Washington (Platts)--13Feb2008

The US House of Representatives will consider legislation Wednesday that
would extend renewable energy and energy efficiency tax credits for several
years beyond their December 2008 expiration dates.

The bill was drafted by the House Ways and Means Committee and was to be
introduced on Tuesday. It would pay for the extensions with rollbacks to
manufacturing and foreign income tax credits for major, integrated oil and
natural gas companies.

The bill, which would cost slightly less than 2007's original $16 billion
tax package, would extend credits for wind, solar, biomass, and energy
efficiency, a draft shows.

It would cap at 35% a production tax credit for renewable energy, which
will be a likely point of contention for wind energy champions like Senate
Finance Committee Ranking Republican Charles Grassley of Iowa, who has warned
he does not support such a cap, even if it means accepting a slightly shorter
extension. The PTC would be extended through 2011 at a cost of $6.6 billion as
the bill is currently positioned.

For solar energy and fuel cell technology, the measure would extend the
investment tax credit for eight years, through 2016. It would cost $640
million.

A variety of other renewable energy and energy efficiency credits would
likewise be extended, including a break for homeowners who invest in solar
panels, which will cost an estimated $635 million.

An extension of a hybrid vehicle credit, which allows car buyers to claim
up to $4,400 for qualifying purchases in a given year, would cost an estimated
$1.3 billion.

The bill would roll back the "199" tax credit for the six or so largest
integrated oil companies, and freeze the incentive at 6% for the rest of the
industry. The credit allows oil and gas producers--and manufacturers--to claim
deductions for domestic production, and its partial repeal would generate an
estimated $13.6 billion to help offset the extensions, according to the Ways
and Means Committee summary.

The bill would also change the rules for oil and gas producers with
regard to non-US income taxes, a modification that Ways and Means presents as
tightening an existing loophole.

Producers would be required to use "ascertainable market values at the
nearest point to the well for which an independent market exists," when
calculating their non-US income taxes. The provision would generate an
estimated $4 billion in revenue over the ten year life of the bill, according
to the summary.

--Jean Chemnick, jean_chemnick@platts.com