(Bloomberg) — The spending deal that is set to hand the
oil industry a major victory by allowing unfettered exports of
U.S. crude for the first time in 40 years also is delivering
some major wins for environmentalists who fought that policy.
The gains include an extension of renewable energy tax
breaks, new life for a 50-year-old conservation program and
allowing spending on a Green Climate Fund that aims to help
developing countries deal with the effects of climate change.
Republicans also agreed to stand down from some riders meant to
block some of the Obama administration’s environmental
regulations.
“This agreement contains important wins for the
environment,” said Rhea Suh, president of the Natural Resources
Defense Council, in a statement. “As a result, the public will
be healthier and the U.S. will continue making progress on
climate change.”
The tradeoff for those environmental victories: an end to
the 40-year-old ban on exporting most U.S. crude oil enacted
during the supply shortages of the 1970s.
Paris Accord
Environmentalists opposed lifting the oil export ban,
warning that it could boost global demand for U.S. crude and
drive up the greenhouse gas emissions that result from burning
it. The deal comes just days after international leaders struck
a major climate accord in Paris.
In a major win for the White House, Republican leaders
agreed not to actively block the Obama administration from
doling out federal dollars to the United Nations’ Green Climate
Fund that aims to help developing countries adapt to rising seas
and other impacts of climate change. The spending bill would not
prohibit the administration from reprogramming or re-purposing
funding to the initiative.
That is a change from an earlier House spending bill that
would have blocked spending on the Green Climate Fund.
President Barack Obama had asked Congress to dedicate $500
million toward the fund as an initial down-payment on a total $3
billion commitment by the United States. Senator James Inhofe, a
Republican from Oklahoma, and Senator John Barrasso, a
Republican from Wyoming, have argued that Congress should now
allow U.S. taxpayer dollars to flow into the UN fund without
explicit Senate approval of the international climate pact.
Thursday Vote
Mainstream environmental groups counted more wins than
losses in the spending and tax deal, including the stripping
away of hundreds of riders that aimed to check the Obama
administration’s environmental rules. The Sierra Club said in an
e-mailed statement that Democrats “extracted a high price as
part of the deal.”
“Despite the lifting of the crude oil export ban, Democrats
secured positive measures to protect our climate and America’s
working families, as well as prevent destructive, poison pill
riders designed to undo essential policies which protect clean
air, clean water, public health and our climate,” said Sierra
Club’s executive director Michael Brune, in an e-mail.
The tax and spending deal had been brokered by
Congressional leaders to help smooth its passage through the
Senate and House, which may vote as soon as Thursday. While
Obama is opposed to stand-alone legislation lifting the export
ban, the White House has stopped short of threatening to veto
the provision as part of the wider spending bill.
”Huge Victory”
Representative Joe Barton, a Texas Republican who led a
House drive to end the ban, said the deal “is a huge victory.”
“It puts the United States in the driver’s seat of energy
policy worldwide,” Barton said.
Limits on U.S. oil exports would be lifted immediately,
according to the bill released early Wednesday by the House
Appropriations Committee. It would allow the president to impose
restrictions on exports for national-security reasons and in
case of a shortage.
The tax measure also would extend a $1 per gallon biodiesel
tax credit for fuel blenders and tax credits for renewable
energy sources — provisions sought by Democrats in exchange for
lifting the oil export ban.
Wind Developers
Wind developers would get at least five more years to claim
a production tax credit that helps finance those projects, with
the amount of that credit gradually scaling down.
Commercial and residential solar developers also would be
able to claim an investment tax credit for at least five more
years under the government-wide spending package, though it
would gradually phase down from covering 30 percent of
qualifying costs today to 10 percent.
“By extending the solar investment tax credit for five
years with a commence construction provision and a gradual ramp
down, bipartisan members in both Houses have reestablished
America as the global leader in clean energy, which will boost
our economy and create thousands of jobs across America,” said
Rhone Resch, president of the Solar Energy Industries
Association, in an e-mailed statement.
Solar companies surged Wednesday after the deal was
reached. SolarCity Corp., the biggest rooftop installer, gained
as much as 28 percent, the most intraday in more than two years.
SunEdison Inc., the largest renewable-energy developer, climbed
as much as 24 percent and panelmaker SunPower Corp. increased as
much as 18 percent. They were the top movers on the Bloomberg
Intelligence Global Large Solar Energy index of 20 companies,
which climbed as much as 6.7 percent, the most since July.
Conservation Fund
The 50-year-old Land and Water Conservation Fund, which
expired in September, would get a three-year re-authorization,
under the legislation. The fund is the principal source of money
for land acquisition by four federal agencies; it also provides
matching grants to help states build outdoor facilities and buy
new lands and waters for recreation.
Conservationists, sportsmen, hunters and hikers cast the
temporary extension as a modest win, falling short of the
permanent extension and full funding they have been seeking.
Limited Scope
Land Tawney, executive director of Backcountry Hunters and
Anglers, said in an e-mailed statement that the group is
“disappointed by the limited scope of this measure.”
Some environmentalists were deeply troubled by the deal.
Jason Kowalski, policy director for the group 350.org suggested
that provisions boosting renewable power do not make up for the
potential carbon dioxide emissions that could result from
widespread U.S. crude exports.
“Supporters of climate action in Congress need to realize
that caving on the oil export ban is like a group of
firefighters giving an early Christmas present to the local
arsonists,” Kowalski said in an e-mailed statement. “Big Oil’s
business plan is to burn the planet and lifting the ban just
adds fuel to the fire.”
Provisions that would block endangered species protections
and limit restrictions on the financing of overseas coal-fired
power plants are troubling, said Lukas Ross, a climate and
energy campaigner with the group Friends of the Earth.
“There are a lot of people who think this has no place in
the funding process and who feel like they’ve been thrown under
the bus,” Ross said in a telephone interview. “Anti-environmental extremism could be in control of the House of
Representatives for a long time, and we can’t keep having a
process where we barter away environmental protections just to
keep the government open.”
Hess Corp.
John Hess, the chief executive of Hess Corp., who has
pushed for lifting the export ban, said the move “will have far
reaching benefits for our country.”
“Overturning this antiquated policy from the 1970s would
create jobs, boost economic growth, increase investment in
American energy, and enhance energy security around the world,”
Hess said in an e-mailed statement.
Oil Falls
West Texas Intermediate crude for January delivery declined
4.1 percent to $35.83 a barrel at 12:36 p.m. on the New York
Mercantile Exchange. It fell as low as $35.62. The U.S.
benchmark slid below $35 a barrel Monday for the first time
since February 2009. The gap between WTI and January Brent, the
North Sea grade used globally, was at $1.47 after narrowing to
60 cents.
Brent for January settlement, which expires Wednesday, slid
$1.15 to $37.30 a barrel on the London-based ICE Futures Europe
exchange. The more-active February contract decreased $1.20 to
$37.53.
The U.S. already permits some crude shipments overseas,
primarily to Canada. The U.S. exported about 500,000 barrels a
day in October, a 22 percent increase from September, according
to the latest information from the Commerce Department’s Census
Bureau.
To contact the reporters on this story:
Brian Wingfield in Washington at bwingfield3@bloomberg.net;
Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net
To contact the editors responsible for this story:
Jon Morgan at jmorgan97@bloomberg.net
Elizabeth Wasserman