Two US Senators have introduced a bipartisan energy tax proposal to encourage innovation in the clean energy sector and rapidly scale up new technologies.
Senator Mike Crapo (R-Idaho), ranking member of the US Senate Finance Committee, and Sheldon Whitehouse (D-Rhode Island), US Senate Finance Committee member, introduced the Energy Sector Innovation Credit (ESIC) Act yesterday.
The ESIC is a technology inclusive, flexible investment tax credit (ITC) or production tax credit (PTC) designed to encourage innovation across a range of clean energy technologies, including generation, storage, carbon capture and hydrogen production.
It seeks to promote clean energy innovation by providing up to 40% ITC or 60% PTC for low market penetration technologies across a variety of energy types. It will then phase out credits as technologies mature, which allows access for the most innovative products, rather than allowing Congress to pick winners when credits expire.
It looks to group technologies into different cohorts as determined by the Department of Energy (DOE), national labs and other stakeholders. It also provides an avenue for “unforeseen” technologies to be eligible for ESIC through an expedited-consideration process by the DOE and Congress.
“ESIC will incentivise technology-wide clean energy innovation so new, clean technologies can rapidly scale up and compete independently in the market,” said Senator Crapo. “Moreover, ESIC automatically scales down credits as technologies’ market penetration ramps up, so taxpayer dollars do not subsidize market-mature technologies.”
“Our bipartisan legislation will accelerate nascent clean technologies that have the potential to compete against heavy-polluting forms of energy and create good jobs in the process,” added Senator Whitehouse.
Original co-sponsors of the Senate legislation include Senate Finance Committee members John Barrasso (R-Wyoming) and Michael Bennet (D-Colorado) and Senate Energy and Natural Resources Committee members Jim Risch (R-Idaho) and John Hickenlooper (D-Colorado). House Ways and Means Members Tom Reed (R-New York) and Jimmy Panetta (D-California) have introduced identical legislation in the U.S. House of Representatives.
Last month, US-based solar manufacturers lauded another tax credit proposal by Democratic Senator Jon Ossoff that would establish new tax credits to rapidly boost American solar manufacturing and drive down “prohibitive costs”, branding it a “new hope for American solar”.
The Bill, however, is considered unlikely to pass in its current guise due to Republican opposition, according to US sources.