Friday, April 29, 2011

The Pickens Plan -- in Bill Form

On April 6, a bipartisan group of federal congressmen from Connecticut, Oklahoma, and Texas introduced a bill--H.R. 1380--which is an "offshoot" of the energy strategy that T. Boone Pickens has advocated for several years now; indeed, the bill embodies a key element of the Pickens Plan, and Pickens predicts that it will pass by "late May."  The Pickens Plan encompasses four goals, which include building wind energy (and some solar) capacity (an element that Pickens seems to have moved away from since first introducing his plan), updating the electrical grid, providing home energy efficiency incentives, and replacing imported oil with domestic natural gas.  The recently introduced bill focuses on this final component. 

H.R. 1380--the "New Alternative Transportation to Give Americans Solutions Act of 2011" (the "NAT GAS Act") would expand existing natural gas subsidies in the Internal Revenue Code.  Section 4081 of the Internal Revenue Code, for example, taxes "the removal of a taxable fuel from any refinery" or "terminal," among other activities, and Section 6426 of the Code exempts certain fuels from this tax, including biodiesel and compressed or liquefied natural gas, among others; this exemption expired at the end of 2009, with the exception of the exemption for hydrogen. The NAT GAS Act would extend the tax exemption for natural gas through December 31, 2016.  The Internal Revenue Code also taxes sales of compressed natural gas and other alternative fuels in Section 4041, and the exemptions to this tax also expired at the end of 2009 (with the exception of liquefied hydrogen); the NAT GAS Act would extend this exemption through December 31, 2016, for natural gas.  Perhaps the most influential components of the NAT GAS Act--infrastructurally speaking--are its proposed extensions and expansions of credits for manufacturing and purchasing natural gas vehicles, investing in R&D for natural gas vehicles, and placing natural gas "refueling property" in service.  

The NAT GAS Act might be a promising development, but, depending on one's perspective, it may also have a key flaw:  it subsidizes one important domestic resource while leaving others--particularly renewables--behind. 

-Hannah Wiseman

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