Hill Heat

From Bloomberg:

A 26-year ban on offshore oil drilling will be dropped as part of a year-end spending bill, said House Appropriations Committee Chairman David Obey.

Eliminating the ban will allow the measure, which funds government operations through March 6, to get through Congress and be signed into law by President George W. Bush, Obey said.

“At least temporarily, the moratorium is lifted,” Obey told reporters. “This next election will decide what our drilling policy is going to be.”

The announcement was hailed by Republicans. “House Republicans have fought for months to lift these outdated bans on American energy production, and the capitulation by Democrats today is a big victory for working families, seniors, and small businesses struggling with record gasoline prices,” said House Republican Leader John Boehner, of Ohio.

The legislation, slated for a House vote tomorrow, will also include a $25 billion loan package for the auto industry, $23 billion in disaster assistance, an additional $2 billion for Pell education grants along with the annual defense, homeland security and veterans’ affairs appropriations bills.

Obey celebrated the closed process of developing the CR:

Asked if the process of has been secretive, Obey said: “You’re damn right it has because if it’s done in the public it would never get done.” He said he wanted to avoid his colleagues’ “pontificating” on the content of the legislation, saying “that’s what politicians do when this stuff is done in full view of the press.” He said, “We’ve done this the old fashioned way by brokering agreements in order to get things done and I make no apology for it.”

Update: The bill also kills the oil shale leasing moratorium.

By a vote of 93-2 (Crapo and Kyl opposed; Biden, DeMint, Kennedy, McCain, and Obama abset), the Senate passed the Baucus-Grassley Energy Improvement and Extension Act (S.Amdt. 5633 to H.R. 6049) this afternoon. The $100 billion bill extends the solar incentives through 2016 and other renewable production tax credits for one or two years. There are $8.3 billion in funds for this year’s climate disasters, including the Midwest floods and Gulf Coast hurricanes. Some tax breaks for oil companies are rolled back, but the bill is far from fully funded (even ignoring the giant AMT protection).

Significant elements of the bill, as passed: Energy incentives

• Extends for one or two years and expands production tax credits for wind, refined coal, biomass and marine renewables. $5.8 billion.
• Extends through 2016 the investment tax credit for solar energy. $1.9 billion.
• Extends through 2016 the credit for residential solar property. $1.3 billion.
• Provides new tax credits for creation of advanced coal electricity projects and certain coal gasification projects. $1.4 billion.
• Establishes a new credit for plug-in electric drive vehicles. $758 million.
• Extends credit for energy-efficient improvements to existing homes. $837 million.

Alternative Minimum Tax

• Increases personal credits against the AMT, shielding more than 20 million taxpayers from the tax. $61.8 billion.
• Protects those exposed to the AMT because of incentive stock options. $2.3 billion.

Individual and business tax credits

• Extends until end of 2009 the research and development credit. $19 billion.
• Extends until end of 2009 the deduction for state and local general sales taxes. $3.3 billion.
• Extends until end of 2009 a tax deduction for higher education costs. $5.3 billion.
• Extends until end of 2009 a deduction for a teacher’s personal expenses. $410 million.
• Lowers the refundable threshold for the child tax credit for the 2008 tax year. $3.1 billion.

Other

• Requires private insurance plans that offer mental health benefits to offer such benefits on a part with medical-surgical benefits. $3.9 billion.
• Provides tax relief to victims of natural disasters in Midwest and elsewhere. $8.3 billion.

A coalition of 16 environmental organizations (and the League of Women Voters) is sending a joint letter to U.S. Senators indicating a joint position on the Baucus-Grassley tax extenders package (H.R. 6049). They write:

On behalf of our millions of members and activists, we urge Congress to pass the clean energy tax incentives included in the Energy Improvement and Extension Act of 2008 and strip the bill of incentives for dirty fossil fuels. Congress should take this opportunity to promote a new energy economy and begin the fight against global warming, and not reward the big oil and dirty coal industries.

The organizations are the Alaska Wilderness League, Audubon, the Center for International Environmental Law, Clean Water Action, Defenders of Wildlife, Earthjustice, Environment America, the Environmental Defense Fund, Friends of the Earth, League of Conservation Voters, League of Women Voters of the United States, Natural Resources Defense Council, Sierra Club, Southern Alliance for Clean Energy, The Wilderness Society, and the Union of Concerned Scientists.

The National Wildlife Federation, because of the “sweeping new federal subsidies for oil shale, tar sands and liquid coal refining,” “dirty fuels that will dramatically increase global warming pollution and threaten millions of acres of wildlife habitat,” is sending a letter in unambiguous opposition to Baucus-Grassley.

The text of both letters is after the jump.

