The U.S. just became the third country, joining Syria and Nicaragua, that cannot be counted as part of the Paris Climate Accords. The 195-nation agreement set goals for reducing greenhouse gas pollution for developed and developing nations alike. President Donald Trump, in a speech at the White House Rose Garden, made the announcement, saying:

In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord but begin negotiations to reenter either the Paris accord or an entirely new transaction on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers.

Trump said he will try to negotiate a deal that is “fair,” adding: “If we can, that’s great. If we can’t, that’s fine.” According to the Associated Press, however, a number of European nations will not be open to the U.S. renegotiating the deal:

BREAKING: France, Germany, Italy issue joint statement saying Paris climate accord can’t be renegotiated.

— The Associated Press (@AP) June 1, 2017

The White House deliberations leading up to Thursday’s announcement were reportedly split between two factions: those who wanted to remain part of the deal and those who wanted to withdraw from it. Ivanka Trump and Secretary of State Rex Tillerson apparently pushed hard for the president to remain, while EPA Chief Scott Pruitt and Trump’s chief strategist Steve Bannon lobbied him to exit the pact.

Stating his rationale for removing the U.S., the world’s second-largest greenhouse gas emitter behind China, from the accord, Trump said it hurt the U.S. economy and transferred coal jobs overseas. Vice President Mike Pence, introducing Trump at Thursday’s announcement, echoed that reasoning: “Our president is choosing to put American jobs and American consumers first,” he said. “Our president is choosing to put American energy and American industry first. And by his action today, President Trump is choosing to put the forgotten men and women first.”

But many of the leaders in the industries Trump said are harmed by the deal–like ExxonMobil, Royal Dutch Shell, and BP–supported the climate agreement, and lobbied Trump to stay in. Environmental groups, Democrats, and dozens of congressional Republicans backed the deal as well. In the end, however, Bannon, Pruitt, and others, won the president over. Soon after Trump’s announcement, Jim Immelt, the CEO of General Electric tweeted:

Disappointed with today’s decision on the Paris Agreement. Climate change is real. Industry must now lead and not depend on government.

— Jeff Immelt (@JeffImmelt) June 1, 2017

The Paris deal, a non-binding agreement signed in December 2015, was an international framework to set the world on the path toward cutting greenhouse gas emissions. The goal was to keep the average global temperature from rising more than two degrees celsius above pre-industrial temperatures. The private sector, as well as some states and cities, have already taken steps to reduce emissions and invest in clean energy. Despite Trump’s decision, the U.S. will technically remain part of the pact until November 4, 2020, a day after the next presidential election.

Former President Barack Obama, who was a central architect in the Paris agreement, issued a statement after Trump announced his decision to withdraw from the accord. He said:

The nations that remain in the Paris Agreement will be the nations that reap the benefits in jobs and industries created. I believe the United States of America should be at the front of the pack. But even in the absence of American leadership; even as this Administration joins a small handful of nations that reject the future; I’m confident that our states, cities, and businesses will step up and do even more to lead the way, and help protect for future generations the one planet we’ve got.

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

The post The Three Countries Not Invested in Paris Climate Deal: Syria, Nicaragua…and the U.S. appeared first on Law Street.

One of Donald Trump’s first moves as president was announcing his plan for the imminent repeal of 75 percent of federal regulations. In a previous article, we went over the creation of the Environmental Protection Agency and the ways in which federal environmental regulations affected business growth, outsourcing, and public health costs. Reviews of environmental regulations show that they have saved trillions of dollars in public heath costs while having a modest effect on American business, which has continued to grow and thrive since the creation of the Clean Air Act and Clean Water Act. Removing environmental regulations will likely not be the deciding factor that enables manufacturing to return to America but it could seriously endanger our water and air, especially for poor and at-risk communities.

But the question of what effect regulations have on the energy market itself has been a hot topic of debate lately. Conservative interests have argued for some time that environmental regulations place serious handicaps on fossil fuels and unfairly favor renewables, and the Obama Administration’s Clean Power Plan has come under a storm of criticism for strengthening this dynamic. Read on to learn about federal energy policy and environmental regulations to see how they have historically impacted different energy industries and examine what the Clean Power Plan would have done in contrast to what Trump’s proposed policies will likely do.

