Senator Max Baucus talks to Montana electric cooperative delegation at the 2008 Legislative Conference. Photo by Luis Gomez.

For the second time, the Senate failed to begin debate on a package of energy tax provisions, similar to a bill that has already passed the House. The bill failed to collect the 60 “yes” votes needed.

Senate Finance Chairman Max Baucus (D-MT) had intended to offer a substitute authorizing $2 billion of new Clean Renewable Energy Bonds (CREB) to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion facilities. Electric cooperatives would have eligible for one third of this funding.

Other energy-related provisions include one year extension of the wind energy Production Tax Credit (PTC) and a three-year PTC extension for other renewable sources, along with a new category: those that generate electricity from marine renewables (e.g., waves and tides).

The controversy that barred the bill from the Senate floor lies not with the tax credits themselves but with proposals for offsetting lost revenue (approximately $18 billion for the renewable energy provisions).

To offset the CREBs and Production Tax Credits, along with other incentive programs, Baucus proposed the following: 1) delay implementing a rule enacted in 2004 that provided a more liberal allocation of interest expense; and 2) close the loophole that allows individuals to take a deduction on deferred compensation from off-shore corporations and other tax-indifferent parties.