E&E News reports:

House Democrats will continue devoting floor time to energy issues with a vote today to limit speculative trading in commodity futures markets. The bill, H.R. 6604, will be brought under a closed rule that does not allow amendments except a GOP alternative to be offered in the form of a motion to recommit. Except for a few technical details that keep the bill within the jurisdiction of the Agriculture Committee, the legislation is nearly identical to the speculation bill that did not pass before the August recess. In July, the legislation failed to win the two-thirds votes necessary to pass under expedited rules Democrats used to eliminate the possibility of Republicans attempting amendments on offshore drilling. The bill did obtain a majority vote of 276-151.

Republicans will likely attempt to use the motion to recommit to replace the bill with a GOP comprehensive energy bill that includes lifting the moratorium on oil and gas drilling on the outer continental shelf and provisions supporting clean coal, nuclear and conservation initiatives.

Yesterday, the Republican motion to recommit failed 191-226.

As votes near this evening on the “all of the above” Democratic energy package (H.R. 6899), National Wildlife Federation president Larry Schweiger sent a letter to Congress opposing the bill because it lifts the oil shale moratorium. He writes:

The public, including National Wildlife Federation’s four million members and supporters, wants Congress to take the urgent and necessary steps that will give consumers better energy choices, cut oil dependency and cut global warming pollution. While we favor many provisions in the Comprehensive American Energy Security and Taxpayer Protection Act (H.R. 6899), especially when compared to the expected motion to recommit, we oppose the bill because of its provision allowing commercial oil shale leasing. As a result of this provision, the bill fails to address the fundamental challenge of avoiding significant new increases in global warming pollution and protecting important wildlife habitat on our public lands.

League of Conservation Voters President Gene Karpinski issued the following statement opposing the Republican motion to recommit:

Drilling is no longer the issue – unfortunately, both H.R. 6899 and the motion to recommit include drilling. The issue today is whether or not each Member of Congress will stand up for the American people or stand with the oil industry lobbyists.

All summer, Republicans have called for an ‘All of the Above’ plan on energy. Now, presented with a compromise that gives them everything they’ve asked for, the Republican leadership refuses to support it. Instead, they offer a motion to recommit, which will remove every provision from the bill that Big Oil doesn’t like: provisions that reduce tax breaks to Big Oil and extend them to renewable energy companies, increase efficiency, and create the first national renewable energy standard.

How each member votes will highlight the real differences between those in Congress who support clean energy as central to America’s energy future, and those who remain tied to big oil and want to keep us stuck in the past. LCV opposes the motion to recommit and calls on the Members of Congress who support it to stop working for the oil companies and start working for the American people.

Reps. Nick Rahall (D-W.V.), Gene Green (D-Texas), George Miller (D-Calif.), and John Dingell (D-Mich.) have unveiled the House Democratic “all of the above” energy package, The Comprehensive American Energy and Security, Consumer Protection Act (H.R. 6899), which lifts the moratorium on offshore drilling and calls for massive investments in natural gas, oil, and coal, as well ethics reform for the MMS, support for public transit, and a suite of energy efficiency and renewable energy incentives and standards paid for by eliminating some oil subsidies.

Many elements are drawn from previous House bills—H.R. 5351, H.R. 3221, H.R. 6, H.R. 4520, H.R. 6578, H.R. 6078, H.R. 6052, H.R. 6515.

At Climate Progress, Joe Romm reviews the full text of the draft “Gang of Ten” energy legislation, now unofficially co-sponsored by ten Democrats and ten Republicans. The original ten senators are conservative and industry-friendly. Highlights of Romm’s review:

• Title II makes clear that the “consumer tax credits for advanced vehicles” is focused on plug-in hybrid electric vehicles (PHEV), see Section 202 (page 17). The tax credit is “$2,500, plus $400 for each kilowatt hour of traction battery capacity in excess of 4 kilowatt hours” with a cap at $7,500. A midsized PHEV might consume 0.3 to 0.4 kilowatt-hours per mile when it runs on electricity (yes, Toyota may well do better than that, but I doubt GM will).

  So a PHEV20 (one with a 20-mile range running only on electricity) might have a battery capacity 7 kwh, and get a $3700 tax credit. The Chevy Volt is supposed to be 40-mile electric range and get about $6500.

• Section 254 (page 114) has a geothermal heat pump tax credit up to $2000 and Section 282 (page 168) has a 2-year accelerated depreciation period for geothermal systems.
• Title IV, Subtitle B “Coal-to-Liquid” (page 191) is a tad confusing, but it doesn’t look to me like it’s going to jumpstart the industry, since it requires carbon capture and storage and requires lifecycle greenhouse gas emissions from liquid coal to be no greater than that from conventional petroleum — a very high bar to jump.
• Subtitle C “Nuclear Power” (page 203) has a bad provision that says the Secretary of Energy “shall begin construction of a spent fuel recycling research and development facility not later than 1 year after the date of enactment of this Act.” Recycling is of course a euphemism for reprocessing.
• Subtitle D “Tax Provisions” (page 218) has a short section on enhanced oil recovery that I think is the worst provision in the bill.

