Senate tax measure helps President Trump pivot away from clean energy and back to fossil fuels
The Trump administration’s campaign for “American energy dominance,” which focuses on elevating the nation’s fossil fuel production, received a potential big boost from Republican senators early Saturday.
The tax measure they approved proposes to open the Arctic to oil and gas development, weaken investment incentives for solar and wind production, and end a big tax credit for new electric vehicles.
Taken together, the Senate tax provisions are clearly allied with the Trump administration’s goal to shift American energy development back to black fuels and reverse Obama-era programs to encourage cleaner technologies to generate electricity and move people and goods.
Arguably the most significant Senate tax provision is meant to tilt a 40-year-old conflict between the oil industry and conservationists toward opening a 1.5-million-acre stretch of the Arctic National Wildlife Refuge to energy exploration. The struggle over the so-called 1002 Area, one of the longest running and most intensely debated in U.S. environmental history, has commanded the attention of every president since Jimmy Carter.
The Senate’s decision to proceed with oil and gas exploration was hailed today by its chief champion, Sen. Lisa Murkowski (R-Alaska).
“Opening the 1002 Area and tax reform both stand on their own, but combining them into the same bill, and then successfully passing that bill, makes this a great day to be an Alaskan,” she said in a statement.
Democratic lawmakers and environmental groups responded with vows to keep the entire 19.3-million-acre refuge undeveloped.
“This fight is not over. The oil industry and its allies in Congress may think they can sneak this past the American people, but communities across the country are speaking out every day,” said Jamie Williams, the president of the Wilderness Society. “The Arctic Refuge drilling provision has no legitimate place in a tax bill, and this backdoor political deal now threatens to destroy the crown jewel of our National Wildlife Refuge System.”
The Senate proposal to explore for energy in the Arctic National Wildlife Refuge is not contained in the House version of the tax measure that passed last month. The two tax proposals will be reconciled by House and Senate conferees this month. If it survives, the Arctic drilling plan would be another step in the Trump administration’s effort to reverse Obama-era measures to curb fossil fuel development, reduce carbon emissions to the atmosphere and encourage more environmentally sensitive electrical generation and transportation.
Other provisions in the Senate tax bill are a boost to the White House fossil energy initiatives. One would treat investment tax credits for wind and solar plants as income and levy a tax on them. Wind and solar developments are eligible for a 30% tax credit under legislation approved in 2015. The nearly $50 billion invested annually in solar and wind projects in the United States has generated hundreds of thousands of jobs and been helped by the $12 billion to $15 billion in tax credit investments by multinational banks and other financiers.
If the charge on investment tax credits is made law, big investors are likely to exit the American clean energy market, said Gregory Wetstone, the chief executive of ACORE, the American Council on Renewable Energy, a trade group in Washington.
“A lot of renewable development occurs in rural areas where there are not a lot of other economic opportunities,” Wetstone said. “They are doing the exact opposite of the intention of this bill, which is to grow the economy and produce jobs. With this bill they are slowing investment and making it harder to grow.”
A third provision in the Senate tax bill that appears aimed at helping the oil industry is the elimination of the $7,500 tax credit for electric vehicles.
The administration, with broad support from rural Americans, conventional energy industries and Republican lawmakers has pursued new fossil energy development. Part of the president’s development strategy is to simultaneously attack the Obama administration’s Clean Power Plan to reduce carbon emissions from coal-fired power plants; withdraw the U.S. from the Paris climate agreement; open public lands in the West to coal, oil and natural gas development; and approve two big oil pipelines that cross the Great Plains.
Each of the administration’s fossil energy measures has faced strong opposition from conservationists, state leaders, Native Americans and executives in the clean energy and recreational industries. Federal jurists also have begun to consider the merits of a flurry of lawsuits intended to halt the administration’s “energy dominance” campaign.
Behind the White House initiative is the conviction that big mines, pipelines and oilfields produce thousands of good jobs. Opponents point out, though, that the administration’s support for the U.S. fossil fuel sector comes as China, India, Europe and several Southeast Asian nations begin to do just the opposite, pivoting away from coal — and to some extent from oil — to grow their economies and respond to the risks of climate change.
U.S. solar companies, one of the nation’s fastest growing industrial sectors, are particularly concerned. Along with the Senate tax provision that weakens investment incentives, President Trump is weighing a tariff on imported solar photovoltaic panels that executives say could cripple the industry. The president has until early January to issue his decision.
“The president and Congress are ceding leadership in the growth segment of the energy industry to China and India as fast as they can,” said Niel Lawrence, Alaska program director and senior attorney for the Natural Resources Defense Council. “It will cost Americans in terms of jobs and global stature and ultimately on the impact of climate change.”