 But the trade is drawing plenty of critics, especially among free-market
advocates who say the swap is a lopsided win for the renewable industry and
Democrats on Capitol Hill.
“It looks like Republicans gave up a lot more than they needed to,” Thomas Pyle,
president of the American Energy Alliance, told Watchdog.org. “In essence, they
just folded their tent.”
Congress passed a $1.1 trillion spending bill Friday and President Obama is
expected to sign it into law, thus averting a government shutdown. Update: Obama
signed the bill late Friday afternoon.
Part of the bill ends the 40-year ban that has kept U.S. oil producers from
exporting crude to markets throughout the world, a prohibition of which oil
companies have lobbied hard to eliminate.
“This oil export ban is a disco-era policy that has depended on the notion that
domestically produced oil is somehow ours,” said Robert Bryce, an energy writer
and senior fellow at the Manhattan Institute, a right-of-center think tank. “And
yet we never hear the same kind of argument when it comes to domestically
produced corn, wheat, soybeans, airplanes, microchips, you name it. And somehow
this one industry has been singled out for being exceptional on this one
commodity. It makes no sense.”
In exchange for lifting the export ban, Democrats insisted on something they
hold dear — extending government subsidies to the renewable industry.
A 30 percent tax credit for solar was scheduled to expire next year. Tax credits
for wind lapsed in 2014, which provided wind farms 2.3 cents for every
kilowatt-hour of electricity generated. The credits to solar and wind between
2008 and 2014 were estimated to cost $24 billion.
Under Friday’s “grand energy bargain,” the Investment Tax Credit for solar
remains at 30 percent for projects that start through 2019 and then drops to 26
percent in 2020, 22 percent in 2021 and 10 percent after 2022.
The wind Production Tax Credit is back, and is scheduled to be phased out
gradually by 2020.
What’s more, the spending bill doesn’t touch the $500 million payment the Obama
administration will make to the U.N. Green Climate Fund and offers a two-year
tax extension package to the biofuels industry — think ethanol — deemed
critical.
The renewables industry was jubilant.
“We’re going to keep this American wind power success story going,” said Tom
Kiernan, CEO of the American Wind Energy Association.
“We commend members of Congress in both parties for taking this bold step,”
Rhone Resch, president and CEO of the Solar Energy Industries Association, said
in a statement.
Oil producers were happy too.
“This is a historic moment in our energy renaissance,” Jack Gerard, CEO and
president of the American Petroleum Institute, said in a news release moments
after the Senate passed the bill. “Lifting this ban will help put downward
pressure on gas prices, create jobs, grow our economy and lower our trade
deficit.”
RELATED: Wind and solar tax credits pack a wallop
[to top of second column] |
 But a number of energy analysts told Watchdog.org they suspect
the renewables industry got the better end of the deal.
“They probably did because I think they need those tax credits to
survive,” Dan Steffens, president of the Energy Prospectus Group,
said in a telephone interview from his office in Houston. “I can’t
see anybody going big solar when you’ve got gas and coal so cheap.
How do they compete with that?”
“For the short term, it’s certainly a huge benefit to the wind
and solar industries,” said Bernard “Bud” Weinstein, associate
director of the Maguire Energy Institute at Southern Methodist
University. “That’s a huge thing (for solar). That’s an upfront tax
credit. And the wind guys, every time the blade turns around they
get 2.3 cents of subsidy, which allows wind companies to sell into
the grid at negative rates.”
Weinstein has estimated solar tax credits have cost American
taxpayers more than $200 billion since they were adopted a decade
ago.
Policy analysts that include left-of-center organizations such as
the Brookings Institution and former Obama administration officials
such as Lawrence Summers have advocated eliminating the export ban,
but the plummeting price of global oil may blunt the short-term
effects of the move.
“I don’t think it will have an immediate effect on oil prices or on
drilling right now,” Weinstein told Watchdog.org. “Long term, I
think it’s going to be very important for the industry’s viability.
We’re now the world’s No. 2 oil-producing country and now we can
compete on the global market.”
Charlie Drevna, distinguished senior fellow at the Institute for
Energy Research, which pushes for free-market solutions to energy
issues, believes Republicans gave up too much.
“You don’t trumpet the lifting of the ban as free market, which it
is, by cutting deals (on tax credits) that are anti-free market,”
Drevna said Friday, who said tax subsidies never seem to get killed.
“Merry Christmas to the American taxpayer. The Grinch is still on
top of the mountain with all the goodies and he’s not about to come
down.”
Others questioned if the price of the bargain was too high. A
separate act of Congress or executive decision could have lifted the
ban, should a Republican win the White House in 2016.
“The government is far too involved in the energy business,” Pyle
told Watchdog.org. “It’s not just about the government picking
winners and losers, it’s that they’re mostly picking losers.”
Despite the tax credit extensions for renewables, some environmental
activists didn’t the like grand bargain because they are dead-set
against lifting the crude oil export ban.
“Doing it the week after the solemn and pious talk about saving the
planet (at the Paris climate summit) is not like some parent who
smoked dope in the ‘70s warning their daughter about drugs — it’s
like a parent who is currently high warning their daughter about
drugs,” Bill McKibben, co-founder of 350.org wrote in an op-ed for
The Hill. “You might as well hold the launch party for your
vegetarian cookbook at a steakhouse.”
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