Baucus Proposal Replaces Dozens of Energy Breaks with Credits for 'Clean' Fuel, Electricity

The Senate's top tax writer unveiled a radical proposal Wednesday to eliminate dozens of deductions, credits and other incentives for the energy industry and replace them with two provisions designed to promote clean electricity and transportation fuels and another credit for carbon capture and sequestration.

Sen. Max Baucus' proposal is the latest entry in his push for comprehensive tax reform, and it represents the most dramatic effort in recent memory to refocus with the array of incentives for oil, natural gas, coal, nuclear and renewable energy toward an overarching goal of reducing greenhouse gas emissions.  The Montana Democrat said his draft would strip away provisions that simply pick "winners and losers" without advancing rational policy goals.

"We need a system of incentives that is more predictable, rational, and technology-neutral to increase our energy security and ensure a clean and healthy environment for future generations," Baucus said in a statement.

The draft package generally takes aim at 42 existing energy tax incentives -- of which some are permanent in the code and others, such as the production tax credit or various biofuels incentives, are typically renewed every few years.

Baucus Proposal Replaces Dozens of Energy Breaks with Credits for 'Clean' Fuel, Electricity