On August 8, 2005, President George W. Bush signed the bipartisan, Energy Policy Act of 2005. The new energy law was shaped by concerns about energy security, environmental quality and economic growth.
The Energy Policy Act provided $14.5 billion in tax incentives over an eleven-year period to encourage domestic energy production and efficiency. The tax incentives were provided for energy efficiency and conservation, renewable energy, oil and gas, coal and nuclear power.
The act resulted in technology breakthroughs in the oil & gas and renewable energy sectors. In the oil & gas sector, hydraulic fracturing (“fracking”) reversed America’s declining domestic oil & gas production. In the renewable energy sector, new technology improved the operating efficiency and output capacity for wind turbines and solar panels.
The Energy Policy Act of 2005 was the beginning of an energy revolution in the United States. In August 2005, electricity in the United States was generated from Coal (50.7%), Nuclear Energy (19.9%), Natural Gas & Petroleum (19.0%) and Renewable Energy (10.4%). As technology drove down the cost of renewable energy and natural gas, utilities began to abandon coal and nuclear power. In April 2019, electricity in the United States was generated from Natural Gas & Oil (47.77%), Renewable Energy (21.56%), Coal (21.55%) and Nuclear Energy (8.95%).
Clearly, the Energy Policy Act of 2005 transformed America’s energy sector. However, the tax incentive in the energy act will expire on January 1, 2022. In the current polarized political landscape in Washington D.C., can any new bipartisan energy legislation gain approval?
Recently, the United States Senate approved the Nation Defense Authorization Act, that included carbon capture legislation. Bipartisan support overwhelming approved the bill 86-8, which would develop infrastructure to foster economies of scale among carbon capture projects. The bill will now go to the House of Representatives, which also has a similar plan.
Another bipartisan bill has been introduced into the Senate to extend tax credits for the development of offshore wind projects. The Offshore Wind Incentives for New Development Act, would extend the 30% Investment Tax Credit for offshore wind projects for six additional years to 2028. The sponsor of the bill, Senator Edward Markey said, “ “Offshore wind projects are a crucial part of America’s clean energy future, creating tens of thousands of jobs up and down the east coast and reducing carbon pollution.”
The Energy Policy Act of 2005 transformed America’s power sector, which resulted in a 12.5% decrease in greenhouse gases. In support enacting new renewable energy, energy storage, carbon capture and nuclear power tax credits for another six to eight years. In my opinion, this legislation would accelerate the move from fossil fuels to renewable energy, which in turn will further reduce America’s greenhouse gas emissions.
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