The Democratic leadership unveiled its energy package yesterday with the no-nonsense title the “Comprehensive American Energy Security and Consumer Protection Act.” But the emerging bill was a swap meet-style process, bundling plans to open up huge chunks of the Atlantic seaboard to offshore drilling with a number of incentives for renewable energy. The bill is scheduled for consideration next week, giving the House an opportunity to vote on offshore drilling, which Republicans and the President have been calling for all summer.
There’s three possible big gains for cleantech: 1) Yet another attempt to extend the renewable energy tax credits, which help solar and wind energy development, 2) the creation of a federal renewable portfolio standard that would mandate all utilities generate 15 percent of their electricity from renewable sources by 2020, and 3) the creation of a Strategic Renewable Energy Reserve to invest in and offer incentives for plug-in hybrid cars, as well as energy-efficient homes, buildings and appliances.
Paying for all this, however, has always been the sticking point. Democrats propose repealing tax breaks for the oil and gas industry and revamping the royalty system, forcing oil companies to pay for their existing leases. Democrats got some ammo on this front this week when reports came out that the Mineral Management Service, the agency in charge of collecting these royalties from the oil companies, was rife with corruption.
The bill’s short-term, fossil-fuel-powered energy goals include the release of 10 percent of the Strategic Petroleum Reserve, which Democrats say could lower prices at the pump by as much as a third. It would also end the moratorium on offshore drilling, allowing for leasing and exploration between 50 and 100 miles offshore, effective at the end of the month. However, how quickly expanded domestic drilling would effect our gasoline prices is anything but certain.
It’s also not clear how Republicans or the oil industry will take to swapping the financial certainty of tax breaks for the gamble of offshore drilling options. But in tit-for-tat sausage making, the Republicans might need to swallow higher taxes on the oil companies if they want to get the domestic drilling over which they’ve been beating their war drum.