Regulations and the Energy Market: Renewables vs. Fossil Fuels

A central objection to environmental regulations is that they unfairly skew the energy market. They place countless handicaps on fossil fuel companies and allow renewables full freedom to prosper, unfairly impacting business throughout the country. It is very true that the energy market is subject to unfair business handicaps, but those that are in place overwhelmingly favor fossil fuel companies rather than hinder their success. Much of this dates back to the Energy Policy Act of 2005, which determined subsidies for different energy sources. The law allocated $5.6 billion in incentives for the gas, oil, and coal industries, $4.5 billion for renewable and alternative energy sources and $3 billion in electricity incentives that largely addressed nuclear power (another $1.3 billion went to energy efficiency and conservation research and development, which mostly applied to fossil fuel production). This $4.5 billion may seem substantial and it did, in fact, bring forth the creation of critical incentives, such as solar tax credits. However, a review of the 2007 budget shows that more than two-thirds of all these renewable subsidies went to ethanol and biofuels. Only a little over a billion dollars went directly into America’s three dominant clean energy sources: solar, wind, and hydropower.

While direct funding and incentives are slanted toward fossil fuels, the real imbalance comes in the form of large-scale post-tax subsidies for fossil fuels that involve the costs of the externalities they create in the form of environmental damage and public health effects. Globally, the subsidy imbalance is extremely dramatic: worldwide about $120 billion in pre-tax subsidies goes to renewables and $523 billion goes to fossil fuels. But when you add post-tax subsidies, the IMF calculates that the fossil fuel industry received a staggering $4.2 trillion in subsidies in 2011. The United States is the world’s top producer of gas and petroleum and it’s a stretch of the imagination to claim that those industries are getting marginalized or cut an unfair deal.

The first part of this series explained the regulations that were placed on power plants for emissions and dumping, which represented a relatively small industry cost (especially compared to the massive public health savings generated by those regulations) and did nothing to stop the growth of the fossil fuel industry. For the most part, renewable energy systems don’t deal with regulations that affect emissions and toxic dumping because they don’t create waste streams through energy production. However, this doesn’t mean that renewables are given a free ride to prosper in the energy market; they are subject to extensive regulatory processes as well despite the fact that they do not have the same adverse impact on public health. The installation of a wind turbine, for instance, requires permits from a vast number of different regulatory authorities, and if even one of the required organizations doesn’t grant a permit then a project can be killed.

A great deal of attention has been called to the potential damage renewables can inflict on wildlife (the most common narrative is that wind turbines kill birds), despite the fact that fossil fuels do much greater damage to wildlife, and protected species regulations are often used to oppose renewable projects. Renewable energy systems can and have been repeatedly shut down mid-project for causing even minor habitat damage. The $2.2 billion BrightSource Solar Farm in the Mojave Desert, the largest solar facility ever to be built in the United States, was almost completely abandoned because of the death of a single endangered desert tortoise.

Fossil fuel companies must deal with some land and water regulations as well, but they also have access to a variety of unique legislative loopholes that allow them to dodge critical regulations and benefit from the tax code–in effect, giving them permission to pollute so that their business may thrive. The most dramatic example of this is the “Halliburton loophole,” which gives hydraulic fracturing companies special permission to inject hazardous chemicals underground, in what would normally be a direct violation of the Safe Drinking Water Act of 1974. These benefits extend to the basic permitting processes that different energy companies must go through as well: fossil fuel companies generally have a streamlined permitting process, are given the cheapest land leasing rates, and must provide no strategy or evaluation of environmental safety.

In California, for instance, a solar farm project can require a three-year permitting process that requires millions of dollars. Comparatively, a fossil fuel company needs only a one-page declaration of intent and can begin construction almost immediately. Furthermore, the Bureau of Land Management values the land it leases to oil and gas companies at a rate set almost a century ago, meaning these companies pay incredibly low prices when utilizing federal land (costing $30 billion in federal revenue over the last 30 years for undervalued land) while the BLM requires renewables to pay modern land leasing rates. The idea that the fossil fuel industry is unfairly suppressed by regulation is a myth; the fossil fuel industry already has access to numerous regulatory loopholes and subsidy benefits. The environmental regulations that are in place aren’t suffocating growth, they’re providing critical protection for our public health against industries with high pollution potential.

