innovation Tax Credit (ESIC) was reintroduced in the House and Senate by Senator Crapo (R-ID), Senator Whitehouse (D-RI), Rep. Reed (R-NY), and Rep. Panetta (D-CA).
Why It Matters
Achieving our global emission reduction targets will require scaling and deploying numerous clean energy technologies which are not yet commercially viable. While tax credits that target particular energy technologies, such as wind and solar have played an important role in growing these technologies, they also have a distortive effect. ESIC establishes a technology Investment Tax Credit (ITC) and Production Tax Credit (PTC) to promote innovation across a range of clean energy technologies, including generation, storage, carbon capture and hydrogen production.
The bill does this by:
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Promoting clean energy innovation by allowing up to a 40 percent ITC or 60 percent PTC for low market penetration technologies across a range of energy sources
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Phasing out credits as technologies mature, which provides an on-ramp for the most innovative technologies to get to market and then compete on their own, rather than allowing Congress to pick winners and losers when temporary credits expire
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Grouping technologies substantively different from one another as determined by experts at the Department of Energy (DOE), national labs and other stakeholders
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Providing flexibility for unforeseen clean energy technologies to be eligible for ESIC by including an expedited-consideration provision for Congress to take up new technology recommendations from DOE
My Take
Tackling climate change will require a wide array of clean energy technologies, many of which do not currently exist or have not yet passed the demonstration stage. The federal government should not use taxpayer money to pick winners and losers in the energy sector. Instead, it should provide a level playing field with incentives for technologies which will provide the most bang for the buck. Furthermore, the government should avoid subsidizing technologies that are already commercially viable and competitive on the market. ESIC combines all these principles into one single piece of legislation, which already has bipartisan and bicameral support. ESIC will spark the innovation needed to meet America’s energy and sustainability goals.
Quote Me On It
“No single technology will beat climate change and meet America’s energy needs. Addressing these dual challenges requires a diverse set of tools. The Energy Sector Innovation Credit is a smart, technology-neutral solution that will help bring breakthrough, emissions-reducing technologies to market.” – VP of Government Affairs Quill Robinson