Supporting a Clean Energy Future

H.R. 6, the CLEAN Energy Act of 2007, represents a critical first step toward a new energy future. By promoting clean, renewable energy and energy efficiency, the bill would help reduce global warming pollution and break our dangerous oil addiction. It would also help create jobs, reduce air pollution and save Americans billions on their energy bills. At the same time, the bill would repeal $13 billion in subsidies benefiting the same oil companies who are earning record profits. The bill would:

Provide $13 billion for clean, renewable energy and energy efficiency. The bill creates a strategic energy efficiency and renewables reserve that will be used to support clean, renewable energy and energy efficiency incentives. The fund could be tapped to support future legislation such as:

• Extension of Energy Efficiency Tax Incentives. These incentives for buildings, equipment and appliances were included in the Energy Policy Act of 2005 (EPAct) but expire within the next two years, too short of duration for the market to respond to them. They must be in place for four to five years to achieve success.
• Extension of Renewable Energy Production Tax Credits. The two-year duration of these credits is not long enough to stimulate the market investments needed to develop a sustainable renewable energy industry. The tax credits should be extended for five years.
• Lift the Cap on Efficient Vehicle Tax Credits. EPAct created a consumer tax credit for hybrid vehicles, but capped the credit at 60,000 vehicles per manufacturer. This cap should be lifted.
• Renewable Energy and Energy Efficiency Appropriations. America has the world’s leading scientists and engineers who have the know-how to solve our energy problems, but the federal government is not providing its fair share of the resources needed to do the job. Congress should make strategic investments to ensure that America is the world leader in clean energy technologies.

Repeal costly handouts to the world’s biggest oil companies. The clean energy reserve would be funded by repealing $13 billion in subsidies that benefit the same major oil companies who are recording record profits at the expense of American consumers. The bill would:

• Recover billions in unpaid royalties from offshore oil and gas drilling. Leases issued in 1998 and 1999 mistakenly omitted limits on royalty relief, allowing companies to drill without paying any royalties—no matter how high the price of oil. By giving companies a choice between voluntarily renegotiating the leases, paying a “conservation fee” on production or being barred from bidding on future drilling leases, the bill provides a strong incentive for these companies to accept the market-based limits on royalty relief that Congress always intended. 
• Repeal additional royalty relief. The bill would prevent additional future losses to the Treasury by repealing provisions in EPAct that authorized additional forms of royalty relief.
• Repeal two tax breaks for major oil companies. The bill would prevent major oil companies such as ExxonMobil from claiming a tax break for “geological and geophysical” expenditures enacted in EPAct. It would also remove a tax benefit from the Jobs Act of 2004 that lowers the income tax rate paid by oil companies by reclassifying oil and gas production as a manufactured good.