Regulations and the Energy Market: The Coal Industry

The fossil fuel source that does face serious decline is coal, which the Clean Power Plan specifically targeted as the most dangerous energy source in use, both for climate change and for public health. One of Trump’s favorite mantras during his campaign was that regulations have destroyed the coal industry and taken away countless jobs from Americans in the process. Historically, no such pattern has been observable; the coal industry prospered under environmental regulations for decades and has suffered so much in recent years largely because of competition with the massive spike in domestic natural gas production and usage. This makes President Trump’s claim that he will boost both coal and gas production–which are two directly competing industries–particularly confusing. Critics of environmental regulations generally point to the implementation of the Mining Safety and Health Administration’s 2014 Respirable Coal Mine Dust Rule, which decreased acceptable concentrations of coal dust per cubic meter from 2 grams to 1.5 grams and required regular air samplings to be taken. This legislation has been a hot topic among the anti-regulation community and coal advocates have complained that maintaining such low levels are unfairly difficult at existing output levels.

Image courtesy of Greg Goebel; License: (CC BY-SA 2.0).

However, it’s worth noting that the rule was put in place in 2014, long after American business made the decision to favor natural gas and long after the initial downturn of the coal industry. It’s also true that the rule addresses very legitimate health concerns and when evaluating the efficacy of a regulation it is important to compare the health benefits to the cost savings that would disappear if the rule were rescinded. A staggering 76,000 miners have died from black lung over the last 50 years. Over the same time frame, the government has had to pay out $45 billion in federal compensation to affected workers and their families. The law is also directly targeted at mining crews with Part 90 miners–workers who have already been diagnosed with a respiratory illness. The rule sought to protect the most at-risk population of workers and if the coal industry is to have a productive workforce then it has a responsibility to ensure the health and survival of that workforce. Estimated annualized compliance costs were about $28.1 million at a 7 percent discount rate, with the majority of compliance costs coming from tech purchases for the newly required Continuous Personal Dust Monitors. This number may seem huge but it only represents about 0.13 percent of the coal industry’s annual earnings of $20.2 billion and less than a third of the $1 billion our nation pays out each year in federal compensation to sick and dying miners.

As an energy source, natural gas simply provides more energy for a lower cost, making it unlikely that coal will experience a serious resurgence in the United States. The coal industry survived and grew under the Clean Air Act, and the industry was on its way out long before the Respirable Coal Mine Dust Rule came into effect. While it’s highly likely that the Clean Power Plan would deal a deathblow to the industry, increasing funds to gas as Trump plans will accomplish the same thing only just at a slower rate.

Repealing pollution regulations like safeguards and filter requirements and removing coal mine dust restrictions wouldn’t make the changes necessary to revive the weakening business, not as long as gas is abundant and comparatively cheap. Removing these regulations would, however, make the coal production and disposal process more dangerous for the environment and miners would be the first group to experience the health consequences.

Obama vs. Trump

The Clean Power Plan issued new carbon emissions reductions standards for each state and would have required the states to independently create a plan to meet their target goals. The result would have been a huge increase in clean, renewable energy production. Coal would have been hit the hardest by this as the worst polluter, although the natural gas industry would more easily be able to improve efficiency rates and meet the new standards. The CPP actually encourages the increased use of gas, as long as it’s primarily a replacement for coal.

The nature of this policy aligns with public opinion as well. About 65 percent of the population favors stricter emissions regulations, about 70 to 75 percent of Americans want to see increased renewable energy, and only about 30 percent want to see more coal. However, the coal industry represents 174,000 jobs, including extraction, transportation, and production and it is unfair to cut off employment without generating new opportunities, even if those lost jobs had high health risks.

