Congressional Legislative Update: Climate & Energy Bill Passes Senate, House Up Next

It is an eventful week in Washington as U.S. Senate Democrats Sunday passed the Inflation Reduction Act (IRA) – a climate, health, and tax-focused reconciliation package developed behind closed doors between Senator Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY).

            The legislation would make the largest federal investment– $375 billion– in climate change fighting strategies, including investments in renewable energy production, tax rebates for consumers for energy efficiency and electric vehicles and more.

            All Senate Republicans voted against the bill.

            The bill now moves to the U.S. House where a vote is expected by the end of the week.

Fuel Neutrality

This week, EMA, the Empire State Energy Association, National Energy & Fuels Institute, and the New York State Energy Coalition sent a letter urging Leader Schumer, and others in the New York delegation, to recognize the importance of fuel neutrality.

Specifically, the groups called on the Senate Majority Leader to maintain the proposed “clean fuels production tax credit” after 2024 at the blender level and allow heating fuels to qualify.

In addition, EMA argued for tax parity for any new credits awarded for fuels that compete for the same feedstocks, in particular, the sustainable aviation fuel (SAF) tax credit which will disrupt and may eventually eliminate the market for on- and off-road biodiesel and renewable diesel by diverting limited U.S. biofuel feedstocks to SAF.

EMA has since learned from the Senate Finance Committee that the updated version of the bill will likely incorporate heating fuels into the category of fuels eligible for the clean fuel production tax credit.

While not confirmed, this would be a significant victory for the heating fuels industry.

Click Here to write Congress over EMA’s above concerns with the Inflation Reduction Act of 2022.

Electric Vehicles

There is also ongoing debate on the EV provisions. Broadly speaking, the legislation allows for up to $7,500 for consumer tax credits, but only if the vehicle meets certain domestic content restrictions and is under $55,000 for sedans and $80,000 for pickups and SUVs.

Democratic Senators from Michigan – who represent many of the largest automakers – have warned that many vehicles will not be eligible for the credits under the current guidelines.

There are also new income ceilings to access the credit — $300,000 for joint filers and $150,000 for individual filers. Proposals have ranged from delaying the domestic content requirements to increasing the price and income ceilings.

Provisions could be changed ahead of time, or could be affected by the “vote-a-rama” process – roughly 20 hours of debate time where unlimited amendments can be considered.

While some of the amendments will be designed for messaging and will likely fail, some could be constructive and may be adopted.

The earliest time for final passage is likely Monday or Tuesday.

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