Tax Credits for MSW Renewable Energy PTC Expires
On December 31, 2013, the Production Tax Credit (PTC) for renewable energy for new landfill gas and waste-to-energy projects ended. This credit originally was enacted in 1992 and most recently updated by the fiscal cliff bill in January 2013. The latest update changed the qualification for the credit from being "placed in service" to having begun construction by the 2014 deadline.
The Production Tax Credit could be reinstated in the future and then applied retroactively, as has occurred previously. Any consideration of restoring the PTC is likely to be tied up with the issue of larger tax reform in 2014. On December 19, 2013, Senator Harry Reid (D-NV), the Senate Majority Leader, sponsored a bill that, in part, would extend the PTC through 2014, but the bill was not passed by the end of 2013 and remains in limbo in the new year.
Tax Reform Proposed
As part of the conversation on tax reform, Senator Max Baucus (D-MT) released a series of proposed changes to the United States’ tax code, including draft energy tax reform on December 18, 2013.
Senator Baucus’s proposal suggests two expanded credits to replace all previous PTC, one for electricity and one for fuel. They are intended to be technology neutral and avoid picking winners or losers, according to a summary released by Senator Baucus’s staff. Newly constructed power sources would qualify based upon their greenhouse gas emissions.
For electricity production, sources would need to be 25% less carbon-intensive than the 2013 national average in order to receive the credit, while qualifying fuel would need to be 25% cleaner than conventional gasoline. Both electricity and fuel production can opt for an investment tax credit rather than the PTC.
The draft energy tax reform would keep certain PTCs, such as the one for renewable energy, in place until the new credits would come into effect. The proposal also provides a path for phase out of both credits over the course of four years once certain milestones are hit.
Comments on the draft are due by January 31, 2014, and may be sent to firstname.lastname@example.org. SWANA is currently reviewing the proposal to determine how such tax reform could impact energy production within the municipal solid waste industry. Anyone interested in learning more or who would like to assist in developing SWANA’s comments on the issue is encouraged to contact SWANA using the information available at the end of this article. Comments are especially needed bout potential effects of the reform on landfill gas and waste-to-energy development, as well as the effect such a fuel credit would have on LNG.
Changes to Senate Chairmanship
Senator Baucus is currently chair of the U.S. Senate Finance Committee, though he has announced he will not seek reelection. President Obama recently nominated Senator Baucus for the ambassadorship to China, which could lead him to vacate his seat sooner than expected. Senator Baucus’s departure from his Senate seat puts his tax reform efforts into doubt, but his series of proposals may still play a role in the ongoing debate.
One other effect of Senator Baucus’s imminent departure is continued speculation about who is most likely to take over his chairmanship on the powerful Senate Finance Committee. The most likely candidate for that spot is Senator Ron Wyden (D-OR), supporter of renewable energy PTCs. If Senator Wyden were to take the position on the Finance Committee, he would then vacate his current chairmanship of the Senate Energy and Natural Resources Committee. It is likely that Senator Mary Landrieu (D-LA) would take Senator Wyden’s place in that spot. Both are expected to take the chairmanship due to their seniority on the respective committees.
4th Quarter Advocacy & Litigation Webinar Recording
For a full update on the advocacy and litigation activities in the municipal solid waste industry for the 4th Quarter 2013, please check out the Advocacy & Litigation Webinar recording available in the eLibrary on MySWANA.org. You must be logged in to access the recording and supplemental materials here.
Questions, comments, or corrections regarding this article should be directed to Jesse Maxwell, Advocacy & eLearning Program Manager, SWANA at (240) 494-2237 or email@example.com.
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