Crapo, Risch, Whitehouse, Reed, Panetta Introduce Legislation to Encourage Innovation in the Clean Energy Sector
Technology-neutral tax credit targets broad innovation in the clean energy sector
Washington, D.C.--According to a report by the International Energy Agency, approximately 40 percent of cumulative CO2 emissions reductions needed to meet sustainability targets rely on technologies not yet commercially deployed on a mass-market scale. 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) have introduced the Energy Sector Innovation Credit (ESIC) Act, a bipartisan energy tax proposal to encourage innovation in the clean energy sector to help rapidly scale and diversify new technologies. Original co-sponsors of the Senate legislation include Senate Finance Committee members John Barrasso (R-Wyoming) and Michael Bennet (D-Colorado) and Senate Energy and Natural Resources Committee members Jim Risch (R-Idaho) and John Hickenlooper (D-Colorado). House Ways and Means Members Tom Reed (R-New York) and Jimmy Panetta (D-California) have introduced identical legislation in the U.S. House of Representatives.
“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,” said Senator Crapo. “ESIC will incentivize technology-wide clean energy innovation so new, clean technologies can rapidly scale up and compete independently in the market. Moreover, ESIC automatically scales down credits as technologies’ market penetration ramps up, so taxpayer dollars do not subsidize market-mature technologies. The U.S. is a leader in energy production because our robust economy allows for innovation and pathways to clean energy solutions, and I will work to get this legislation across the finish line.”
“Thanks to innovators like the INL, the United States continues to lead the world in clean energy development,” said Senator Risch. “The Energy Sector Innovation Credit Act will advance us towards the goals of energy independence and a clean energy future by ensuring that nuclear, hydrogen, geothermal, and other groundbreaking technologies play a key role in our energy mix.”
“Major investments in innovative clean energy technologies are needed if we’re going to make a difference in the race against climate change,” said Senator Whitehouse. “Our bipartisan legislation will accelerate nascent clean technologies that have the potential to compete against heavy-polluting forms of energy and create good jobs in the process.”
“It is time Congress finally act to mobilize American ingenuity and fully unleash the power of new innovative energy technologies,” said Congressman Reed. “We can best do so by passing the Energy Sector Innovation Credit Act, our technology-neutral tax incentive designed to boost the deployment of any cutting-edge clean energy system without the government picking winners and losers. We are proud to reintroduce this critical legislation, and I thank my colleagues on both sides of the aisle for their continued support.”
“To combat the ever-growing climate crisis, we can use the tax code to incentivize clean energy innovation for next-generation technologies,” said Congressman Panetta. “Our bipartisan and bicameral Energy Sector Innovation Credit will leverage the ITC and PTC tax credits to bolster new, emission-reducing technologies and motivate existing energy sources to go greener. This bill will provide the tools necessary to support clean energy entrepreneurship and reach our emissions reductions targets more quickly and efficiently.”
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.
- 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 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.
ESIC is supported by a number of industry and environmental groups, including ClearPath Action, Idaho Falls Power, the Evangelical Environmental Network, the Utah Associated Municipal Power Systems, Citizens’ Climate Lobby, the U.S. Nuclear Industry Council, the Nuclear Energy Institute, Carbon180, Bipartisan Policy Center Action, The Nature Conservancy, American Conservation Coalition, ThirdWay, Nuclear Innovation Alliance, Arnold Ventures, Clean Air Task Force, Citizens for Responsible Energy Solutions, Xcel Energy, American Public Power Association, Oklo Inc., NuScale Power, Geothermal Rising, Fervo Energy, Ormat, Geothermal Resource Group, GeothermEx, Long Duration Energy Storage of California, Environmental Defense Fund, Carbon Utilization Research Council, Clean Hydrogen Future Coalition, American Petroleum Institute, and National Rural Electric Cooperatives Association.
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