Washington (Platts)--24Oct2011/321 pm EDT/1921 GMT

Proposals to eliminate tax breaks for fossil fuels or renewable energy are likely to receive close scrutiny from a joint congressional committee tasked with reducing the US debt by at least $1.2 trillion, two former senators said Monday.

But they noted that there was little chance the committee's recommendations or subsequent action from Congress would lead to broad policy reforms.

"I do think that energy revenues, expenditures, credits will be under the microscope," former Senator Trent Lott, who served in Republican leadership positions over 35 years in Congress, said at a forum here. "That's one area that I think is in the crosshairs of this supercommittee."

Former Senator Byron Dorgan, who served in Democratic leadership positions over 30 years in Congress, joined Lott at the forum, sponsored by the Bipartisan Policy Center, a Washington-based think tank.

Dorgan agreed that the supercommittee, formally known as the Joint Select Committee on Deficit Reduction, would look to the $37 billion in tax incentives for coal, oil, natural gas, nuclear and renewable energy companies as a money-saving measure, but he was skeptical that whatever the committee comes up with would provoke many policy shifts.

Whatever comes out of the supercommittee, which has released few details about the deficit-reduction package it is tasked with assembling, Congress will need to attempt another big-picture revision of federal energy policy, Lott and Dorgan agreed. And neither of them suspected such an effort would be forthcoming anytime soon.

Little of substance has happened on energy policy since the failed effort to enact a greenhouse gas cap-and-trade bill in 2009 and 2010, and Congress has not passed a broad energy bill since the Energy Independence and Security Act of 2007.

"Rather than picking apart little pieces of the tax code for budget purposes, we really need to look at the broader picture and see whether we can't do a better job right across the board -- in conservation, in alternatives, with oil and gas drilling, in nuclear and the whole package," Lott said. "But I don't think right now we're in a position to make that happen."

Dorgan, who left the Senate earlier this year, agreed that a new energy bill would provide a framework to evaluate the tax incentives that are provided to various energy sectors in terms of broad goals around conserving the environment, avoiding climate change and promoting energy independence.

Without a holistic policy, "we act like we're on a trip without a destination," he said.

In the meantime, most industries are focusing their lobbying efforts on winning smaller scale advantage where they can, participants on a second panel at the forum said Monday.

For oil and natural gas companies, that means ensuring their favorable tax treatment is not undone by the supercommittee, Stephen Comstock, tax policy manager for the American Petroleum Institute, said. For renewable industries, that means furious lobbying to extend production and investment tax breaks that are set to expire at the end of next year, Dennis McGinn, president of the American Council on Renewable Energy, noted.

--Nick Juliano, nicholas_juliano@platts.com