June 28, 2022

Volume XII, Number 179

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June 28, 2022

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June 27, 2022

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House Approves Energy Tax Extenders

Last week, the U.S. House of Representatives (House) overwhelming approved a $42 billion tax extenders bill.  The bill, H.R. 5771, includes extensions of nearly $10 billion in energy tax incentives through the end of 2014.  But by failing to extend the tax incentives beyond the end of this year, the House bill has been criticized by industry advocates that wanted stability and predictability as to the future availability of the incentives.

The bill extends the New Market Tax Credit in Section 45D, the Production Tax Credit in Section 45, the Research Credit in Section 41, the bonus depreciation rules in Section 168(k), the Energy Property Credit for individuals in Section 25C, the Second Generation Biofuel Producer Credit in Section 40(a)(4), the incentives for biodiesel and renewable diesel in Section 40A, the New Energy Efficient Home Credit in Section 45L, the Energy Efficient Commercial Buildings Deduction in Section 179D, the special rule for sales or dispositions to implement FERC or state electric restructuring policy for qualified electric utilities in Section 451 and the excise tax credits relating to certain fuels in Section 6427.

By extending the Production Tax Credit (PTC) and other incentives retroactively only through the end of this year, the House bill provides little reassurance to companies in the industry who are looking to invest in renewable energy products, given the long lead time required to get projects off the ground.  With only three weeks left before the PTC expires again, the extension is unlikely to provide much incentive to invest in new renewables projects.  The House Ways and Means Committee expects the extension to cost around $9.6 billion over the next 10 years.  But industry insiders argue that the expiration of the PTC last year and the resulting uncertainty has caused a drop off in new renewables (non-solar) projects, and have called for a multi-year extension that would phase out the PTC over three years.  This kind of phase-out generated bipartisan support in a Senate bill last month, but the bill ultimately died after the White House threatened to veto it over other matters.  Although some in the Senate are still pushing for a two-year extenders bill, it is currently expected that the extenders package will ultimately be passed in the form adopted by the House.

© 2022 McDermott Will & EmeryNational Law Review, Volume IV, Number 342
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About this Author

David Birchall, McDermott Will Emery law Firm, Environmental Attorney
Partner

David Birchall is a partner in the law firm of McDermott Will & Emery UK LLP, based in its London office.  His practice focuses on corporate energy deals, energy trading (including carbon), renewables and clean tech projects, energy projects, regulation and waste, in particular waste to energy schemes.

+44 20 7570 1403
Martha Groves Pugh, Federal Income Tax Attorney, McDermott Will Emery Law Firm
Counsel

Martha Groves Pugh is counsel in the law firm of McDermott Will & Emery LLP and is based in its Washington, D.C., office.  She focuses her practice on federal income tax issues with a particular emphasis on the nuclear and energy industries.  Marty has helped clients seek and receive many private letter rulings and has extensive experience in drafting legislative language for tax proposals. Her practice also includes tax planning for proposed transactions and advising clients on audits, appeals and litigation issues...

202-756-8368
Jacob Hollinger , Environmental & Energy Attorney McDermott Will Emery Law Firm
Partner

Jacob Hollinger is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s New York office.  His practice focuses on the environmental, regulatory and litigation needs of energy and manufacturing sector entities.

Prior to joining McDermott, Jacob spent nearly ten years as a government enforcement attorney, first with the New York State Attorney General’s Office and later with the U.S. Environmental Protection Agency.  As an Assistant Attorney General for New York State, Jacob was New York’s lead litigation counsel in several complex environmental and...

212-547-5834
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