However, the Clean Power Plan has a strong focus on creating jobs in renewable energy and pollution control industries. The traditional conservative narrative claims that fossil fuels create employment and clean energy policies stifle it, but the reality is actually the reverse; renewables can be a vital catalyst for job growth and actually create more jobs than fossil fuels. One powerful example of the over-inflated projections of fossil fuel employment opportunities is happening right now, with President Trump advancing the Dakota Access Pipeline and Keystone XL Pipeline. The Keystone Pipeline, in particular, has come under a media firestorm after it was revealed that the project would only create 35 permanent jobs. Like most construction projects, the vast majority of jobs related to the pipeline will be temporary positions, including some that will only last for a few months or “spillover jobs” that take place in another industry.

The entire clean energy sector employed 8.1 million workers as of 2015 and growth in the sector has also moved at a rate 12 times faster than overall job growth. In 2014 there were 7.7 million clean energy jobs worldwide and by the end of 2015, that number had grown to about 8.1 million. The related job creation is also remarkable when compared to fossil fuels–a million dollars of spending on renewable energy and energy efficiency will create 13 jobs. That same million dollars only creates 6 jobs within the fossil fuel industry. These are good jobs for middle-class Americans as well, paying on average 13 percent higher than median wages. Many of the jobs that are created by renewable energy involve manufacturing, which would align with President Trump’s vow to revitalize the American manufacturing industry. However, unlike fossil fuels, positions in the renewable energy industry don’t endanger the health of the workers who support them. Hillary Clinton’s ambitious Clean Power Challenge would have expanded upon Obama’s CPP and would have increased renewables through competitive grants, tax incentives, and market-based incentives and created a flux of new jobs in the process. Such efforts would have also meant opening up the industry of offshore wind, a massive and untapped source of domestic energy and employment.

“Keystone XL Pipeline Protest at White House” courtesy of Tar Sand Action; License: (CC BY 2.0)

Critics of the Clean Power Plan claimed that it unfairly supported renewables and made it impossible for fossil fuels to thrive. It’s more accurate to say that it would have leveled the playing field, not skewed it in favor of renewables. Fossil fuels would still be disproportionately subsidized and would still play a huge role in American energy. What the CPP would have done is act as a major catalyst for an increase in clean energy use that America needs to combat climate change, establish energy independence, protect our public health and national lands, while creating new jobs for Americans.

Conclusion

It’s a political myth that the fossil fuel industry is unfairly regulated in the United States. America produces more gas and petroleum than any country on earth, subsidizes the fossil fuel industry with billions more than goes to renewables, and gives oil and gas companies fast-track access to land at the cheapest possible rates. The Clean Power Plan was a chance to increase clean, domestic renewable energy across the nation. Without the plan, the state renewable energy goals will be rendered non-binding and the progress of renewables will move at a much slower rate. Over the next four years, America will continue to be dependent on fossil fuels as the Trump Administration works to open up federal lands for drilling and fracking and peel back regulations allowing the oil and gas industry to freely pollute.

Will a Donald Trump presidency destroy the renewable energy industry? No, because the president doesn’t truly have control over the free market. Trump can seriously slow down renewable progress, but even if the Clean Power Plan is reversed, 29 states still have Renewable Target Portfolios established and another eight have created non-binding goals for themselves. The renewable energy industry has grown dramatically and will continue to receive bipartisan support in the places where it is cost efficient and useful. Red states such as Idaho, the Dakotas, and Texas have all made serious commitments to renewables because they have high renewable energy potential and investing in solar and wind simply makes economic sense. Technological improvements, especially within the field of energy storage, are increasingly raising the value of renewable energy systems and boosting growth within the private sector. In terms of coal, it will be difficult, and maybe even impossible, to bring the coal industry back to its previous rates of production as long as natural gas thrives in the United States.

However, climate change worsens every year and we don’t really have the luxury of waiting for things to move slowly. With Trump in power not only will much of Obama’s work be undone, we will also lose out on one of our last chances as a nation to try and combat climate change.

Kyle Downey

Kyle Downey is an Environmental Issues Specialist for Law Street Media. He graduated from Skidmore College with a Bachelor’s degree in Environmental Studies. His main passions are environmentalism and social justice. Contact Kyle at Staff@LawStreetMedia.com.

The post The Impact of Environmental Regulations on the Energy Market appeared first on Law Street.

Let’s work backwards: there is a nuclear power plant in upstate New York called Indian Point, and it needs to be shut down.

