Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - June 29, 2006)

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Ms. SNOWE. Mr. President, today I am introducing another piece of legislation with Senator FEINSTEIN that addresses the critical issue of the Nation's energy policy, the EXTEND the Energy Efficiency Incentives Act of 2006. The Senator from California and I have come together once again--given where we are as a Nation in terms of reliance on foreign oil, the historically high costs of energy, the state of our environment, and the status of our technological know-how--to introduce realistic, doable legislation that represents one of the best opportunities for developing bipartisan consensus on tax policy to further securing our Nation and its future.

The EXTEND Act, also cosponsored by Senator KERRY, takes a comprehensive and practical approach to assure that America gets the maximum possible energy savings and relief from high energy prices at the lowest cost. It builds on the incentives for efficient buildings adopted in the Energy Policy Act of 2005, EPAct 2005, and modifies them where necessary to achieve these policy goals.

The bill extends the temporary tax incentives for energy efficiency buildings established in EPAct 2005, providing 4 years of assured incentives for most situations, and some additional time for projects with particularly long lead times, such as commercial buildings. A sufficient length of time is needed by the business community to make rational investments. The bill is meant to incentivize not discourage. I want to encourage businesses to make investments to qualify for energy efficiency tax incentives. Commercial buildings and large residential subdivisions have lead times for planning and construction of 2 to 4 years. This is why the EXTEND Act provides 4 years of assured incentives for most situations, and some additional time for projects with long lead times.

I am pleased to have the support of Finance Committee Chairman GRASSLEY for crafting the correct policy for large-scale commercial projects, recognizing that these large commercial building projects take years to design and build. As a mater of fact, I entered into a colloquy with the chairman the day EPAct 2005 passed the Senate and received his assurance that he will continue to work with me to make this a long-term policy of the Tax Code.

Also, the EXTEND Act makes modifications to the EPAct 2005 incentives so that the incentives are not based on cost but based on actual performance. These are measured by on-site ratings for whole buildings and factory ratings for products like solar water heaters and photovoltaic systems as well as air conditioners, furnaces, and water heaters. The EXTEND bill provides a transition from the EPAct 2005 retrofit incentives, which are based partially on cost and partially on performance, to a new system that can provide larger dollar amounts of incentives based truly on performance.

The Snowe-Feinstein legislation also extends the applicability of the EPAct 2005 incentives so that the entire commercial and residential building sectors are covered. The current EPAct 2005 incentives for new homes are limited to owner-occupied properties or high rise buildings. Our bill extends these provisions to rental property and offers incentives whether the owner is an individual taxpayer or a corporation. This extension does not increase costs significantly, but it does provide greater fairness and clearer market signals to builders and equipment manufacturers.

I have worked hard over the past 5 years for performance-based energy tax incentives for commercial buildings--one-third of energy usage is from the building sector, so there are great energy savings to be made with the extension of these incentives. My energy efficiency tax incentives provisions for commercial buildings that came to fruition in the EPAct 2005 were tasked to Treasury to promulgate regulations to harmonize with the law. On June 2, 2006, the Internal Revenue Service issued guidance on how to comply with section 179D of the Internal Revenue Code establishing a deduction for commercial buildings that achieve a reduction in energy consumption of 50 percent.

Unfortunately, the guidance is inadequate, according to energy efficiency experts, which may stem from the fact that we are into some uncharted territory and there may be a basic lack of understanding of what it takes to make energy efficiency tax incentives work, and specifically those based on performance, not cost. It is critical that the IRS guidance is written correctly so as to actually incentivize greater energy efficiencies while making sure any guidance promotes the best use of taxpayer dollars. I brought these issues to the attention of the now Secretary of the Treasury Paulson at his nomination hearing in the Senate Finance Committee on June 27, and I look forward to working with his people at Treasury to resolve these important issues relating to the IRS guidance.

It is reasonable to expect many annual benefits after 10 years if we put into place the appropriate incentives. For instance, direct savings of natural gas would amount to 2 quads per year or 7 percent of total projected natural gas use in 2017. And, to this figure must be added the indirect gas savings from reduced use of gas as an electricity generation fuel. Total natural gas savings would be 35 quads per year, or 12 percent of natural gas supply. Total electric peak power savings would be 115,000 megawatts; almost 12 percent of projected nationwide electric capacity for the year 2017.

