Some fossil fuel and environment groups are agreeing on an issue: They hate the deal Congress has cooked up to extend renewable energy tax credits in exchange for repealing the ban on crude oil exports.
Many Republicans want to see a repeal of the 40-year-old oil export ban included in a government funding bill. The desire to lift the ban resulted in the “tax extenders” package, which was being considered separately, being brought in as a potential sweetener for Democrats. The tax extenders package is estimated to cost about $800 billion.
But outside the Capitol, the deal is being met with revulsion from both pro-fossil fuel and green groups.
“I sure as hell hope not,” said Melinda Pierce, legislative director at the Sierra Club, when asked if she thinks the deal will pass.
“It makes no sense to get rid of one bad policy only to replace it with another,” said Chris Warren, spokesman at the pro-fossil fuel American Energy Alliance.
Momentum is picking up around the deal, and congressional observers expect it to be a major sticking point in negotiations over a budget bill. It’s looking likely that lawmakers will pass a short-term measure to keep the government running before returning to work next week.
Some observers think Democrats will make the price for repealing the oil export ban too high.
“No one is going to go for it,” said one lobbyist. And a 10-year extension of the wind credit is just “irrational.”
The lobbyist reiterated that environmental groups are “up in arms” over the prospect of allowing the free flow of crude oil, while they are trying to cement an international climate change deal in Paris.
Lobbyists and congressional staff agree that nothing has been cemented. A House aide says negotiators have discussed extending the wind credit two to five years, not the 10 that some proponents have touted in the Senate.
“I think the more likely case is a two-five-year package, but everything is in flux,” said the aide.
Observers say there has been discussion about phasing out the credit over a five-year period.
But, interest groups on both sides of the debate say the deal is akin to caving in to the other side’s top priority.
Pierce said the Sierra Club is not willing to give in one of the oil industry’s top priorities to see the wind and solar tax credits extended.
“We don’t believe simply extending the [wind tax credit] and the [solar tax credit] and other sweeteners in the pot would ever make it palatable, because it’s a giant windfall for the oil industry,” she said.
While the American Petroleum Institute, which counts lifting the ban as one of its top legislative priorities, declined to speak about the deal, the American Energy Alliance said Republicans would be foolish to accept the deal.
Warren said lifting the ban would be good for consumers and the oil industry, but the deal would end up doing more harm than good.
“Not only would extending the PTC send billions of taxpayer dollars to Big Wind and their lobbyists, but it would also advance President Obama’s carbon regulations,” he said. “This deal is capitulation on one of the Democrats’ top priorities.”
Margo Thorning, chief economist with the conservative American Council on Capital Formation, said she is optimistic the repeal will pass, saying if it doesn’t this time around, it will eventually.
Thorning said President Obama would be less inclined to veto the measure after the Paris climate change talks have concluded, which could push past the scheduled Friday conclusion of the conference. Republican leaders announced Wednesday they would pass a short-term bill to keep the government open until next week to allow negotiations to continue.
In response to environmental concerns, she says lifting the ban would not result in a sudden surge of oil from the United States since a massive oil glut is keeping prices low.
“I really don’t think there would be an enormous surge … but there would be some,” she said.
She also said there is an argument to make that U.S. crude oil output produces fewer greenhouse gases because the nation’s environment management practices are tougher than many other oil-producing countries.
“We do tend to produce our crude more cleanly than other countries,” Thorning said. “We may have a beneficial impact on [greenhouse gas] emissions” by lifting the oil export ban, she said, an argument often used to support a repeal because of the belief that U.S. exports would take away market share in Europe and Asia from other oil-producing countries.
Some renewable energy groups aren’t bothered by the idea of the export ban lifting as long as the tax credits are extended.
The American Wind Energy Association said it supports lawmakers continuing their negotiations.
The tax credits help support an industry that has 73,000 jobs and about 500 factories in the United States, according to the association.
“To keep this American success story from facing another cliff, Congress must act quickly to extend the (wind tax credit) and (solar tax credit) for as long as possible,” the group said.
James Hewett, a policy associate for the American Council on Renewable Energy, agreed the deal would be fine as long as the tax credits were extended.
He said investors need the certainty of the tax credit extension because renewable energy companies are “unfairly disadvantaged” by not having permanent tax credits as the fossil fuel industry does.
“Our main focus is to create a level playing field for renewable energy,” he said.
John Siciliano contributed to this story.