Nuclear reactors are notorious for their cooling systems; the Three Mile Island, Chernobyl, and Fukushima meltdowns all occurred because of cooling system failures. Located in Buchanan in Westchester County, the Indian Point nuclear plant sits at the edge of the Hudson River. It draws in two billion gallons of river water every day in order to cool its reactors, discharging it back into the river eight degrees warmer. This has catastrophic consequences for the fish, eggs, larvae, and other aquatic life there. In fact, more than a billion of them die every year, said Paul Gallay, president of Riverkeeper, an organization devoted to protecting the Hudson River and its tributaries (read more about this important organization here).

In a process called entrainment, fish and river life are sucked into the cooling intakes and annihilated. For decades conservationists have advocated for a closed cooling system, which has not come to fruition because it would require a financial investment that Entergy, the plant operator, is not willing to make. Rather, the company has proposed installing screens at the mouths of the intakes. Researchers have revealed that this is a far cry from a solution, not doing enough to protect the river’s biodiversity. In addition, it does not address the warm water discharge.

The Indian Point Reactor, courtesy of Franklin R. Halprin

The quality of the reactor itself and its operation therein are sorely lacking as well. Security guards consistently fail mock attack tests, there is no viable evacuation plan for the surrounding region, and the reactor is deteriorating with age. The Indian Point closure debate is particularly hot right now because the site’s 40-year license is about to expire and the Nuclear Regulatory Commission is considering granting them a 20-year renewal. The reactor provides a substantial percentage of the power used by New York City and the surrounding area; instead of shutting it down, why not repair and renovate?

In addition to closed cycling cooling, there are things that can be done in order to make Indian Point a bit safer, including fire safety measures and dry cask storage. These actions are insufficient; they do not change the underlying threats due to the reactor’s age, such as embrittlement, corrosion, and metal fatigue. Considering these problems are irreparable, why not tear it down and build a new reactor? Forty years ago, population geographies were different. Indian Point’s location is undesirable, due to its proximity to communities. Furthermore, several fault lines run through the area.

Unenforced “Keep Out” buoys, courtesy of Franklin R. Halprin

Nuclear energy is an efficient and clean means of powering our world. A controversial and provocative documentary called Pandora’s Promise (2013) makes a case for its desirability. Watch the trailer here:

One pound of uranium, the size of a person’s finger, yields as much energy as 5,000 barrels of oil. Nuclear energy does not pollute the air the way fossil fuels do. The amount of nuclear waste is overestimated: all the United States’ spent fuel rods would occupy a space no larger than a football field. Proposed “fourth generation reactors” are even more efficient and can recycle waste into another round of energy productivity. Renewables may be best for the long term sustainability of civilization, but right now, considering we continue to expand our energy demands, we need something realistic and nuclear is the way to go. These are some of the arguments the documentary presents, many of which are reasonable and worthy of consideration.

According to Gallay, Riverkeeper does not have a stance on nuclear power in general, but renewable energy and energy efficiency are two separate but interrelated things. We cannot argue that our needs for energy are increasing so drastically, while we waste 30 percent of the power we use. We can make many lifestyle changes so as to limit the growth of our demands. The idea of fourth generation nuclear plants is a fruitless quest for a Holy Grail. Rather, we should utilize the options we already have in hand. Declarations that carbon emissions in New York State would skyrocket if Indian Point were to close can be neutralized by a more wholehearted embrace of renewable energy systems. The economic infrastructure for them is more firmly established than ever, and market penetration is at an all time high. Furthermore, the sources of 650 of 2,000 potential megawatts are already in place and good to go.

These statistics are specifically in reference to New York State, but the conceptual framework is just as applicable to the United States at large and its national energy policy. Nuclear power has many advantages over fossil fuels, but it is not the ultimate answer. There are some notable outliers, such as France. Gabrielle Hecht’s The Radiance of France brilliantly chronicles the country’s national embrace of nuclear energy in the second half of the 20th century and the cultural values therein, as a means of assuaging the damage done by two world wars and as an attempt to reclaim its status as a member of the top of the geopolitical order. When the 21st century arrived, France had achieved energy independence and was even exporting its surplus to other countries. The general health of the environment and air there is notable; however, at the start of its program in the late 1940s, wind and solar power were barely in the conversation, and the state of technology did not allow for the viability of options such as geothermal energy. Just because France found success with its nuclear embrace half a century ago does not mean that the United States should pursue the same course now. We are fortunate enough to have at our fingertips a wider array of more preferable options.

