Statement of The Honorable Jay Inslee, a Representative in Congress from the State of Washington

Testimony Before the Subcommittee on Select Revenue Measures
of the House Committee on Ways and Means

April 24, 2007

Thank you for allowing me the opportunity to testify before this committee regarding the tax provisions included in energy proposals that I am leading.  While I serve on the Energy and Commerce Committee, the Select Committee on Energy and Global Warming and the Natural Resources, this committee has the opportunity to significantly impact policy that will take this country into the next new energy economy. 

Climate change is a fact.  We have the opportunity to create jobs and become an international leader on the development of new technologies that reduce our emissions and change the way we rely on energy. 

The energy proposals that I have worked on with my colleagues from all over the country in clued the following tax provisions that I request your favorable review on. 

• The Get Real Incentives to Drive (GRID) PLUG-IN Vehicles bill, H.R. 589, will provide a $3,000 tax credit to consumers that purchase a vehicle that runs on electricity
• The Marine Hydrokinetic Renewable Energy Act provides for the inclusion of ocean, tidal and wave power in Section 45 Production Tax Credits, extends the 5-year accelerated depreciation benefit to ocean and tidal technologies, as well as establishes a 30 percent Investment Tax Credit.
• The Industrial Cogeneration Act of 2007 would provide a 10 percent investment tax credit for combined heat and power properties with electrical capacities up to 50 megawatts.
• The New Apollo Energy Act of 2007 is currently in draft form.  This new bill will include several provisions that were in the New Apollo Energy Act of 2005.  During the 109^th Congress, H.R. 2828 included the following tax provisions:
  • Extension of the Biodiesel Tax Credits for 10 years.
  • Expand the Production Tax Credit for renewable resources by removing the ½ credit periods for solar and geothermal so that they receive the full 10-year credit period.
  • Create incentives for re-tooling investment in new facilities and assets to produce energy efficient technologies and domestic clean energy production technologies.

• There are provisions that will be included in the New Apollo Energy Act of 2007:
  • Expansion of the Investment Tax Credit provided for solar energy and fuel cells and include small wind, geothermal, biomass and kinetic hydropower projects. 
  • Extension and expansion of the Clean Renewable Energy Bonds for 10-years
  • Increase in the annual cap on the 30 percent tax credit for residential solar tax credits and water heaters from $2,000 to $4,000.

A cap-and-trade program to reduce greenhouse gas emissions would include an emissions allowance auction program that could generate tens of billions of dollars to offset tax incentives.  Following the allocation and auction scheme proposed by Senator Feinstein and assuming that carbon credits will be trading at a minimum of $20 per ton – a conservative estimate, according to experts – we can expect annual revenues in 2010 to be about $20 billion dollars.  Following the same scheme – whereby a decreasing number of credits will be given away for free and an increasing number of credits will be sold at auction – we estimate that annual revenues by 2025 will be in the range of $60 billion.  I advocate using a large portion of these revenues to fund tax provisions that will encourage private investment in energy efficiency and renewable energy technologies.  That way we can help American businesses meet emissions reductions targets while increasing America’s competitive edge in a global clean energy economy.

Lastly, as we move forward with crafting these proposals, I urge you to keep in mind that not all energy solutions are created equally.  When it comes to providing for energy security and protecting the climate system, Congress must address the impacts that technologies like IGCC, or Coal to Liquids, have on the environment.  With this in mind, I support IGCC (integrated gasification combined cycle) clean coal technology for electricity generation because it improves air quality and is highly compatible with carbon capture and sequestration.  On the other hand, I do not think that the federal government should be providing incentives for the construction of coal-to-liquids plants, which could lead to a doubling of carbon dioxide emissions from transportation fuels. 

I look forward to working with the committee to identify truly clean alternative energy technologies that will put America on a path toward a sustainable, secure and clean energy future.