Energy & Sustainability Washington Updates – January 2021 – Energy and Natural Resources – United States – Mondaq News Alerts

United States: Energy & Sustainability Washington Updates – January 2021

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As we approach the end of the current 116th Congress on January
3, there has been a flurry of energy-related activity on Capitol
Hill as well as with the Biden-Harris presidential transition as
President-elect Biden prepares for his inauguration on January
20.

Biden-Harris Transition Updates

President-elect Biden has continued to round out his energy,
environment, and climate teams, naming cabinet-level nominees as
well as other roles that do not require confirmation by the U.S.
Senate.

  • Jennifer Granholm, the former governor of Michigan, has been
    nominated top serve as Secretary of Energy.
  • Michael Regan, Secretary of the North Carolina Department of
    Environmental Quality, has been nominated to serve as Administrator
    of the Environmental Protection Agency.
  • Rep. Deb Haaland (D-NM) has been nominated to serve as
    Secretary of the Interior.
  • John Kerry, former senator and secretary of state, will serve
    as Special Envoy for Climate (a new post created by the
    President-elect).
  • Gina McCarthy, former Administrator of the EPA, will serve as
    the White house National Climate Advisor (a new post created by the
    President-elect).
  • Ali Zaidi, who served in the Obama Administration, as Deputy
    White House National Climate Advisor (a new post created by the
    President-elect).
  • Brenda Mallory, an environmental law expert, will serve as
    chair of the White House Council on Environmental Quality.
  • Susan Rice, former National Security Advisor to President
    Obama, will serve as chair of the Domestic Policy Council.

Congress Approves Bipartisan Energy
Package

The Fiscal Year 2021 Consolidated Appropriations Act, finalizing
the federal government’s appropriations for the current fiscal
year which started on October 1, included a bipartisan, bicameral
agreement (the Energy Act of 2020) which combined the Senate’s
American Energy Innovation Act (S. 2657) and the House of
Representatives’ Clean Economy Innovation and Jobs Act (H.R.
4447). This is the first comprehensive energy legislation in more
than a decade.

The package focuses on energy storage; advanced nuclear; carbon
capture, utilization and storage; carbon removal; renewable energy;
critical minerals and materials; fusion; industrial technologies;
smart manufacturing; and grid modernization, among other areas. It
also reauthorizes ARPA-E and the Weatherization Assistance program,
and includes a range of measures aimed at boosting energy
efficiency and brings administrative reforms to improve the
Department of Energy.

A high-level summary of the Energy Act can be found by clicking
HERE.

A more detailed section-by-section summary of the Energy Act can
be found by clicking HERE.

Energy Tax Provisions Made Permanent or
Extended

The end-of-year omnibus legislation, covering FY21
appropriations and COVID relief measures, also included numerous
provisions that either made permanent or extended certain energy
and energy efficiency tax provisions. The “tax extenders”
language in the omnibus extends the investment tax credit for two
years and the production tax credit for one year; expands tax
incentives for offshore wind, waste heat to power property, and
efficient biomass stoves; incentivizes energy efficient commercial
buildings by making permanent the deduction for certain energy
efficient property; and extends credits for energy efficient and
renewable energy property for homeowners, new energy efficient
homes, EV charging and fuel cell refueling stations, and certain
zero-emissions vehicles.

More specifically, the bill:

  • Extends the production tax credit for renewable power
    facilities that begin construction by the end of 2021. For wind
    facilities that begin construction by the end of 2021, the credit
    continues to be reduced by 40 percent.
  • Extends the current 26 percent investment tax credit for solar
    energy property, fiber-optic solar equipment, fuel cell property,
    and small wind energy property that begin construction by the end
    of 2022, and at a 22 percent rate for property that begin
    construction by the end of 2023, after which the credit is reduced
    to 10 or zero percent. The bill extends the 10 percent investment
    credit for microturbine property, geothermal heat pumps, and
    combined heat and power property that begins construction through
    2023.
  • Extends through 2021 a credit for purchases of nonbusiness
    energy property. The provision allows a credit of 10 percent of the
    amounts paid or incurred by the taxpayer for qualified energy
    improvements to the building envelope of principal residences. The
    provision allows credits of fixed dollar amounts ranging from $50
    to $300 for energy-efficient property including furnaces, boilers,
    biomass stoves, heat pumps, water heaters, central air
    conditioners, and circulating fans, and is subject to a lifetime
    cap of $500.
  • Extends, through 2021, a credit for purchases of new qualified
    fuel cell motor vehicles. The provision allows a credit of between
    $4,000 and $40,000, depending on the weight of the vehicle.
  • Extends, through 2021, a credit for the installation of
    alternative fuel vehicle refueling property, which includes
    property that dispenses alternative fuels including ethanol,
    biodiesel, natural gas, hydrogen, and electricity. The credit is
    capped at $30,000 per location for business property and $1,000 for
    property installed at a principal residence.
  • Extends, through 2021, a 10-percent credit for highway-capable,
    two-wheeled plug-in electric vehicles. The credit is capped at
    $2,500. Batter capacity within the vehicles must be greater than or
    equal to 2.5 kilowatt-hours.
  • Extends, through 2021, the credit of up to $2,000 for qualified
    new energy efficient homes.
  • Extends, through 2021, the $0.50-per-gallon excise tax credit
    or payment for alternative fuel and $0.50-per-gallon credit for
    alternative fuel mixtures.
  • Extends, through 2022, the credit for residential energy
    efficiency property at the current 26 percent rate for property
    placed in service through 2022, with the rate reduced to 22 percent
    for property placed in service in 2023. Starting in 2021, the
    provision expands the definition of eligible property to include
    qualified energy efficient biomass fuel property with a thermal
    efficiency rating of at least 75 percent. Biomass stoves will no
    longer qualify under section 25C to prevent a double benefit.
  • Makes waste energy recovery property eligible for the energy
    investment tax credit. Waste energy property that begins
    construction after 2021 or 2022 is eligible for a 26 percent
    credit, and property that begins construction in 2023 is eligible
    for a 22 percent credit.
  • Extends the investment tax credit for electing offshore wind
    facilities that begin construction through 2025. Offshore wind
    facilities that begin construction during 2017 to 2025 are not
    subject to the onshore-wind facilities phase-out rates and are
    eligible for the full credit amount.

A Senate Finance Committee summary of the tax provisions can be
found by clicking HERE.

House Democrats Finalize 117th Congress Committee
Assignments

The House Democratic Steering Committee has finalized committee
assignments for the 117th Congress, which convenes on January 3,
with a number of new members for the House Energy & Commerce
Committee: Rep. Angie Craig (D-MN), Rep. Lizzie Fletcher (D-TX),
Rep. Kathleen Rice (D-NY), Rep[. Kim Schrier (D-WA), and Rep. Lori
Trahan (D-MA). The House Ways & Means Committee, which has
jurisdiction over tax matters, will also gain one new Democratic
member with Rep. Stacey Plaskett (D-VI).

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