Legislative update - Finance Committee staff discussion draft of energy tax incentive reforms 

December 18:  The Senate Finance Committee today released a “staff discussion draft” of proposals concerning energy tax incentives.

According to a Finance Committee release, the discussion draft focuses on reforming the current set of energy related tax preferences.

  • Under current law, there are 42 different energy tax incentives—including more than a dozen preferences for fossil fuels, 10 different incentives for renewable fuels and alternative vehicles, and six different credits for clean electricity.
  • Of the 42 different energy incentives, 25 are temporary and expire every year or two years.
  • The credits for clean electricity alone have been adjusted 14 times since 1978.

According to the Finance Committee release, if Congress continues to extend current incentives, they will cost nearly $150 billion over 10 years.

Proposals in staff discussion draft

The Finance Committee staff discussion draft proposes a smaller number of targeted and simple energy incentives that would be intended to be flexible enough to accommodate advances among fuels and technologies of any type—whether renewable, fossil, or anything in between.

The proposals are intended to promote domestic energy production and reduce pollution. Specifically, the discussion draft offers proposals to:

  • Establish a new, technology-neutral tax credit for the domestic production of clean electricity
  • Establish a new, technology-neutral tax credit for the domestic production of clean transportation fuel
  • Consolidate almost all of the existing energy tax incentives into these two new credits, with appropriate transition relief
  • Provide businesses and investors with greater certainty by making the new incentives long enough to be effective, but phasing them out once clearly defined goals have been met

The package of reforms draws heavily from proposals offered by both Republican and Democratic members of the Senate Finance Committee.

Comments on these proposals are requested by January 31, 2014.

Related documents

©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this


Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.

Email your contact information.

Other TaxNewsFlash publications

TaxNewsFlash-United States by year