Just after 5:30 a.m. Friday morning, Congress moved to end the blink-and-you-missed-it five-hour government shutdown. The deal sets spending levels for two years, including a massive increase in military spending and a significant boost to domestic programs.
It also includes coveted tax breaks for the energy sector.
As part of the package, several energy sectors secured long-sought tax breaks designed to give a leg up to up-and-coming forms of energy production. Other types of energy sources, meanwhile, were left in the cold.
In total, critics say, the last-minute negotiations, which often apply tax breaks both going forward and retroactively, make for a haphazard way of setting government goals.
“This is not an ideal way of making federal policy,” Scott Greenberg, a senior analyst at the Tax Foundation, told The Post's Heather Long and Jeff Stein. “It’s probably not a good idea to make retroactive tax extenders in the first place.”
One of the biggest winners is a nuclear power station in Georgia. The Vogtle project was once meant to be one of many in a torrent of new nuclear power plants in the United States that never came to be.
Many of those new reactor plans have been scrapped as cheap natural gas, wind and solar power have undercut existing nuclear plants. Today, Vogtle’s prospects are strained by construction delays and cost overruns that have nearly doubled its price tag to about $23 billion.
The Trump administration, intent on bolstering the ailing fleet of nuclear plants, has promised $3.7 billion in new loan guarantees for the pair of nuclear reactors. Now, in the budget deal, Congress included a tax break for advanced nuclear energy that Georgia Power, an electric utility owned and operated by Southern Company, can harness in its Vogtle project.
Makers of geothermal pumps, too, will get a surge after the budget deal revived an expired tax break.
At the end of 2015, Republicans and Democrats struck a deal to allow U.S. oil companies to sell petroleum abroad in exchange for an extension on a series of tax breaks meant to encourage renewable energy.
But in the rush to get home for the holidays that year, lawmakers hashing out the details said they made, in the words of Minority Leader Nancy Pelosi (D-Calif.), a “drafting error” excluding the tax breaks for small wind turbines and geothermal heat pumps that could be installed at homes and businesses.
More than two years later, Congress finally corrected the mistake in the long-lasting budget deal.
“With the extension of federal tax credits being revived, the entire geothermal supply chain … will finally get the relief we have needed since being left on the sidelines in 2015,” said Ryan Dougherty of the lobbying group Geothermal Exchange Organization.
The package also patched another hole: It reinstated a tax on oil companies for federal oil-spill response efforts that congressional Republicans let expire at the end of 2017.
With the tax bill, President Trump also has the chance to make his “clean coal” rhetoric a reality.
The package included a new tax credit for carbon capture projects with support from across the ideological spectrum in the Senate. Both Sens. Sheldon Whitehouse (D-R.I.), who is one of the chamber’s biggest advocates for action on climate change, and John Barrasso (R-Wyo.), who once said “the role human activity plays [in climate change] is not known,” were original co-sponsors on the carbon-capture provision, as were Shelley Moore Capito (R-W.Va.) and Heidi Heitkamp (D-N.D.).
This “diverse group,” Heitkamp said, helped get the carbon-capture tax proposal across the finish line.
“That’s number one,” she said. “Look at how many of us came from different perspectives.”
Heitkamp, who has at least three carbon-capture projects in her state, said the fact that Senate Majority Leader Mitch McConnell (R-Ky.), representing coal-country Kentucky, had been a co-sponsor on the legislation “absolutely helped.”
Several other tax-related proposals meant to boost alternative forms of energy, however, didn’t make the cut.
The package the Senate brought to the House included tax provisions meant to encourage large-scale geothermal generation, offshore wind energy, energy storage and waste heat to power, in addition to a new financing mechanism for carbon capture called a private activity bond, according to Senate staffers.
It would also have given renewable energy projects access to a legal entity long used by oil and gas companies called a master limited partnership, which lets builders of pipelines, refineries and other energy infrastructure lighten their tax load.
But in leadership negotiations, the office of House Speaker Paul Ryan (R-Wis.) pushed back against those tax perks, the staffers say. House Ways and Means Committee Chairman Kevin Brady (R-Tex.) opposed the use of the budget deal as a vehicle for new tax breaks, and the speaker supported his position, a Republican congressional staffer said.
Despite not getting all they sought, carbon-capture advocates were thrilled with the tax incentive they did secure. "I'm very pleased with what they got done," Julio Friedmann, who formerly led carbon-capture efforts at the Energy Department. "We'll see if there is opportunity to do more in the future."
And Ryan did give biodiesel producers half of what they asked for: a tax break that applies to fuel produced last year.
But one of the biggest biofuel boosters among Senate Republicans, Charles E. Grassley (R) of Iowa, wasn't pleased. The corn-state senator thought he had secured a promise from House leadership for a two-year extension for biodiesel.
“That's not very, very good,” Grassley told reporters Thursday, “and it's contrary to the promise I got from both the leadership of the Senate and the House, including a Nov. 9 telephone conversation that I had with Ryan.”
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— One more energy-related thing to know about the budget deal: "The U.S. Strategic Petroleum Reserve would be sold down," write The Post's Heather Long and Jeff Stein. "In an effort to cover at least a bit of the price tag, the bill calls for selling 15 percent of the petroleum reserve. But interestingly, the selling would not start until 2022. Budget hawks who are concerned about the level of U.S. debt call 'pay fors' such as this 'gimmicks' that are one-time revenue increases. Congress was trying to get away from those, but this bill appears to abandon that commitment."
