Congress continues to make headway on two major pieces of legislation—energy efficiency tax incentives and climate change legislation—in this election year. Action on extending the tax incentives has passed the House and is under consideration in the Senate, which makes extension legislation possible in 2008. However, the picture for passage of climate change legislation is murkier.
Federal energy efficiency tax incentives were passed by Congress in 2005, but some of these incentives expired at the end of 2007 and others will expire at the end of 2008. In February, the House of Representatives passed legislation to extend the tax incentives for commercial buildings, appliances, existing homes (including HVAC equipment), fuel cells, and home solar systems. The legislation also adds new tax credits for plug-in hybrid vehicles and home wind systems. Discussions are now proceeding in the Senate on what modifications to make to the House bill, and how to pay for these changes (or how to find revenues to offset the cost of these incentives). For example, based on past actions of the Senate Finance Committee, we would expect them to add an extension of the tax credit for efficient new homes. Of course, Senate action is not guaranteed.
Federal legislation to limit emissions of greenhouse gases will be debated in Congress later this year. The Senate Environment and Public Works Committee voted out legislation in late 2007 and the bill is scheduled for action on the Senate floor in June. (To access "America's Climate Security Act of 2007," enter S.2191 in the Search Bill Text box.)
Many modifications to the bill are likely as the authors work to reach the 60 votes needed to overcome a filibuster by opponents. The vote is expected to be close. The current bill allocates 15% of emissions allowances to be used by utilities and states to raise revenue to fund energy efficiency and other public purpose programs. The leaders of the House Energy and Commerce Committee are also starting to develop legislation, but no schedule has been reached. It may be possible for both the Senate and House to pass legislation this year, but time will likely run out before differences between the two bodies, not to mention difficulties finding a bill that both the Congressional leadership and President Bush can support, can be worked out. A final bill will probably not be passed until 2009 after a new President and Congress take office.