Crude export ban emerges as bargaining chip for wind, solar

By Hannah Northey, Geof Koss, Corbin Hiar | 07/31/2015 06:53 AM EDT

Senators skeptical of lifting the 40-year-old ban on crude exports signaled a willingness yesterday to negotiate if they’re offered language to extend tax incentives for wind and solar generators.

Senators skeptical of lifting the 40-year-old ban on crude exports signaled a willingness yesterday to negotiate if they’re offered language to extend tax incentives for wind and solar generators.

New Mexico Democrat Martin Heinrich and Maine Independent Angus King bucked their Democratic colleagues on the Energy and Natural Resources Committee in outright opposing the "Offshore Production and Energizing National Security Act of 2015," or the "OPENS Act," which would effectively lift the export ban. The bill — which cleared the committee 12-10 — would also increase coastal states’ share of federal revenue raised by drilling off their coasts.

Heinrich said Republicans offered persuasive arguments for the language and King said he wasn’t hostile to the bill, but their warmth for the measure stopped there. They called the language unbalanced and said Republicans should step up their offerings if they’re hoping to secure a bipartisan vote on the Senate floor.


"Before we make such a monumental shift in U.S. policy, I hope we can agree to extend our existing policy incentives for carbon-free energy sources, vis-à-vis the solar [investment tax credit] and the wind [production tax credit]," Heinrich said before the vote.

Heinrich also noted the "OPENS Act" would be funded with the same pot of cash supporting the Land and Water Conservation Fund, which is authorized to receive $900 million a year from offshore oil and gas revenues but typically receives a third of that after the appropriations process. He said the fund has waited decades to be replenished and must be part of any conversation to lift the export ban.

King said the bill’s title should be the "No Fossil Fuel Left Behind Act" and lined up with Heinrich.

"I might be willing to support it, but only if there’s a more balanced package of changes in the bill, for example, extension of the renewable credits for wind and solar, other kinds of potential environmental and renewable supports," King said. "I think this bill, while it can be justified and can be argued, is totally unbalanced, and I can support it if it’s modified to be more balanced in terms of our long-term energy needs."

King said during an interview that he intends to pursue renewables in negotiations but he’s not sure what specific provisions he’ll request.

"I think if proponents want to get votes from me and others, they need to balance the bill," he said.

It’s not the first time Democrats have suggested a quid pro quo for lifting the export ban.

Rep. Frank Pallone (D-N.J.), the ranking member on the House Energy and Commerce Committee, suggested earlier this month that the price for ending the export ban should include some of the oil and gas industry’s tax breaks, export fees or revisions to the federal royalty structure (Greenwire, July 9).

None of those ideas will fly in a Republican-led Congress, but Pallone’s comments signal that Democrats see exports as a bargaining chip they can use to advance their own priorities.

Heinrich told E&E Daily that there are other Democrats interested in leveraging the export ban to secure long-term certainty for renewables, whose tax credits have varied and at times vanished over the years.

"I think there are a number of people on the committee on my side of the aisle who are open to a balanced approach who couldn’t support the kind of one-sided approach we saw today in committee," he said.

Heinrich indicated discussions remain in a preliminary phase on how such a deal could be made.

"I don’t think that people have quite figured that out yet," he said. "There’s a lot of interest and a lot of conversations going on on both sides on a number of levels because it’s obviously a Finance [Committee] issue, as well as an Energy and Natural Resources issue."

The New Mexico Democrat added, "let’s keep talking about this because we think that there may be a path there."

Wyden’s role

The broader legislation Heinrich hinted at would likely require the support of Sen. Ron Wyden, the ranking member of the Finance Committee and a strong advocate for wind and solar power. Last week, the Oregon Democrat helped push through committee an extension of the wind production tax credit, but solar subsidies were not included in that deal (E&ENews PM, July 21).

In an brief interview yesterday, Wyden confirmed he was involved in discussions about extending incentives for all renewables in exchange for lifting the oil export ban. But he had little else to say on the topic.

"This is such a serious subject that I just can’t do this on the fly," he said.

Meanwhile, Senate Energy and Natural Resources Committee ranking member Maria Cantwell (D-Wash.) said yesterday that Democrats will push to extend the renewable tax breaks on the floor. "I think it’s safe to say you’ll hear a lot about it," she told reporters.

But she downplayed the growing support for lifting the export ban, which she likened to "a discussion point."

Republicans pushing the "OPENS Act" appeared wary of negotiating on tax incentives for wind and solar.

Sen. John Hoeven (R-N.D.) said during an interview that his first priority is lifting the ban, and the bill already includes amendments from Sen. Joe Manchin (D-W.Va.) that would allow the president to take swift action to stabilize gas prices.

"Beyond that, we’ll have to see, I think we have to go to the floor with an open mind, and anything that would get added would have to get 60 votes," Hoeven said. "At the end of the day, you’d have to be careful not to have amendments that would in fact prevent the bill from passing."

Manchin later explained he opposed the "OPENS Act" over the provisions expanding offshore drilling, saying Republicans "threw them together because they thought they couldn’t get the votes if they kept them separate." He called it unfair that states that oppose offshore drilling had "very little input" into the bill.

"I’m OK if Louisiana wants to do it — let them drill — but don’t force it upon Florida and all the other Gulf [states]," he said in an interview. "It just doesn’t make any sense."

ClearView Energy Partners LLC yesterday said Senate Majority Leader Mitch McConnell (R-Ky.) may be wary of having the "OPENS Act" surface on the floor, given the committee’s party-line vote.

"He may also be leery of taking on the horse trading required to secure OPENS’ inclusion, especially if it comes with a hefty price tag for green energy subsidies," the firm said in a research note after the markup.