— “Major” announcement ahead: Interior Secretary Ryan Zinke is scheduled to visit the Western Hunting & Conservation Expo in Utah on Friday to make a “major conservation announcement,” the Deseret News reports. It’s the secretary’s third visit to the state in a year.
—Public lands. Meanwhile, Interior's Bureau of Land Management has finalized a set of recommendations that would overhaul the way it permits energy exploration and other activities on public land, The Post's Juliet Eilperin and Michael Laris report. One of the biggest streamlining efforts: "The report and its accompanying appendicies call for establishing “targeted time and page limits” for federal environmental analyses and for legislation that would limit the number of Freedom of Information Act requests a person or organization could submit to the agency."
— Trump vs. California: The Interior Department has announced it wants to open 1.3 million acres across the California desert to mining starting in March, the Desert Sun reports. It follows an announcement from the Trump administration last week that it will reconsider an Obama-era plan to protect those areas. “In California, the areas that will be open to mining include low desert lands bordering Joshua Tree National Park in Riverside County, high desert areas north of Pioneertown in San Bernardino County, lands flanking Death Valley National Park in Inyo County, and huge stretches of eastern Imperial County.”
The Los Angeles Times editorial board charged the administration with having “no valid reason for revising California’s desert plan.”
— Governors excluded from Interior plan: A group of 19 Western governors say Zinke did not consult them in plans for a major overhaul of Interior, the Associated Press reports. A Feb. 1 letter from the Western Governors Association says they “asked Zinke in April 2017 to be consulted on any reshuffling of the department...They said last week that Zinke has still not sought the views of its members."
Interior spokeswoman Heather Swift told the AP the governors “are welcome to share their ideas and opinions with the secretary or their staff are also encouraged to reach out to the secretary's staff."
— Big, if true: "After failing to win a bailout for cash-strapped coal plants, some Trump administration officials are considering emergency orders that could keep at least some coal generators online," reports Bloomberg News. The information comes from "people familiar with the discussions" and a department spokeswoman said “that is not correct information." But if the Trump administration were to enact emergency orders, it would be a big win for coal executive and Trump booster Bob Murray.
— EPA enforcement fines date back to Obama: The EPA released data on Thursday showing the agency brought in nearly $5 billion in fines and penalties as a result of enforcing environmental laws. But The Post’s Brady Dennis reports many of the actions in the agency’s report were initiated under the previous administration. Cynthia Giles, a top EPA enforcement official during the Obama administration, told the Post that in “no sense do these cases reflect the intentions or actions of the new administration.”
— California’s move a blueprint for states: California’s plan to block the Trump administration’s offshore drilling plans “could serve as a blueprint for the governors and congressional delegations of coastal states, who are overwhelmingly united in bipartisan opposition to Trump's plan,” CNBC reports.
— What is thundersnow? And how do tall buildings make it worse? As the name suggests, it’s a weather phenomenon that occurs when snow is accompanied by thunder and lightning. During January’s “bomb cyclone,” thundersnow “may well have been mostly artificial — not a direct product of the storm but due to manmade structures in the storm’s path,” Matthew Cappucci writes for The Post. He adds he was “able to trace its occurrence to the presence of high man-made towers, soaring over 1,000 feet into the sky.”
— Sorry, D.C. snow enthusiasts: Washington is No. 2 on a list of “snow losers” this season. The District’s pitiful 3.1 inches of snow as of Feb. 6, just 31 percent of what the city normally gets by this date, put the metro area in second place behind Flagstaff, Ariz., reports The Post's Angela Fritz.
— Cutting oil subsidies may not be the answer to climate change: A new study in the journal Nature found that cutting subsidies to fossil fuels would spur only modest reductions to carbon emissions. “In other words, the effect of removing fossil fuel subsidies would fall far short of the reductions promised in the Paris Agreement—which many experts calculate are still not enough to stay within the desired 1.5- or 2-degree-Celsius temperature target,” E&E news reports.
— Pipeline suspension, lifted: The Pennsylvania Department of Environmental Protection said Thursday the suspension on the Mariner East 2 pipeline has been lifted after construction stopped over “egregious and willful violations” of state law. The state regulators lifted the suspension on the pipeline after Sunoco Pipeline agreed to pay a $12.6 million fine for the violations, per The Philadelphia Inquirer.
— Chevron’s “creative lawyering:” Chevron’s move to bring foreign companies into the lawsuits against oil producers over their contribution to global warming is strategic, one environmental group’s chief legal counsel told Bloomberg News. Julia Olson at Our Children’s Trust, who is not involved with the case, said it would keep the dispute out of state court where the California cities may have found a more sympathetic judge.
And here are some great long reads for your weekend:
— ProPublica took a look at the consequences of Volkswagen’s “Dieselgate” controversy for the German automaker. The story highlights the contrast in the punishments doled out so far: While the carmaker paid billions in fines, penalties, civil damages and restitution in the United States, it has not paid any major fines in Europe.
— The California Sunday Magazine has dedicated its entire February issue to a stunning 20,000-word feature from Mark Arax on the subject of his upcoming book. “Stewart Resnick is the biggest farmer in the United States," Arax writes, "a fact he has tried to keep hidden while he has shaped what we eat, transformed California’s landscape, and ruled entire towns. But the one thing he can’t control is what he’s most dependent on — water.”
- The Renewable Fuels Association’s annual conference will be held in San Antonio Feb. 12-14.
— Stop everything and watch this: A Missouri woman shared a now viral video of coming home to find her neighbor's Corgi sitting on top of her one-eyed pony named Cricket. Read more from the Springfield News-Leader here.