Download the full draft.

In August, Tom Friedman penned “Eight Strikes and You’re Out” on McCain’s record on extending renewable energy production and investment tax credits:

Senator McCain did not show up for the crucial vote on July 30, and the renewable energy bill was defeated for the eighth time. In fact, John McCain has a perfect record on this renewable energy legislation. He has missed all eight votes over the last year — which effectively counts as a no vote each time. Once, he was even in the Senate and wouldn’t leave his office to vote.

The eight votes:

• July 30: S. 3335 filibustered 51-43 [Roll Call #192]
• June 17: H.R. 6049 filibustered 52-44 [Roll Call #150]
• June 10: H.R. 6049 filibustered 50-44 [Roll Call #147]
• April 10: S. Amdt. 4419 (tax credits without offsets, attached to Dodd housing bill) passes 88-8 [Roll Call #95]
• February 6: S. Amdt 3983 to H.R. 5140 (tax credits without offsets, attached to stimulus package) filibustered by one vote (58-41; Reid procedural vote with GOP, McCain not voting) [Roll Call #8]
• December 13: H.R. 6 filibustered by one vote (59-40; Landrieu with GOP, McCain not voting) [Roll Call #425]
• December 7: H.R. 6 filibustered 53-42 [Roll Call #416]
• June 21: S.Amdt. 1704 filibustered 57-36 (Landrieu with GOP, Boxer, Brownback, Coburn, Johnson, McCain, Sessions not voting) [Roll Call #223]

The one time the tax credit extension passed, it was known to be a deal-breaker in the House, since there was no funding mechanism approved and it was tied to the housing bill.

See Hill Heat’s earlier timeline of Republican obstruction on extending the renewable tax credits.

According to E&E News, Democratic leadership plans to unveil an “all of the above” energy package today or tomorrow which likely has the following components:

• Expansion of OCS leasing to include areas off the coasts of the Carolinas, Virginia and Georgia, and possibly the eastern Gulf of Mexico as well. A bipartisan Senate plan known informally as the “Gang of 10” proposal would allow drilling in these regions no closer than 50 miles from shore. But House lawmakers and aides did not say how close to shore their plan would allow drilling.
• New revenues from oil companies. A Democratic leadership aide said the bill may include provisions to ensure payment of royalties from late-1990s deepwater Gulf of Mexico leases that currently allow royalty waivers regardless of energy prices. The absence of price-based limits on these royalty waivers could cost the Treasury as much as $14.7 billion over 25 years, according to the Government Accountability Office. The bill may also include the repeal of the Section 199 tax deduction for major oil companies. This plan, past versions of which have also frozen the deduction at 6 percent for non-majors, raises roughly $13.6 billion over a decade, the Joint Committee on Taxation estimated in June.
• A so-called renewable electricity standard that requires utilities to supply escalating amounts of power from sources like wind and geothermal power. The House Democrats plan to include a standard of 15 percent by 2020, an aide said, akin to a measure the House approved last year that did not survive negotiations with the Senate. The plan allows roughly a fourth of the standard to be met with efficiency measures.
• Extension of renewable energy and energy efficiency tax credits.

E&E also reports that Pelosi indicated “the energy bill might include support for automakers’ retooling to make more efficient vehicles.”

This could also be part of an economic stimulus package being prepared or the continuing resolution to extend government spending beyond the Sept. 30 end of the fiscal year, she said.

From the Wonk Room.

Yesterday, the Center for American Progress released Green Recovery, a new report by Dr. Robert Pollin and University of Massachusetts Political Economy Research Institute economists. This report demonstrates how a new Green Recovery program that invests $100 billion over two years would create 2 million new jobs, with a significant proportion in the struggling construction and manufacturing sectors. It is clear from this research that a strategy to invest in the greening of our economy will create more jobs, and better jobs, compared to continuing to pursue a path of inaction marked by rising dependence on fossil fuel billionaires.

To create 2 million new jobs within two years, the overall level of fiscal expansion will need to be around $100 billion, or roughly the same as the portion of the April 2008 stimulus program that was targeted at expanding household consumption. This green economic recovery program will create more jobs and better paying jobs. If Congress were to decide as part of a domestic oil production and gas price reduction effort to spend $100 billion on new oil and gas subsidies and subsidizing gasoline and oil prices, only a quarter as many jobs would be created: