Senate Panel Leaders Offer Energy Tax Plan

By COREY BOLES September 12, 2008;

WASHINGTON -- The heads of the Senate Finance Committee put forward a $40 billion package of tax credits for investors in renewable energy sources, to be offset by new taxes on the oil and natural-gas industry. The measure's future is uncertain as Congress jockeys to address voter energy concerns ahead of the election.
Separately, House Speaker Nancy Pelosi (D., Calif.) said funding for loans to U.S. auto makers to allow them to invest in environmentally cleaner vehicles will be put in place before Congress adjourns in three weeks. But Rep. Pelosi indicated the loan deal will be closer to the $25 billion proposed by lawmakers last year, not the larger numbers floated by auto makers.
Negotiations on the loans are continuing. Rep. Pelosi said the loans could either be offered as part of a broader economic stimulus bill or a resolution to fund the government through the elections.
The proposal to extend tax credits for solar and wind energy and other alternatives to oil came from Sens. Max Baucus, (D. Mont.), and Charles Grassley, (R. Iowa), the chairman and ranking Republican on the Senate Finance Committee. "This is crucial, this is vital, we've got to move on this, we can't wait," said Mr. Baucus. Mr. Grassley said he hoped Republicans would vote for the package.
The credits are likely to be attached to a wider energy bill that will include provisions on drilling. The plan is expected to be introduced as soon as next week in the House.
The package includes a new tax credit for nuclear-energy production and a credit for capturing and storing carbon dioxide. The wider renewable-energy credits are extended to 2011, expanding an earlier one-year extension.
To pay for the credits, an existing tax credit for major integrated and state-owned oil companies will be eliminated, which is estimated to raise $13.9 billion over the next decade.
An excise tax will be applied to the removal of any taxable crude oil or natural gas recovered from the outer continental shelf, expected to raise $17 billion over 10 years, as well as three other measures raising revenue. The oil industry has opposed cutting these tax breaks.
Write to Corey Boles at corey.boles@dowjones.com