Washington (Platts)--21May2008

The US House of Representatives Wednesday passed 263-160 a major tax
incentives bill that would authorize $20 billion in credits for the energy
industry, including extensions of incentives for wind, solar, and other
renewable energy resources and $1.5 billion to develop carbon-control
technologies.

The bill (H.R. 6049) also includes numerous credits unrelated to energy.

President Bush earlier Wednesday promised to veto the bill unless the
House made major revisions before passing it.

Even as they spoke of the bill's importance in improving the environment
and bringing down the price of gasoline, some House Democrats acknowledged
Wednesday it would face an uphill battle after it left the lower chamber due
to controversy over the bill's revenue raisers. Increased taxes for employees
of offshore corporations, including hedge funds, are to be tapped to pay for
the energy credits.

Some 41 Senate Republicans signed a letter in April to Senate Finance
Committee Chairman Max Baucus asking that the Montana Democrat work with them
to produce a tax bill that does not include tax increases. In the Senate, 60
votes are needed to pass controversial legislation.

Without revenue raisers, the bill would violate budget rules that have
been championed by the Democratic majority, especially in the House.

Baucus has said that the Senate bill, which will be unveiled before his
committee takes it up in June, will include unspecified "pay fors," or revenue
raisers.

The Republican senators said that the Senate already voted to extend
energy tax incentives in a housing stimulus bill passed in February.

"An overwhelming majority of the Senate has already voted this year to
extend various extending energy tax incentives without offsetting tax
increases," they said.

Congressional rules require that new spending hikes or tax cuts be offset
with new revenues. The White House does not share this view, however.

"Overall, the administration does not believe that efforts to avoid tax
increases on Americans need to be coupled with provisions to increase
revenue," the White House said in a statement of administration policy.

Additionally, President Bush said the renewable energy provisions could
be improved by creating one "single, expanded program with the following
features: the incentive should be carbon weighted; technology-neutral; long
lasting; and should take into account our nation's energy security needs."

The administration also expressed "concern" about the "expensive and
highly inefficient" Clean Renewable Energy Bonds program, which provides an
incentive for public power entities.

It would receive a $2-billion authorization under the House bill, which
would help fund projects that generate electricity from wind, biomass, marine,
geothermal and other qualifying resources.

--Jean Chemnick, jean_chemnick@platts.com