Camp Opening Statement: Hearing on Energy Tax Incentives Driving the Green Job Economy
Mr. Chairman, clean, renewable energy is something every member of this committee supports. In fact, I wouldn’t be surprised if at one time or another every member of this committee has signed onto or voted for legislation to incentivize the production, purchase and use of alternative fuels. It has been and remains an issue about our national security, our environment and our economy.
Clearly, we need to reduce our dependence on foreign oil. We should continue to utilize new technologies to ensure a clean, safe environment for future generations. And, given that the unemployment rate appears to be stuck at nearly 10 percent, despite the President’s promises about the stimulus bill, we clearly need more jobs.
However, we should be realistic about the current status of and prospects for the so-called green economy and green energy.
Over recent years, policymakers at the federal, state, and local levels have significantly stepped-up efforts to subsidize renewable energy through the tax code. Despite this investment, as the chart on the screen makes clear, the overwhelming majority of America’s energy consumption continues to be sourced from fossil fuels. In fact, petroleum, coal, and natural gas supplied 85% of America’s energy demand in 2007, with nuclear supplying 8%. Renewable energy sources supplied only 7 percent – virtually unchanged from 2000.
Even after a Federal investment of nearly $40 billion in new tax subsidies for renewables as part of legislation enacted in October of 2008 and as part of the February 2009 stimulus package, these relative shares remained about the same in 2009. As the chart on the screen shows, in 2009, 83 percent of our energy came from fossil fuels, 9 percent from nuclear and 8 percent from renewables.
As one executive told me, you can’t run an alternative energy manufacturing plant on wind and solar energy.
Again, given how reliant our families and jobs are on traditional sources of energy, I am further discouraged by the Administration’s proposed tax increases on the oil and gas and coal industries.
President Obama’s 2011 budget proposal would impose an estimated $40.7 billion in punitive new taxes on domestic energy production by America’s oil and gas and coal industries. Most of the proposals targeting oil and gas were also proposed in last year’s Administration budget; the coal proposals are new.
Among many others, these include:
- repealing the Sec. 199 domestic manufacturing deduction for oil and natural gas companies (raising $14.8 billion over ten years),
- repealing expensing of intangible drilling costs (raising $10.9 billion),
- increasing the amortization period for geological and geophysical costs of independent producers from two to seven years (raising $1.0 billion),
- repealing the Sec. 199 domestic manufacturing deduction for coal and hard mineral fossil fuels (raising $2.1 billion)
Additionally, the President’s 2011 budget contains several other revenue-raisers – repealing the last-in-first-out (or LIFO) accounting method (raising $75.3 billion), modifying rules for dual capacity taxpayers (raising $8.2 billion), and reinstating Superfund excise taxes and corporate environmental income taxes (raising $19.1 billion) – that would have a significant effect on energy businesses, including oil and gas production.
Simply put: it takes today’s energy to power tomorrow’s technology.
And these tax increases are dwarfed by the nearly $900 billion national energy tax that the Majority calls cap-and-trade. I should note that this bill has gone nowhere in the Senate and the prospects for its revival are, thankfully, not good.
So, while the focus of this hearing may be on the energy of tomorrow and the tax incentives to encourage its development, and I look forward to hearing that testimony, I would strongly urge my colleagues to keep in mind the tax increases that will be imposed on the energy of today to meet the Majority’s misguided paygo rules. You cannot increase the cost of producing 85 percent of the energy being used today and expect consumers or employers to benefit from tax incentives that are going to less than 10 percent of the energy being used today. The math just doesn’t add up.
With that, I yield back the balance of my time and look forward to hearing from our witnesses.