Crapo, Whitehouse Release Energy Innovation Tax Credit Proposal
Technology-neutral tax credit targets broad innovation in the clean energy sector
Washington, D.C.--Today, U.S. Senator Mike Crapo (R-Idaho), Ranking Member of the U.S. Senate Finance Committee, and U.S. Senate Finance Committee member Sheldon Whitehouse (D-Rhode Island) released a discussion draft of the Energy Sector Innovation Credit (ESIC) Act, a bipartisan energy tax proposal to encourage innovation in the clean energy sector.
“The U.S. is a leader in energy production because our robust economy allows for innovation and pathways to clean energy solutions,” Crapo said. “But if we are to meet long-term emissions targets without sacrificing affordable electricity, we need to invest in on-the-horizon technologies that can accomplish our environmental goals, create good-paying American jobs and meet our energy demand. This proposal incentivizes technology-wide clean energy innovation so new, clean technologies can rapidly scale up and compete independently in the market. Moreover, the credits scale down as technologies’ market share ramps up, so taxpayer dollars do not subsidize market-mature technologies. I look forward to continuing the conversation on how we can spur emerging clean energy investment.”
“We have plenty of good ideas for clean energy technology to battle climate change; the challenge is bringing them online quickly enough to make a difference. That’s why we need proposals like this one,” Whitehouse said. “Our legislation will hit the accelerator on promising new sources of clean energy, and help those technologies compete with heavy-polluting sources on the open market. I’m glad to partner with Senator Crapo in beginning work on this bipartisan bill, and look forward to strengthening it as others weigh in.”
The Energy Sector Innovation Credit is a technology-inclusive, flexible investment tax credit (ITC) or production tax credit (PTC) designed to promote innovation across a range of clean energy technologies, including generation, storage, carbon capture and hydrogen production. ESIC:
- Promotes clean energy innovation by allowing up to a 40 percent ITC or 60 percent PTC for low market penetration technologies across a range of energy sources, including renewables, fossil fuels, and nuclear.
- Phases out credits as technologies mature, which provides an on-ramp for the most innovative technologies to get to market and then compete on their own, rather than allowing Congress to pick winners and losers when temporary credits expire.
- Groups technologies that are substantively different from one another as determined by experts at the Department of Energy (DOE), national labs and other stakeholders.
- Provides flexibility for unforeseen clean energy technologies to be eligible for ESIC by including an expedited-consideration provision for Congress to take up new technology recommendations from DOE.
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