President Obama took on the Republican-controlled Congress when he laid out a budget request Monday that called for increased spending on climate change and clean energy, while also taking whacks at the fossil fuel industry.
Budget proposals are often more a set of ambitions than real expectations for policymaking. Obama, for example, probably isn’t expecting Republicans to give his administration $1.29 billion in funding for international climate change aid – including $500 million for the United Nations-created Green Climate Fund – he asked for in the fiscal 2016 budget. But if his budget were passed, here’s who would win and lose in the energy and environment sector.
Solar and wind energy
Expiring tax credits for wind and solar energy would be permanently extended under the president’s budget proposal. The budget also calls for a $104 million bump in an Energy Department solar program and $100 million in new spending for renewable energy on federal land.
Making the solar and wind tax credits permanent would appease Democrats and some Republicans, though the subsidies have become increasingly political. Conservatives from breezy states who once supported the wind credit are less likely to do so now out of concern that it would increase the federal deficit.
The 30 percent investment tax credit for solar energy installations is set to expire after 2016 for residential customers and reduce to 10 percent for commercial purchasers. The 2.3-cent per kilowatt-hour production tax credit, which primarily benefits wind energy, would end after this year if Congress doesn’t extend it.
Carbon capture technology
The budget proposal includes a $2 billion investment tax credit for power plants that use carbon capture and sequestration technology, which involves trapping carbon emissions and pumping them underground.
The Obama administration contends the method will be part of the nation’s future electricity mix and keep coal in the system. Industry groups aren’t so sure since the technology has never been implemented in the power sector on a large scale without subsidies.
Fiscal conservatives aren’t likely to support the creation of a new tax credit. Many are fighting to end the wind and solar incentives that opponents say sacrifice billions of federal revenues and would prefer sending more money to support basic research for fossil energy rather than carving out new subsidies.
The spending proposal would offer up to $4 billion to states that implement programs to reduce power-plant emissions beyond the state targets set in a proposed Environmental Protection Agency rule. The regulation is trying to to slash carbon emissions from the electricity sector 30 percent below 2005 levels nationwide by 2030.
“This funding will enable states to invest in a range of activities that complement and advance the Clean Power Plan, including efforts to address disproportionate impacts from environmental pollution in low-income communities and support for businesses to expand efforts in energy efficiency, renewable energy, and combined heat and power through, for example, grants and investments in much-needed infrastructure,” the White House said.
How many states are planning to go beyond those goals is uncertain, as more than half the states have filed public comments challenging the plan. The coal industry frowned on the announcement, as the American Coalition for Clean Coal Electricity called it a “bribe” that glossed over the costs industry groups say the regulation would impose on coal-heavy states and low-income consumers.
“Facing mounting criticism over his Clean Power Plan’s lack of flexibility and jaw-dropping compliance costs, President Obama has resorted to bribing states with taxpayer money to implement a rule many are already working fervently to overturn,” said Laura Sheehan, spokeswoman with ACCCE.
Gulf Coast states
A new proposal beginning in 2018 would divert some federal offshore drilling revenues slated to go toward Gulf Coast states to the Interior Department’s general fund. That would total about $3 billion in revenue, according to Interior projections.
That amounts to a shot across the bow by the administration to Gulf Coast lawmakers. Interior Secretary Sally Jewell said the proposal underscores the administration’s belief that “the Outer Continental Shelf is owned by all Americans.” She noted the administration hasn’t had any conversations with lawmakers from the affected states.
“In terms of outreach, the proposal is just going on the table now. We haven’t had outreach to the stakeholders,” Jewell said in a media call.
Details were scarce. Four Gulf Coast states – Alabama, Louisiana, Texas and Mississippi – receive 37.5 percent of offshore royalties and revenues that oil and gas companies pay Interior for leasing Gulf of Mexico waters. Payments can’t exceed $375 million annually, though that cap is slated to increase to $500 million in 2017.
The news didn’t go over well with Gulf Coast lawmakers. “I will do everything in my power to use my seats on these committees to not only block the president’s raid on oil and gas revenues, but fight to increase Louisiana’s share of offshore revenue,” said Sen. Bill Cassidy, R-La. “Funding for coastal restoration must remain a promise to Louisiana and other Gulf Coast states.”
Great Lakes states
The Great Lakes Restoration Initiative, an EPA program treasured by Midwest Democrats and Republicans alike, would be cut by one-sixth under the fiscal 2016 budget. The pot of money for the five-year-old program would shrink $50 million to $250 million.
Its champions credit the program with restoring the Great Lakes’ water level, restoring wetlands and combating invasive species, and fought to keep funding at its current level despite the administration’s request to reduce it last year.
“We must ensure that the Great Lakes Restoration Initiative – which helps support efforts to clean up toxic pollution, combat invasive species and restore wildlife habitats – is adequately funded,” said Rep. Dan Kildee, D-Mich.
The proposed cuts come as Great Lakes states such as Ohio have battled algal bloom. Agricultural runoff causes algae to grow, and the blooms kill fish and other plants as the algae consumes a greater share of dissolved oxygen.
Oil and natural gas drillers
The Obama administration called for ending $4 billion of annual tax breaks awarded to oil and gas companies, which has become a staple in Obama’s budget proposals. But the administration also took whacks at the industry by proposing new inspection fees to monitor the more than 100,000 wells operating on federal lands to help pay for the permitting program. Those fees would total $48 million in 2016.
Jewell said the inspection fees would address Interior’s “whole portfolio,” as she noted offshore wells currently face inspections. She said it would help pay for a pilot program Congress extended last year that seeks to expedite energy permitting on federal lands.
“It certainly will result in increased speed and processing time so those companies can get on with development,” Jewell said. “We will not be a barrier to supporting the expeditious permitting on public lands.”
|Wind Watch relies entirely
on User Funding