WASHINGTON-(Dow Jones)--A $40 billion package of tax credits for companies and individuals investing in renewable energy sources was unveiled Thursday in the U.S. Senate, with the cost of the package offset by new taxes on the oil and gas industry.
Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, the chairman and ranking Republican on the Senate Finance Committee, crafted the deal and urged their fellow senators to get behind the package.
"This is crucial, this is vital, we've got to move on this, we can't wait," said Baucus, at a press conference announcing the deal.
Grassley said that he hoped his Republican colleagues in the Senate would vote for the package.
The renewable credits were part of a wider piece of tax legislation which became known as the tax extenders bill. The other parts of that package - including an annual patch for the alternative minimum tax and credits for research and development - were not part of the package released Thursday.
A spokeswoman for the finance committee said that while Sen. Baucus was determined to get all aspects of the extenders' package passed before Congress retires for the year in three weeks, he wanted to deal with the energy credits first.
The renewable energy tax measures are likely to be attached to a wider energy bill which will include provisions on drilling. That plan is expected to be introduced as soon as next week in the House of Representatives.
The package includes a new tax credit for nuclear energy production, and a credit for capturing and storing carbon dioxide. The wider renewable energy credits are extended to 2011 instead of just the one year extension that was included previously.
To pay for the credits, an existing tax credit for major integrated and state-owned oil companies will be eliminated, which is estimated to raise $13.9 billion over the next decade.
An excise tax will be applied to the removal of any taxable crude oil or natural gas recovered from the outer continental shelf, raising $17 billion over 10 years, as well as three other measures raising revenue.
Reacting to the announcement, Rhone A. Resch, the president of Solar Energy Industries Association, said he was cautiously optimistic.
"We've been down this path eight times already in the Senate and not been able to get this done," said Resch.
Resch said he hoped that the renewable credits weren't attached to a larger energy bill, fearing that bill could be derailed in an election year.