April 11, 2005

Dear Representative,

We urge you to support the Doggett amendment to the tax portion of the energy bill, which would end the decades-old synfuels boondoggle. For too long, energy companies have been using the Section 29 tax credits to reap huge, taxpayer-funded payouts for the production of coal-based synthetic fuel, a substance that neither addresses America’s current energy crunch nor provides a cost-effective energy source. It is time to end this once and for all by rescinding synfuels’ eligibility for Section 29 credits.

Congress established a tax credit in Section 29 of the Internal Revenue Code in 1980 to encourage the development of unconventional fuels that could lessen the U.S.’s dependence on foreign sources of oil. Synthetic fuel produced from coal was only one of the energy sources slated to receive Section 29 credits – others include oil produced from shale or tar sands, gas produced from pressurized brine, biomass, and coalbed methane. While some of these energy sources have shown signs of someday being marketable, it has become abundantly clear after 25 years that synfuels will never be an adequate substitute for gasoline. It is time for Congress to recognize that synfuels are in no way a viable fuel source, and modernize this longstanding piece of legislation to reflect the realities of the energy market.

While scientists have made few advances in synfuels in recent years, energy companies have made great strides in using underhanded accounting techniques to exploit the synfuels Section 29 credits for their benefit. Thanks to a 1996 ruling by the IRS that allowed companies to sell off their Section 29 credits, the synfuels break is increasingly being used as a tax shelter for corporations with high taxable earnings. The synfuels credit is now robbing the federal Treasury of approximately $1 billion every year. At a time of record deficits, taxpayers are the ones who ultimately pay for these corporate accounting tricks.

The current legislation being considered by the Committee on Ways and Means gives you a meaningful opportunity to reconsider which federally-subsidized energy sources are working, and which are not worth hard-working Americans’ tax dollars. Again, we urge you to support the Doggett amendment to close the loophole on synfuels tax credits. If you would like more information, please contact Evan Berger at (202) 546-8500 x111.

Sincerely,

Jill Lancelot
President / Co-Founder