On May 26, the Senate Finance Committee held a markup of “The Clean Energy for America Act,” which addresses energy industry-specific taxes and incentives directly related to the energy industry. The committee considered several amendments, which ultimately was approved by the committee along partisan lines. The bill moves to the full Senate for debate and potential passage.
Several provisions in the legislation could affect Council Member Companies. The Council expressed specific concerns in a joint letter to Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID), signed by a coalition of energy trade organizations. The letter articulates industry concerns that the bill could be used to directly target the energy industry and hinder the sector’s growth.
The measure targets cost recovery mechanisms, such as the intangible drilling costs (IDCs) tax provision. Removal of this provision would prevent companies from recovering costs invested in future projects necessary to meet global energy demands. Labor comprises almost three-fourths of costs accounted for by IDCs. All other sectors are able to expense labor immediately. Eliminating IDCs as proposed in this legislation would target the oil and gas industry with an unfair burden on their operations.
The bill is designed to deny the oil and gas sector access to business provisions available to all industries. The energy sector was severely affected by the COVID-19 economic downturn, and like other industries is trying to recover lost jobs and revenues. This legislation would remove emergency economic relief under the “CARES Act,” specifically for the oil and natural gas sectors. Additionally, the bill limits incentives for some technological developments such as carbon capture and sequestration, which would jeopardize progress towards a lower carbon energy future.
While the bill has cleared the Senate Finance Committee, it still needs a majority of Senators to vote for passage. The Council will continue to fight for fair tax provisions for energy companies to encourage the sector’s continued recovery and growth.
If you are interested in the Council’s advocacy efforts or would like to join the Government Affairs Committee, contact SVP Government Affairs & Counsel Tim Tarpley.
Deidre Kohlrus, Director Government Affairs, writes about industry-specific policies for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.