It is time to make some substantial decisions regarding national energy policy and the directions in which we want to go. The Indian Point debate is a good starting point, and shutting it down would provide a great opportunity to set ourselves on a more renewable, and environmentally and socially responsible course.

—

Franklin R. Halprin (@FHalprin) holds an MA in History & Environmental Politics from Rutgers University where he studied human-environmental relationships and settlement patterns in the nineteenth century Southwest. His research focuses on the influences of social and cultural factors on the development of environmental policy. Contact Franklin at staff@LawStreetMedia.com.

Featured image courtesy of [Nick Fedele via Flickr]

Franklin R. Halprin

Franklin R. Halprin holds an MA in History & Environmental Politics from Rutgers University where he studied human-environmental relationships and settlement patterns in the nineteenth century Southwest. His research focuses on the influences of social and cultural factors on the development of environmental policy. Contact Frank at staff@LawStreetMedia.com.

The post It’s Time to Shut Down New York’s Indian Point Nuclear Plant appeared first on Law Street.

On December 18, 2013, Senate Finance Committee Chairman Max Baucus unveiled a discussion draft for an energy tax reform plan intended to make progress in the federal government’s current system of corporate tax incentives for the production of clean energy. The old system was criticized as being too complicated and too decentralized. Read on to learn about Baucus’ energy plan, the arguments in favor of it, and the arguments against it.

What was Baucus’ plan?

There are forty separate tax incentives offered to corporations for a variety of forms of energy including fossil fuels, wind, solar, and nuclear power; however, many of these are short-term incentives set to expire every two years or so until they are re-authorized by Congress, often leaving companies unsure of which tax incentives would still be in effect in the future. These incentives are also often specific in a way that does not provide for new and emerging technologies that may contribute to reducing emissions.

Senator Baucus’ plan aims to make energy tax incentives “more predictable, rational, and tech-neutral” by consolidating some of these incentives and eliminating others to form two broader and simpler tax incentives, one focused on clean production of electricity and one focused on clean production of transportation fuel. These incentives are granted after a particular plant is using a method that produces emissions intensity 25 percent cleaner than average energy production methods (“emissions intensity” is measured as the amount of emissions released per amount of energy produced, and is used to compare the environmental effect of different methods of energy production).

Baucus’ plan also calls for using the federal money saved through this tax reform to lower the corporate tax rate, which currently stands at 35 percent. Baucus, however, was confirmed in January as the next US Ambassador to China, and though leadership of the Senate Finance Commission will transfer to Senator Ron Wyden, who has worked closely with Baucus on this reform plan, many expect the plan to become stalled as its leader moves overseas. Despite this uncertain future, Baucus’ reform plan is seen as an indicator of impending reform to the current energy tax system in the United States.

What is the argument for Baucus’ plan?

Supporters of the reform say Baucus’ plan is an effective way to simplify the tax incentive structure while supporting clean energy. Companies would not have to waiting on their toes to see whether the particular incentives that apply to them would be renewed, and knowing that these incentives will have more longevity would promote more investment into clean energy production technology projects in the future. Most importantly, this reform plan is tech-neutral, meaning that it does not favor certain technologies over others and in fact does not specify any technologies in its incentives.

Supporters argue that this aspect of the plan will benefit newer and cleaner technologies that may not necessarily fit into the rigid outlines of our current tax incentives, thus paving the way for further innovation and investment into energy-producing technology. Additionally, many of the incentives that are to be eliminated and not included in the broader transportation fuel incentive are tax breaks that benefit Big Oil, a move hailed by many supporters who do not see the point of offering tax breaks to companies in an industry that has shown record profits year after year [cite]. Lastly, with the federal revenue gained from simplifying the tax incentive structure and removing breaks for big oil companies, Senator Baucus’ plan intends to lower corporate tax rates, which supporters hope will provide impetus for further economic growth.

