Climate

Big Oil Just Won Another Round In Congress

CREDIT: AP Photo/Andrew Harnik

President Barack Obama speaks with House Speaker Paul Ryan of Wis. in Emancipation Hall on Capitol Hill in Washington, Wednesday, Dec. 9, 2015, during a commemoration ceremony for the 150th anniversary of the ratification of the 13th Amendment to the U.S. Constitution which abolished slavery in the U.S.

In a blow to environmental activists, lawmakers agreed late Tuesday to lift the 40-year-old oil export ban in a budget deal for the coming year. In exchange, the wind and solar industries will receive some market certainty, with tax credits extensions for the next five years.

Republicans have been pushing hard this year for an end to the ban, which was established to protect American energy security after the oil embargo of the 1970s. In recent years, with the rise of fracking and American production of light, sweet crude, the international and national prices of oil have become imbalanced.

World and U.S. prices of oil are expected to converge if the export ban is repealed.

World and U.S. prices of oil are expected to converge if the export ban is repealed.

Oil production is expected to get a big boost from lifting the ban. Oil Change International estimates it could add an additional 467,000 barrels a day, while the American Petroleum Institute estimates up to 500,000.

“This is a powerful reminder of just how powerful Big Oil and the Koch brothers are,” Radha Adhar, a federal policy representative for the Sierra Club, told ThinkProgress. She said it had become clear that the Republican leadership was willing to shut down the government over the issue, and that Democrats in the Senate worked hard to get clean energy tax breaks in return.

Shipping oil overseas will also likely increase the amount of oil being moved from the Bakkan fields in North Dakota to the coasts — either by rail or by pipeline. Pacific Northwestern states have been moving in recent weeks to curb fossil fuel infrastructure, in an effort to reduce the amount of coal and oil moving through the area.

“This is a policy that is going to be bad for the climate, bad for the economy, and bad for consumers,” Adhar said.

While the oil industry is certainly expected to benefit from the ban’s repeal, American consumers are not expected to reap much advantage. According to analysis from the federal Energy Information Administration, if the ban were repealed, oil and gas prices for consumers will either slightly decrease (at higher domestic production levels) or remain the same (at current levels). In essence, what we pay for gas depends more on the global market than it does on one trade policy.

And the manufacturing industry — which includes oil refineries — is expected to take a hit, at least in some ways. The United Steelworkers union has been working with the Sierra Club to oppose lifting the ban.

“There is no way to spin it – lifting the crude oil export ban will be disastrous for our jobs, our climate, and our environment,” the groups said in a joint statement. Other groups, such as the National Association of Manufacturers, lauded the move.

Many environmentalists commented that the move sent a negative signal to the world, especially coming so close on the heels of the Paris agreement to address climate change.

On the other hand, the solar and wind industries got a huge win on Tuesday. The solar Investment Tax Credit (ITC) has been a crucial driver of the burgeoning industry. Solar has experienced record-breaking growth since the policy was implemented in 2006. The new budget deal includes a commence construction provision (which means that any project that begins construction before the policy expires will qualify) and a gradual stepping down from the current 30 percent level.

“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,” Solar Energy Industries Association president Rhone Resch said in a statement emailed to ThinkProgress. His group estimates the extension will spur more than $125 billion in private investment in solar and add 140,000 new jobs. Solar, the fastest-growing source of renewable energy, is expected to go from .1 percent in 2010 to 3.5 percent of electricity generation by 2022 — the equivalent of 26 coal-fired power plants.

Wind, too, will benefit. The wind Production Tax Credit has expired and been renewed several times, wreaking havoc on the industry.

energy-graphic-production-tax-credit-wind-capacity-bar-graph

CREDIT: Union of Concerned Scientists

Increasing wind and solar capacity is seen as a critical way for the United States to meet its commitments under the United Nations Framework on Climate Change agreement — and also for states meeting their goals under the EPA’s Clean Power Plan.