A bill in the California Senate would allow Californians to tap a federal tax benefit available in 45 other states.
If Senate Bill 302 is passed, California would stop collecting taxes on the revenue from sales of environmental credits as permitted by the Inflation Reduction Act (IRA), which President Donald Trump has committed to curtailing via his Jan. 20 executive order “Unleashing American Energy.”
State Sen. Steve Padilla (D-San Diego) introduced the bill on Feb. 10. It was co-authored by Assembly and Senate energy chairs.
Part of the purported goal of the Inflation Reduction Act of 2022 (IRA), signed into law by President Joe Biden, is to speed up the transition to clean energy and reduce greenhouse gas emissions. The IRA introduced direct pay and transferability for environmental tax credits.
California State Senate Minority Leader Brian Jones (R-San Diego) told The Epoch Times that SB 302 is a common sense reform to align California with federal law and other states that do not tax revenue from the sale of environmental credits.
“It’s absurd that the government is selling these credits to promote clean energy, only to turn around and tax the proceeds as income,” Jones told The Epoch Times in an email.
“This double-dipping drives up costs, discourages investment, and undermines the very incentives it’s meant to promote. With our state’s affordability crisis, we must pursue every option to lower energy costs and provide much-needed relief, and this bill is a good step in the right direction.”
Stephanie Doyle, the Solar Energy Industries Association’s California state affairs director, also said in a statement that the bill could bring down certain prices.
“California is unique among the states in its failure to conform state taxes to the federal tax system, and ratepayers are paying the price,” Doyle said.
According to SB 302, California must nearly double its clean energy capacity over the next five years to achieve its climate and energy goals, which include a net-zero carbon economy by 2045 via legislation and guidelines.
The 100 Percent Clean Energy Act of 2018, Senate Bill 100, set a state goal that by 2030 at least 60 percent of California’s electricity would be renewable. Under the Act, 100 percent of the state’s electricity retail sales must be from renewable zero-emission sources by 2045.
The Clean Energy, Jobs and Affordability Act of 2022, Senate Bill 1020, also requires eligible renewable energy resources and zero-carbon resources to supply 90 percent of all retail sales of electricity by Dec. 31, 2035, and 95 percent of all retail sales by Dec. 31, 2040.
In addition, SB 1020 states renewable and zero-carbon resources must supply 100 percent of electricity procured to serve all state agencies by Dec. 31, 2035, and 100 percent of all retail sales by Dec. 31, 2045.
SB 302 would help the state achieve these ambitious goals, said officials.
“California needs more energy, not less,” said Padilla in a statement. “Updating our tax law to conform with federal law will help make energy projects cheaper and more affordable for all Californians.”
