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Energy tax breaks excluded from Senate aviation bill

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Energy tax breaks excluded from Senate aviation bill

Taxcredits for carbon capture and certain forms of renewable energy will not maketheir way into a Federal Aviation Administration reauthorization bill afterpushback from conservative groups and lawmakers.

Industrygroups and many Democratic lawmakers were pushing for tax credit and incentives in theFAA bill for small wind power production, carbon capture and sequestration forenhanced oil recovery, biofuels, geothermal heat pumps, fuel cells and a widerange of other energy sources. But the ballooning size of the credit package —which grew to over $9 billion with the inclusion of unrelated, non-energy taxcredits, according to FBR & Co. — drew opposition from fiscalconservatives. The energy tax credits alone totaled a more modest $1.4 billion,FBR said.

Negotiationsto include the energy and other tax credits in the must-pass aviation billbroke down April 12, a development that was praised by conservative groups.

"Congressis right to reject this backroom deal and move ahead with a clean FAAextension," said Andy Koenig, a senior policy adviser for FreedomPartners, a nonprofit group that promotes free-market policies. FreedomPartners had joined another conservative group, Americans for Prosperity, andover 30 free-market groups in launching a campaign against adding the taxbreaks to the FAA bill.

Thegroups wrote an April 5 letter to Senate Finance Committee Chairman OrrinHatch, R-Utah, and Committee Ranking Member Ron Wyden, D-Ore., to express "strongopposition to extending expiring renewable energy provisions" in the FAAbill. The letter said Congress had already considered expiring energy taxprovisions in late 2015, when lawmakers voted to extend investment and production tax credits for windand solar facilities as part of a massive tax package and fiscal year 2016appropriations bill. But the tax provisions considered for the FAA bill "area distortion of the tax laws for special interests in the renewable energyindustry and were wisely left out of [the fiscal year 2016] package," thegroups said.

ButDemocrats are keeping up pressure on Senate leaders to extend tax breaks forcertain forms of renewable energy to help level the playing field withlarger-scale onshore wind and solar facilities. Proponents of the energy taxincentives may vote against the underlying FAA bill without the inclusion ofsome tax breaks, lowering the must-pass bill's chance of passage.

Inthe meantime, Senate Democrats are seeking any means possible to extend taxcredits for other forms of renewable energy. Sens. Ed Markey, D-Mass., andSheldon Whitehouse, D-R.I., and a group of other Senate Democrats are fighting to extend the investment tax credit for offshore windthrough 2025. The current offshore wind tax credit expires in 2019, and thelong lead time to build new facilities means "no future offshore windprojects would be able to qualify for these offshore wind tax credits prior totheir expiration," the senators said in an April 12 to Senate MajorityLeader Mitch McConnell, R-Ky., and Senate Minority Leader Harry Reid, D-Nev.