Overview
Title
To amend the Internal Revenue Code of 1986 to disallow the production tax credit and investment tax credit for offshore wind facilities placed in service in the inland navigable waters of the United States or the coastal waters of the United States.
ELI5 AI
H.R. 2187 is a plan to stop giving certain money-saving benefits to companies that build wind farms in certain water areas in the U.S. after 2025. This means that if companies build their wind farms in these places, they won't get some tax credits to help with costs.
Summary AI
H.R. 2187 proposes changes to the Internal Revenue Code of 1986 to stop companies from receiving certain tax credits for offshore wind facilities located in U.S. inland navigable waters or coastal waters. Specifically, it disallows the production tax credit and the investment tax credit for these facilities, affecting facilities put into service after December 31, 2025. The bill was introduced by Mr. Fallon and others in the House of Representatives and referred to the Committee on Ways and Means.
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled H. R. 2187, seeks to amend the Internal Revenue Code of 1986. The primary aim of the bill is to disallow production and investment tax credits for offshore wind facilities situated in the inland navigable and coastal waters of the United States. The bill specifies that these tax disallowances would take effect for energy produced and properties placed in service after December 31, 2025.
Summary of Significant Issues
Several critical issues arise from this bill. Firstly, the bill introduces the term "disqualified offshore wind facility" but doesn't clearly define what constitutes such a facility beyond its location. This could lead to ambiguity and potential legal challenges regarding the interpretation of which facilities are excluded from tax incentives.
Moreover, the bill's amendments may act as a deterrent for investment in offshore wind projects in specified waters, potentially conflicting with broader renewable energy goals. There is a lack of clarity on the rationale for the exclusion, which might invoke concerns about fairness and transparency in the legislative process.
There is also no analysis provided regarding the potential economic impacts, such as effects on sector growth, jobs, and investment, stemming from the exclusion of these tax credits. Finally, the technical language of the bill may pose comprehension challenges to the general public, and the choice of the effective date lacks an explanation, leading to questions about the appropriateness of the timeline.
Impact on the Public
For the general public, this bill could lead to a reduced pace of offshore wind energy development due to diminished financial incentives for developers. This slowdown might affect the national and international goals for expanding renewable energy sources, potentially impacting public aspirations toward clean energy reliance. On a broader scale, slowing renewable energy development could contribute to prolonged reliance on more traditional energy sources, influencing environmental and sustainability outcomes.
Impact on Specific Stakeholders
For energy developers and investors, the bill presents a negative impact by reducing financial incentives, possibly steering investment away from offshore wind projects in designated areas. This could particularly impact projects planned in inland navigable and coastal waters, thereby affecting potential employment opportunities within these regions.
On the other hand, proponents of fiscal restraint may view this bill positively, as it might reduce government expenditure on tax credits perceived as unnecessary. Environmentalists and sustainability advocates, however, may argue that the bill contradicts efforts to foster cleaner energy solutions, advocating for continued incentives to meet climate action targets.
Ultimately, without adequate justification and transparent goals, the bill could face challenges both from a public acceptance perspective and within legislative scrutiny.
Issues
The bill disallows investment tax and production tax credits for offshore wind facilities located in certain bodies of water. The lack of a clear definition or criteria for what specifically constitutes a 'disqualified offshore wind facility' aside from its location could lead to ambiguity and legal challenges. This issue is found in Section 1.
The amendments contained within this bill may disincentivize investment in offshore wind facilities in inland navigable or coastal waters of the United States. This appears counterproductive to renewable energy goals unless properly justified, posing potential ethical and political concerns. This is discussed in Section 1.
The rationale for excluding certain offshore wind facilities from receiving tax credits is not clearly articulated. This lack of clarity could raise concerns about impartiality or fairness, potentially leading to political and public scrutiny. The relevant references are in Section 1.
The bill does not address the potential economic impact on offshore wind projects due to exclusion from tax credits. This could result in unintended economic consequences for the sector, impacting jobs and investment. This is relevant to Section 1.
The language used in the bill is technical and may be difficult for the general public to understand, potentially leading to misunderstandings about the implications of the changes. This could create issues in public communication and political discourse. This issue is connected to Section 1.
The effective date of after December 31, 2025, for the amendments is provided without justification. This omission could raise questions about the appropriateness of this timeline, potentially impacting legislative intent and planning for stakeholders. This is noted in Section 1.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Disallowance of investment tax credit and clean electricity production credit for certain offshore wind facilities Read Opens in new tab
Summary AI
The section outlines amendments to the Internal Revenue Code that deny certain tax credits for offshore wind facilities located in U.S. inland navigable waters or coastal waters. Starting from January 1, 2026, these facilities will not qualify for investment or production tax credits related to clean electricity or renewable resources.