The massive FY2021 Omnibus and COVID-19 relief package includes dozens and dozens of tax code changes. Some are new and tailored to the current situation, but many are tax policy pariahs that get extended every year or two as “temporary” measures known as “tax extenders.” Like every year, tax breaks for energy interests make up a large portion of the extenders.

The full list of energy provisions in the bill and their cost is provided below, but some highlights of this year’s energy extenders package include:

Longer Extensions

In recent years, Congress has often re-animated this set of tax breaks after the provisions have expired. This year is different if only by a couple weeks – most of the provisions currently expire at the end of 2020. Similarly, most of the provisions in the package this year are given a one-year extension through 2021. But for others, Congress deviated from recent practice and granted extensions for several years. These include:

• The oil spill liability trust fund financing rate is extended through 2025.
• The 45Q credit for carbon capture and storage (CCS) currently allows facilities to claim the credit if they begin construction by the end of 2023. The bill would extend the deadline to break ground to the end of 2025.
• Both the Energy Tax Credit (aka, investment tax credit, aka ITC) and the Credit for Residential Energy Efficient Property were not set to expire until the end of next year, but the bill extends their “phase-out” period through 2023.

No Need for Further Extension

Some tax breaks were made permanent in the bill. That includes one on the energy side, the Energy-Efficient Commercial Buildings Deduction.

Biofuels Regulars Are Back (mostly)

Biofuels continue to enjoy overly-generous support through tax extenders. Three key provisions were given a one year-extension through 2021:

• Alternative Fuel Vehicle Refueling Property
• Incentives for Alternative Fuel and Alternative Fuel Mixtures
• Cellulosic Biofuel Producer Credit

Two others were cut, saving taxpayers billions of dollars. See ‘Notable Absences’ below.

New Energy Credit-Eligible Members:

• Offshore wind projects are given an exception to the general phaseout for wind to claim the ITC, and would be able to claim it at full value through 2025.
• The bill also adds Qualified Waste Energy Recovery Property as eligible “energy property,” for which a taxpayer can claim the ITC.
• The Credit for Residential Energy Efficient Property is expanded to include “Biomass Fuel Property,” though qualifying property like biomass stoves previously received support through the Credit for Nonbusiness Energy Property.

Notable Absences

Three provisions normally included in the energy extenders list were left out this year:

• Biodiesel and renewable diesel credits – the costly credits could have doubled the energy extenders’ price tag.
• Special Rule to Implement FERC or Electric Transmission Restructuring
• Special Depreciation Allowance for Cellulosic Biofuel Plant Property