Thank you Mr. Chairman for allowing me the opportunity to testify before you today. I appreciate the fact your Subcommittee is holding this hearing in order to explore the many tax proposals introduced by Members relating to the discovery, production, transportation, generation, and end-use of power. Given the current focus on these issues as a result of the West Coast electricity situation, and the President’s own description of the national "crisis" we are facing, these hearings are indeed timely.
As Chairman of the Democratic Caucus, I have over the last 18-months chaired the Democratic Caucus Task Force on Energy. Our Task Force is composed of Members from all parts of the country representing a diverse spectrum of political views. While we all do not necessarily agree on all aspects of energy policy, there is a strong agreement in our Caucus that this Nation’s energy needs can be met through a combination of increased production, use of alternative and renewal energy sources, and through energy efficiency and conservation. We believe national polls have shown that the American people agree with our focus on a balanced approach to solving our Nation’s energy needs in the 21st Century.
Last month our Caucus released a report prepared by the Caucus Energy Task Force that outlines our view of what energy policy should look like. While not everyone agrees with every part of the report, I believe, on balance it represents a good starting point for any discussion of how we should be addressing the energy problems we currently face. Please notice I have termed the current situation as a problem and not as a crisis, as has President Bush. While he and I both hail from Texas, a major energy producing state, I cannot agree with him that we are facing a crisis. And I do not believe most of my colleagues from Texas or other oil patch states would agree we are in a crisis mode. We do believe however, along with our colleagues from the North, the West, the Midwest, and the South, that the Congress, working with the Administration and the private sector, can find solutions to problems that might become crises if they are not addressed adequately and if they are not addressed in the short-term with long-term results in mind.
Our report calls for very specific actions that will lead to increased energy supply as well as increases in conservation and energy efficiencies. We do not believe energy problems can be solved without concentrating on both supply and demand. We also reject the notion that the environment must be sacrificed in order to maximize production and generation. As stated in our report, "Democrats strongly object to President Bush’s assertions that the substantial improvements made in cleaning the air we breathe, cleaning the water we drink, or improving our public health must be sacrificed in order to ensure adequate energy will be available to fuel our industries, heat or cool our homes and businesses, and keep motorists on the road. . . . . Democrats support a plan that recognizes the need for new energy production and generation, and will at the same time save consumers money, continue the important work to cut pollutants that affect the health of every American, create real jobs, and will reduce the percentage of imported foreign oil we need to keep our economy strong and to protect our national security." (Principles for Energy Prosperity: Helping Consumers, Promoting Growth & Protecting the Environment, House Democratic Caucus, May 15, 2001)
Our report calls for several tax incentives that will promote both increased domestic energy production as well as enhanced conservation and energy efficiency in homes and businesses.
First, we believe the independent domestic oil and gas industry needs greater market stability in order to maintain and increase domestic production of oil and gas resources. We endorse a number of tax incentives for the domestic industry embodied in H.R. 805, a bill sponsored by my Republican colleague from Texas, Mac Thornberry as well as my colleagues Ralph Hall, Charlie Stenholm, and Max Sandlin. These targeted tax incentives are designed to insure that the domestic production of oil and gas does not suffer long-term damage in times when the price of a barrel of oil drops so low it is impossible for small producers to continue to explore and produce. When these producers are forced to cap wells, lay off their crews and cannibalize their equipment, it becomes extremely difficult for them to retool or reopen their wells once the price rises to more profitable levels. The President and the Vice President, both veterans of the oil industry, should understand the difficulties small producers experience in times of price swings, yet the President’s energy plan contains no tax provisions that will help smaller domestic producers continue to produce oil and gas domestically. We believe this Committee should give the Thornberry bill every consideration when forming a legislative proposal.
Secondly, we have called for the creation of a Best Energy Saving Tax Credit (BEST Credit) which would help consumers by providing a flexible tax credit of up to $4,000 for new homes meeting certain energy efficiency criteria, up to 20 percent of cost up to $4,000 for the retrofitting of existing homes or the replacement of existing heating and cooling systems, appliances, lighting, windows, doors, and insulation that meet or exceed federal guidelines; and a credit of up to $4,000 for the purchase of vehicles utilizing new technologies or alternative fuel engines.
We also call for assisting American businesses reduce their energy costs and thus increase their profitability through the creation of a Structure and Vehicle Efficiency Tax Incentive (SAVE Incentives). Our plan would created an investment tax credit of up to 30 percent of the cost of the purchase of renewable energy generation, including wind turbines, co-generation, solar water heating and photovoltaic panels, fuel cells, geothermal technologies and other similar energy efficient technologies. We would create a business deduction of up to $2.25 a square foot for property improvements that reduce energy use by 50 percent below defined standards. Finally, the SAVE Incentives would provide a 20 percent investment tax credit for the purchase of cars and/or light trucks/SUV’s/minivans equipped with fuel-saving new technology or alternative fuel engines.
Democrats understand that coal is currently the source for over 50 percent of America’s electricity generation, but at the same time we remain concerned about the emissions coming from coal-fired plants. While there have been encouraging strides made to reduce those emissions, we have called for the creation of an EXCEED Tax Credit which would provide a ten percent investment tax credit for the cost of clean air control technology for utilities that lead a power plant to exceed mandatory emissions reductions levels for pollutants regulated under Title I of the Clean Air Act, or for significant early compliance with clean air emissions reduction target dates. We would also extend this credit to those technologies that cap their CO2 emissions at 2000 levels. And, important to rural America, we would permit public utilities and coops to trade these credits or use them as offsets against debt or obligations.
Also very important to rural America and the farming industry, we support an investment tax credit of up to ten percent for modifications made to existing coal plants to allow the use of biomass and/or synthetic liquid or gaseous fuels form coal, in combination with coal to produce at least five and up to 15 percent of a plant’s fuel requirements.
Finally, our report calls for continued investments tax credits for renewable energy sources. We support increasing the existing investment credit for renewable energy infrastructure to 20 percent for solar and geothermal, and extending the credit to wind, biomass, and other energy produced form renewable resources. We also call for increasing the current tax credit for producing electricity to 2 cents per kilowatt hour for electricity produced from wind and biomass, and for extending the credit to solar and geothermal.
Mr. Chairman, many of the proposals called for the Democratic Caucus energy plan are already embodied in legislation introduced by both Republican and Democratic Members of the House. Some of these proposals can be found in the President’s energy plan. These are all good places to start any discussion of energy policy and I believe we can develop a meaningful energy policy that will benefit all Americans through a cooperative and deliberative legislative process. Certainly none of these proposals will solve the current problems consumers and businesses are experiencing in the West, but by working together it is possible to fashion and energy policy that will benefit all Americans, an energy policy that will create jobs for American workers, an energy policy that will protect the health of all Americans, and, most importantly, protect our national security in the years ahead.
Again, thank you for the opportunity to appear before you today. On behalf of the Democratic Caucus, I look forward to working with you as you develop proposals to be incorporated into an overall energy policy for the 21st Century.