What is the argument against Baucus’ plan?

Others are strongly opposed to this reform plan due to its emphasis only on energy producers (companies that use coal, fossil fuels, wind, solar and other methods to produce energy) and not energy users (all other private citizens and companies that use electricity, gasoline, etc.), and because the emissions reduction quotas of the incentives are, as one critic put it, “unambitious”, and would have little effect on improving the environment.

The two main tax incentives of Baucus’ plan target producers of electricity and transportation fuel, with no mention of companies that use energy in a cleaner way. This means that companies that make their buildings more energy efficient, companies that manufacture environmentally-friendly appliances and cars, and the individuals who use these greener manufactured goods would no longer receive the tax incentives they currently receive. Many opponents see this as being counter-productive in the struggle to promote cleaner energy technologies.

And while this plan does target energy production, many opponents point out that this plan would actually reduce incentives provided to areas such as solar and wind power. Whereas currently producers of solar power receive an investment tax credit of 30 percent, under this new plan they would only be entitled to either a production tax credit of $0.023 per kilowatt or an investment tax credit of 20 percent. Therefore, despite favoring carbon-free methods of energy production, many opponents feel this plan will do little to help area such as solar, wind, and other green energy production.

There has also been a backlash from the oil and natural gas industry, as well as from areas such as Montana and North Dakota who have a fledgling oil industry, arguing that by favoring carbon-free technologies the plan would be stifling job opportunities and economic growth brought about by the oil industry. Lastly, some opponents of the plan argue that the reduction quotas are too low. One critic points out that a 25% reduction in emissions “intensity”, which is the wording used in the discussion draft, is vastly different from a concrete measurement of emissions, and depending upon economic growth and the relative amount of energy these companies are producing, companies could meet this quota without any serious reduction in emissions. On a broader scale, some oppose tax incentives for alternative energy production altogether, arguing that global warming is, as indicated by its name, a global phenomenon, and that any reduction in emissions in the US is offset by emissions due to economic growth in developing countries, where environmental legislation is often more lax.

Conclusion

It’s clear that something needs to be done to fix the very confusing and red-tape-littered energy tax process. While there are certainly tangible benefits to Baucus’ plan, opponents worry that it would do more harm than good.

Resources

Primary

U.S. Senate Committee on Finance: Baucus Unveils Proposal For Energy Tax Reform

U.S. Senate Committee on Finance: Energy Tax Reform Discussion Draft

Additional

American Progress: Baucus Tax Reform Cuts $46 Billion in Oil Breaks

Domestic Fuel: Senator Max Baucus Unveils Energy Tax Reform

EE News: Baucus Proposal Replaces Dozens of Energy Breaks with Credits for ‘Clean’ Fuel, Electricity

BioMass Magazine: Sen. Baucus Releases Proposal To Overhaul Energy Tax Incentives

BillingsGazette: Baucus’ Tax Reform Must Be Fair To Energy Industry

ThinkProgress: Max Baucus’ Renewable Energy Tax Break Reform: The Good, The Bad, and The Ugly

Daily Caller: Analysis: Baucus Energy Tax Plan Comes With Dubious Benefits

Breaking Energy: Are Subsidies the Answer to Energy Sector Tax Reform?

Solar Industry: Baucus Energy Tax Reform Plan Reduces Solar Investment Credit

Washington Post: The Way Congress Funds Clean Energy Is A Mess. Max Baucus Thinks There’s A Better Idea

Politico: Baucus Proposes To Overhaul for Clean-Energy Tax Breaks

Lexology: US Teax Reform Update: Senate Finance Chairman Baucus Issues Energy Tax Reform Proposal

Hill: Baucus Proposes Dumping Energy Breaks

Tax Reform Law: Baucus Proposes Major Overhaul To Energy Incentives

Joseph Palmisano

Joseph Palmisano is a graduate of The College of New Jersey with a degree in History and Education. He has a background in historical preservation, public education, freelance writing, and business. While currently employed as an insurance underwriter, he maintains an interest in environmental and educational reform. Contact Joseph at staff@LawStreetMedia.com.

The post Max Baucus’ Tax Plan: Could it Work? appeared first on Law Street.