In addition, reduction in greenhouse gas emissions would be 330 million metric tons of carbon dioxide annually, about 16 percent of the carbon emissions reductions compared to the base case necessary to bring the U.S. into compliance with the Kyoto Protocol; or roughly 5 percent of projected U.S. emissions in 2017. Also, importantly, the bill will result in the creation, on net, of over 800,000 new jobs.

The value of energy savings should not be overlooked as both business and residential consumers will be saving over $50 billion annually in utility bills by 2017, as a direct result of the reductions in energy consumption induced by the appropriate incentives. Also, the projected decrease in natural gas prices will be saving businesses and households over an additional $30 billion annually.

I would also like to take this opportunity to comment on the Feinstein-Snowe 10 in 10 CAFE standards legislation introduced this past week as the bill is yet another piece for solving the Nation's energy crisis.

The ten in ten measure is straightforward--we increase the average mileage of each company's vehicles fleet by 10 miles per gallon in 10 years--10 in 10. This would save 2.5 million barrels of oil a day by 2025--the same amount we currently import daily from the Persian Gulf--while eliminating 420 million metric tons of carbon dioxide emissions, a climate change-causing greenhouse gas, from entering the atmosphere.

Certainly, we ought to be able to at least meet these goals. Yet, thus far, Congress and the administration have regrettably sent exactly the wrong message at a time when we have already witnessed a crisis--and that is, a ``can't do'' attitude, rather than the ``can do'' spirit that has defined progress in America since our fledgling days as a nation. We have the means, we have seen the demonstrated necessity, we possess the entrepreneurial spirit, what exactly is there left not to get?

There should be no question that increasing fuel economy standards an average of 1 mile per gallon across a manufacturer's fleet for the next 10 years is a challenge to which this country can rise--in fact, it is long overdue.

We are long past the point of watching and waiting it out while the U.S. auto makers dither--Congress has a responsibility to provide leadership on this issue by refusing to accept the notion that ``this is as good as it gets.''

We must reject the administration's request that we just cede to the Department of Transportation our statutory authority to reform CAFE standards for passenger cars--especially as DOT has had the opportunity to increase CAFE standards for SUVs, minivans, and light pickups, but only incrementally increased the miles per gallon to 22.2 mpg by model year 2007 that is an increase of less than 1 mile per gallon. This minimal increase will save less than 2 weeks worth of gasoline each year for the next 2 decades. We can do better and under our legislation we will do better.

A wide variety of experts, including some of those who took part in the 2001 congressionally mandated National Academy of Sciences report on CAFE standards, agree that the most effective action we could take today to decrease the price of gasoline is to increase fuel economy standards for all vehicles--passenger cars and light trucks. Yet the only time we raised fuel economy standards for passenger cars was back in 1976. Think about it--in 1976, our computers were about the size of cars--and now we hold them in the palm of our hand--are we really saying the United States of America doesn't have the technological wherewithal to provide 10 more miles-per-gallon over the next 10 years, at a time when the transportation sector accounts for fully 40 percent of all the Nation's fossil fuel consumption?

Morever, we give manufacturers the flexibility to develop an entire fleet that accomplishes the overall fuel economy standard in the most cost-effective manner--it can be done and it must be done. And with a third of American drivers now considering trading their current vehicle for another that gets great fuel economy, frankly, if our auto makers had embraced higher fuel economy standards when our SUV loophole bill was first introduced in 2001, or way back in the early 1990s when an increase in CAFE was a compelling argument for that decade's energy bill, perhaps the U.S. industry would be in better shape today. Consumers certainly would be.

And how can there be any question--at this time when our reliance on foreign oil has skyrocketed from 44 percent 3 decades ago to 72 percent this year--and prices hover at near historic highs of $70 per barrel--that we must take a page from America's greatest quests--like putting a man on the Moon--to finally reduce our consumption of precious fossil fuels. We are financing the ambitions of radical leaders in some of the most volatile regions of the world to supply the energy to power America's future. This makes no sense--not when our bill, through its resulting fuel savings, would effectively develop Middle Eastern oil production within our own country within just the next 19 years.

Mr. President, these two bills, the EXTEND Act and the 10 in 10 Act, are synonymous with the security of America's future. These bills are two pieces of an overall national energy picture that we need to address now. Consumers throughout the United States, from small businesses to families, are demanding leadership on energy prices. Congress should advance past rhetoric, gimmicks, and photo-ops and move to substantive legislation such as the EXTEND Act and the 10 in 10 CAFE bill. It is imperative that Congress begin these policy discussions--we cannot wait for yet another crisis.

I look forward to working with my Senate colleagues and the administration to provide the American people the leadership they deserve on these issues.

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