Senate Democrats Unveil Energy Bill That Features Performance-Based Incentives

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A group of Senate Democrats – led by Maria Cantwell, D-Wash., the ranking member of the Senate Energy and Natural Resources Committee – have introduced a national energy bill that lays out a path to a cleaner energy future. Sens. Harry Reid, D-Nev., Ron Wyden, D-Ore., and Charles Schumer, D-N.Y., co-sponsored the legislation.

The bill, The American Energy Innovation Act of 2015, includes a broad array of programs that would invest in clean energy, cut carbon pollution and waste, and support research and development.

Notably, the bill aims to streamline incentives for the production of clean electricity, namely the production tax credit (PTC) and investment tax credit (ITC). The tax credits on the books now are a ‘patchwork of incentives [that] features several temporary provisions with differing rules and expirations,’ noting that the current law does not include several new and emerging technologies. As such, the bill creates a performance-based incentive that would be neutral and flexible between clean electricity technologies.


Taxpayers are able to choose between an ITC and a PTC, which are scaled based on the carbon emissions of the electricity generated – measured as grams of carbon dioxide equivalents emitted per kilowatt-hour generated. Power plants that emit at least 25% less carbon than the current nationwide average would begin qualifying for a small incentive, which increases for power plants that are progressively cleaner. Zero emission facilities would qualify for the maximum credits – a $0.023/KWh hour PTC or a 30% ITC.

The PTC would be available for the 10 years after a facility is placed in service.

Power plants placed in service before Jan. 1, 2018, that add energy storage or carbon capture technology are able to claim the maximum 30% ITC for those investments, which can enhance grid stability and reduce the emissions of current fossil fuel power plants. Storage technologies include hydroelectric pumped storage, thermal energy storage, fuel cells and batteries, among others.

To read the bill's full text, click here.

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