By Dino Grandoni
February 11, 2018 - 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.”
Photo by Zach Gibson, Getty Images
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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