From: Robert Gehrke, The Salt Lake Tribune
Published June 20, 2005 12:00 AM

Energy Bill Adds Hatch Tax Break for Hybrids

WASHINGTON — Several of Utah Sen. Orrin Hatch's proposals to spur energy development and conservation -- including a tax incentive for purchase of hybrid cars -- were included in an energy bill before the Senate.

A key component of the tax package was the inclusion of the bulk of Hatch's CLEAR Act, which extends a tax break for the purchase of gas-electric hybrids or other alternative fuel vehicles. The breaks would range from $400 to $2,400, depending on the efficiency of the hybrid.

It also gives tax incentives to spur development of hydrogen fuel-cell vehicles and refueling stations for alternative fuels.

"We need to reduce our dependence on foreign oil, and my provisions will make a real difference in Utah and throughout the country," Hatch said in a statement.

Overall, the energy tax package approved by the Senate Finance Committee provides about $16 billion in tax incentives over the next decade aimed at building electricity system infrastructure, conserving energy, spurring domestic production of oil and gas, and stimulating development of alternative fuels.

In contrast to the tax provisions that passed the House, the Senate version is weighted more heavily to alternative fuels and conservation, rather than benefiting traditional oil, gas and coal.

"What came out of the House was not even a pale green. This is deep forest green," said Sen. Charles Schumer, D-N.Y.

Sen. Jon Kyl, R-Ariz., was the sole Finance Committee member opposing the package. He argued that "a lot of the subsidies will support very popular programs" that could be developed without government help. Hybrid automobiles have been growing in popularity and the wind power industry -- which would receive about $3 billion in tax breaks over 10 years -- is growing on its own, he said.

Hatch originally had included a larger tax break, but hybrid vehicles have been selling so briskly that the price tag would have been too steep, approaching $3 billion. He agreed to cut the credit 20 percent and to allow the tax break to sunset in four years, rather than five as originally proposed.

A Hatch bill aimed at accelerating development of oil shale and tar sands was not included in the bill because congressional budget experts were not able to pinpoint how much it might cost. Eastern Utah and Western Colorado are believed to have the most plentiful deposits of oil shale -- the equivalent of roughly 1 trillion barrels of oil.

The provision still could be added before the Senate approves the measure.

Another Hatch provision seeks to bolster U.S. refining capacity by allowing refiners building new facilities to write off new equipment in the first year, rather than spreading it over 10 years.

And another promotes geothermal energy, which could provide power to more than 22 million homes.

"We're providing good incentives to broaden our fuel supply and increase domestic oil production. The President and Congress have made energy policy a priority, and I believe this is the year we will get it done," the Utah Republican said.

The Associated Press contributed to this story.

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Source: Knight Ridder/tribune Business News

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