Wean Americans Off the Barrel, Introduce Biofuels
I won’t spend a lot of time expanding on why we need to reduce our reliance on foreign energy. I think by now most of us recognize that depending on others for our energy is not a sustainable position for the United States. Whether it be global warming, peak oil, high prices or instability in the Middle East, signs point to a day when we need to have energy sources that are not petroleum-based. And some signs may suggest sooner rather than later.
I believe that Congress should pursue policies leading to energy security. This is an ambitious goal, one that will require industry, policymakers and Americans to think of innovative approaches to meet our energy needs. As an advocate for the flat tax, I do not generally find myself supportive of using the tax code for social engineering, but reducing America’s energy dependence is so absolutely vital to our national security. Our energy tax policy should reflect this priority by encouraging conservation, efficiency and the development of alternative energy. But we must not forget that we cannot replace oil and natural gas overnight; our economy, and many American jobs, depend on the availability of affordable oil and natural gas. It is a robust economy that allows us the opportunity to make advances in transformational technology.
The Energy Policy Act of 2005 was a good step in the right direction. Tax incentives in the bill were allocated among conservation and efficiency ($2.7 billion), renewable energy ($2.9 billion), clean coal ($2.9 billion), oil and gas ($2.6 billion) and electricity reliability ($3.1 billion). The Energy Policy Act extended the production tax credit for electricity from renewable sources — wind, solar, geothermal and open-loop biomass, landfill gas and trash combustion — through the end of 2007. It also created a manufacturers tax credit for energy-efficient dishwashers, clothes washers and refrigerators in 2006 and 2007, as well as incentives for energy efficiency improvements to existing homes and a business tax credit for construction of new energy-efficient homes.
As we discuss energy independence, however, it is easy to talk about the need for “more wind” and “more solar” to solve our problem. But the truth is that we use very little oil to create electricity in the United States — only 3 percent of electricity is generated using petroleum. The vast majority of oil is used to fuel our cars. That is why the Energy Policy Act of 2005 created a tax credit for hybrid vehicles, fuel-cell vehicles, advanced lean-burn vehicles and other alternative-fuel vehicles. The purpose of these tax credits is to encourage the utilization of this fuel-efficient technology by addressing this “early adopter” problem by decreasing the cost for these initial units.
The energy bill also included a renewable fuel standard that sets a target of 7.5 billion gallons of renewable transportation fuel per year by 2012. It is largely expected that this will be met using corn ethanol. I continue to question the wisdom of using a feedstock that is net energy negative, which means that it takes more energy to produce a unit of the fuel than is contained in that unit of fuel. Biodiesel is another homegrown fuel that could help move the United States toward greater energy independence. Unlike corn ethanol, however, it is net energy positive and, when created from recycled restaurant grease, can be created without reducing arable land used for farming. The American Jobs Creation Act created a production tax credit for biodiesel of $1 per gallon for biodiesel from virgin oils and 50 cents per gallon for biodiesel from recycled restaurant grease. I have introduced legislation to increase this tax credit to $1 per gallon for biodiesel from recycled restaurant fry oil.
But the Energy Policy Act is already two and a half years old, and technology has advanced since that time. We must make sure the tax credits we put in place reflect evolving technology and encourage the development of new technology. We also should think outside the box and use the tax code to reward states and communities that adopt measures that encourage energy efficiency and reduced air emissions. Forward-thinking local governments could provide county tax credits for alternative or low-emission vehicles, particularly in Clean Air Act non-attainment cities. I am investigating the advisability of instituting a federal tax credit to encourage this type of local policy.
The future may hold a fleet of dual-fueled vehicles powered by efficient engines such as electric vehicles, hybrid electric vehicles, and fuel-cell vehicles, along with homes and businesses powered purely by solar and wind power. But our economy today is based on the availability of a cheap and stable energy supply, most of which is currently supplied by fossil fuels. Conservation and efficiency can help us to reduce our oil consumption, but until alternative energy sources, such as hydrogen, are up and running, we must ensure that our tax policies encourage domestic production as well.
Rep. Michael Burgess (R-Texas) is a member of the Energy and Commerce Committee.