February 13,2002

Committee Passes Energy Tax Bill With Many Grassley Initiatives

WASHINGTON -- The Committee on Finance today passed a bipartisan energy taxincentives bill including numerous pieces of environmentally responsible alternative energylegislation that Sen. Chuck Grassley, ranking member of the Committee on Finance, has championedfor years.

“It makes sense to use the tax code to develop alternative energy,” Grassley said. “Cuttingtaxes is an effective way to encourage positive, environmentally conscious ways to produceelectricity. I’m glad to work with Chairman Max Baucus to put together a good, green energypackage.”

The committee passed the bill on a voice vote. Grassley tax priorities in the bill passedinclude:

< Wind energy. The bill includes Grassley’s pending legislation, the Bipartisan Renewable,Efficient Energy with Zero Effluent (BREEZE) Act (S. 530), to extend the production taxcredit for energy generated by wind for five years. The tax credit expired Jan. 1. Grassleyauthored the Wind Energy Incentives Act of 1993, which established the first-ever windenergy production tax credit.

< Biomass. The package includes Grassley’s bill, the Growing Renewable Energy forEmerging Needs (GREEN) Act (S. 756), which extends the tax credit for the production ofbiomass, which Grassley authored and which became law in 1992, and expands thedefinition of biomass to include saw dust, tree trimmings, agricultural byproducts anduntreated construction debris. Also included is the extension of the tax credit for theproduction of electricity from poultry waste.

< Biodiesel. The committee accepted an amendment from Grassley and Democratic Sen.Blanche Lincoln, with support from non-committee members Republican Sen. TimHutchinson and Democratic Sen. Mark Dayton, to provide an income tax credit and excisetax rate reduction for biodiesel fuel mixtures. These new incentives will encourage theproduction of biodiesel, a clean-burning alternative fuel made from domestic renewablesources, such as soybean oil.

Grassley noted that Iowa is the nation’s largest producer of soybeans and is home to twobiodiesel plants. “Our vegetable oils are plentiful, and our energy needs are great,” Grassley said.“Biodiesel is an environmentally sound way to fill the gap between energy supply and demand.”

< Small ethanol producer credit. The new legislation expands the definition of an eligiblesmall ethanol producers so small cooperative producers of ethanol will receive the same taxbenefits as large companies. It also clarifies that the tax credit can flow through to thepatrons of the cooperatives. Grassley’s legislation, the Tax Empowerment and Relief forFarmers and Fishermen Act (TERFF) (S. 312), includes these provisions.

Grassley has a long history of promoting ethanol as a clean-burning, renewable, domesticallyproduced energy source. He scored a major victory for the Midwest when he not onlyblocked anti-ethanol efforts, but also countered by orchestrating congressional approval toextend the ethanol excise tax exemption to 2007.

< Fuel taxes. The bill moves a portion of the taxes from gasohol – gasoline blended withethanol – into the Highway Trust Fund to ensure that fuel taxes are used for highways, notunrelated government programs. Grassley and Baucus agreed on this issue after an energyhearing last July.

< Energy-efficient appliances. The package includes legislation Grassley originally authoredand co-sponsored in this Congress, the Resource Efficient Appliance Incentives Act (S. 686),to encourage the manufacture and use of super energy-efficient washing machines andrefrigerators with a tax credit for the production of those appliances.

< Swine and bovine waste. The package includes Grassley’s legislation, the ProvidingOpportunities With Effluent Renewables (POWER) Act of 2001 (S. 1219), which providesnew opportunities for energy production, a useful method of waste disposal and increasedfarm income by creating a production tax credit for electricity generated from swine andbovine waste.