Energy

GOP’s Move To Preserve Green Energy Credits Comes At High Price For Enviros

Federico Rostagno/Shutterstock)

Daily Caller News Foundation logo
Chris White Tech Reporter
Font Size:

A Republican-led tax bill that includes a bevy of green energy tax credits also preserve a highly controversial proposal allowing oil producers to drill in Alaska’s Arctic wildlife refuge.

House and Senate negotiators hashed out an agreement giving oil producers the okay to begin drilling in Alaska’s Arctic National Wildlife Refuge. They also preserved many of the green energy tax credits that were targeted for elimination in earlier versions of the bill.

Republicans and Democrats have haggled over opening the Arctic refuge to oil and gas drilling. The 19.6-million-acre refuge in northeastern Alaska is home to polar bears, caribou, migratory birds and other wildlife, but it also contains a large swath of untapped energy. The tax bill does come with a bright side for environmentalists.

Lawmakers spared a $7,500 electric-vehicle tax credit and a wind production tax credit that Republicans nixed to balance out the hefty tax bill, according to a Bloomberg report Thursday. Democrats and activists argue the credits are crucial for propping up the solar industry, as well as keeping electric vehicles affordable.

The tax credit drives most of Tesla’s sales, analysts argue. Electric car sales slumped badly in Georgia, going from 1,400 a month to just 100 a month, after the state shuttered its $5,000 credit. Other countries have eliminated electric vehicle credits with similar results.

The bill also preserves a phase-out of tax incentives for both the solar and wind industries passed in 2015, most of which are set to expire in 2020 and 2022, respectively. Wind-energy credits are especially popular with Republicans like Sen. Chuck Grassley of Iowa and South Dakota Sen. John Thune, who worked to save the credits after the House’s version nixed them.

Meanwhile, another provision that could harm the industry has not yet been eliminated. The so-called Base Erosion Anti-Abuse Tax provision (or BEAT) could erode the value of solar and wind credits and dry up a $12 billion tax-equity market, according to McDermott Will & Emery, a law firm specializing in international tax trade.

BEAT is intended to prevent multinational companies from abusing the tax code, but it would also make tax credits like the production tax credit (PTC) for wind power less valuable. Republicans argue the proposal disallows major companies from outsourcing jobs to other countries.

The final version of the bill drops the corporate tax rate from 35 percent to 21 percent, a move that could potentially save U.S. companies more than $1.3 trillion over ten years. They lose part of a tax deduction for interest expenses, along with limits on deductions for operating losses and R&D spending – the sacrifice will save the U.S. nearly $600 billion over the next decade.

A lot is riding on the Arctic drilling approval. The Interior Department, for instance, approved Italian oil company Eni’s application to drill an exploratory well from an artificial island in the Beaufort Sea. Drilling could start as early as December, provided Eni meets federal technical and regulatory requirements, and the GOP tax bill becomes law.

Interior officials also announced in October they would auction off 10.3 million acres in the National Petroleum Reserve-Alaska (NPR-A), which could hold between 900 million and 10 billion barrels of oil. What remains to be seen, however, is if oil companies have an appetite for costly Arctic drilling with oil prices hovering around $60 a barrel.

The Obama administration put roughly half the NPR-A off limits to oil and gas drilling, despite Congress’ decision to set the area aside specifically for that purpose. NPR-A is estimated to hold 895 million barrels of oil and 52.8 trillion cubic feet of natural gas.

WATCH:
 

Follow Chris White on Facebook and Twitter. 

The Daily Caller News Foundation is working hard to balance out the biased American media. For as little as $3, you can help us. Freedom of speech isn’t free. Make a one-time donation to support the quality, independent journalism of TheDCNF. We’re not dependent on commercial or political support and we do not accept any government funding.

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.