April 23,2002

Grassley Initiatives Advance in Energy Tax Bill

WASHINGTON -- Key alternative energy production tax incentives from Sen. ChuckGrassley, ranking member of the Committee on Finance, advanced today when Senate leaders agreedto include the items as an amendment to the pending energy policy bill.

“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 Senate leaders to advance a good, green energy package.”

In February, the Finance Committee on a voice vote passed an energy tax incentives packageput together by Grassley and Sen. Max Baucus, committee chairman. Today, Senate leaders agreedto accept the tax package as an amendment to the energy policy bill after negotiations with Grassleyand Baucus. This development significantly advances the tax package and could lead to legislativesuccess. Immediately after this agreement, a cloture vote on the energy bill passed overwhelmingly,bringing the bill closer to a final vote.

The tax package includes numerous alternative energy tax incentives that Grassley haschampioned for years, such as:

< Wind energy. The package 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 through Dec. 31, 2006. Grassley authored the WindEnergy Incentives Act of 1993, which established the first-ever wind energy production taxcredit.

< Biomass. The package includes Grassley’s bill, the Growing Renewable Energy for EmergingNeeds (GREEN) Act (S. 756), which extends the tax credit for the production of biomass,which Grassley authored and which became law in 1992, and expands the definition ofbiomass to include saw dust, tree trimmings, agricultural byproducts and untreatedconstruction debris. Also included is the extension of the tax credit for the production ofelectricity from poultry waste and closed loop biomass co-fired with coal, including animportant Iowa switch grass project.

< Biodiesel. The package includes a proposal from Grassley and Democratic Sen. BlancheLincoln, with support from non-committee members Republican Sen. Tim Hutchinson andDemocratic Sen. Mark Dayton, to provide an income tax credit and excise tax rate reductionfor biodiesel fuel mixtures. These new incentives will encourage the production of biodiesel,a clean-burning alternative fuel made from domestic renewable sources, 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 legislation expands the definition of an eligible smallethanol producer so small cooperative producers of ethanol will receive the same tax benefitsas large companies. It also clarifies that the tax credit can flow through to the patrons of thecooperatives. Grassley’s legislation, the Tax Empowerment and Relief for Farmers andFishermen 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 – from the general fund into the Highway Trust Fund to ensure that fuel taxes areused for highways, not unrelated government programs. Grassley and Baucus agreed on thisissue after an energy hearing last July.

< Energy-efficient appliances. The package includes legislation Grassley originally authored andco-sponsored in this Congress, the Resource Efficient Appliance Incentives Act (S. 686), toencourage 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.