[Congressional Record Volume 152, Number 87 (Thursday, June 29, 2006)]
[Senate]
[Pages S6809-S6810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mrs. Feinstein, and Mr. Kerry):
  S. 3628. A bill to amend the Internal Revenue Code of 1986 to improve 
and extend certain energy-related tax provisions, and for other 
purposes; to the Committee on Finance.
  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.

[[Page S6810]]

  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.
                                 ______