President Obama released his budget for fiscal year 2014 this week with scarcely a response from Capitol Hill. Many of his proposals have appeared in previous budgets, where they were promptly dismissed or disregarded. In part, many of the energy proposals in the President's 2014 budget are statements of principles rather than realistic starting points for the serious negotiations with Congressional leaders in the months ahead.
The budget calls for cutting oil imports in half and reducing greenhouse gas emissions by 17% below 2005 levels within the next ten years. These are proposals that date back to the first year of his presidency.
The coal, oil and gas industries are the primary targets of this Administration. Collectively these industries will receive over $44 billion over the next ten years in tax incentives. President Obama wants to repeal all of them. In addition, he wants to revamp the federal management of oil, gas and coal, which his budget estimates will save $3 billion over 10 years. The President has called these provisions wasteful loopholes and giveaways. Almost $450 billion is at stake - incentives that the fossil fuel industry has enjoyed for years with little opposition - and now the President will be on the attack.
The industry has already mounted an aggressive defense in the media and on Capitol Hill. It will only intensify once congressional hearings commence and the votes are counted.
The winner in the President's budget is the renewable industry. Renewable energy production is almost totally dependent on the generous tax incentives in the Tax Code. The Production Tax Credit (PTC) is essential for new development. The starts and stops of the PTC benefits have had an enormous impact on the industry. With the PTC, development surges; without it, the industry is brought to a standstill. The President has proposed making the PTC permanent. His budget has also called for making the tax credit refundable, which greatly assists new companies without a large tax liability.
Several environmental provisions in the budget address climate change. They have been a part of the President's long-term objectives since his first term in office. He calls for a clean energy standard, a doubling of fuel efficiency by 2030, and dramatically cutting greenhouse gas emissions by 2030. He proposes establishing a new Energy Security Trust Fund that would invest $2 billion over 10 years in cleaner energy sources. It will be funded by federal oil and natural gas production profits.
This spring the battle over the country's energy and environmental policy will begin in earnest on Capitol Hill. The stakes could not be higher.