Funding Bill Repealing Oil Export Ban Sent to Obama

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By Ari Natter

Dec. 18 — The Senate voted to repeal the 40-year-old crude oil export ban and extend tax incentives for the wind and solar industry as part of a $1.1 trillion omnibus funding bill.

The 65-33 vote on Dec. 18 sends the measure to President Barack Obama, who is expected to sign it into law.

“Those tax credits are now going to be extended for five to seven years, and as a consequence, that combination of market signals means that the private sector is going to start investing much more heavily,” Obama told reporters, speaking about the bill during his year-end press conference. “They know this is coming. And it's not just coming here. It's coming around the world.”

Earlier in the day the House voted to pass the bill, 316-113.

Previously Unthinkable

Ending the ban, which was put in place in the wake of the Arab oil embargo, was effectively unthinkable a few years ago, but booming domestic oil production and low gasoline prices changed the political dynamics. Ending the trade prohibition has been a priority for oil producers such as ConocoPhillips Co. and Marathon Oil Corp.

“This represents the most substantial energy policy enacted in a generation,” Rep. Joe Barton (R-Texas), the author of standalone legislation ending the ban that passed in the House earlier this year, said in a statement. “Of the remaining scarcity energy policies from the 1970s, lifting the ban on exports was the last vestige of unnecessary government overreach from the time.”

Muted Impact

While the policy change could net oil producers as much as $30 billion in additional annual revenue starting in 2025, according to the Energy Department, analysts have said its near-term impact is expected to be muted amidst low oil prices (241 ECR, 12/16/15).

The change in policy, which was also a priority for Senate Majority Leader Mitch McConnell (R-Ky.) and other Republicans, was coupled with Democrats' priorities, including multiyear extensions of the wind production tax credit and the solar investment tax credit.

Green Tax Credits

Under the omnibus spending deal, wind and solar tax credits would be extended. The wind credit eventually would be phased out, and the solar credits would be phased down.

Wind Production Tax Credit

Offers a rebate of 2.3 cents per kilowatt hour

• 2015 (retroactive): 100% of 2.3 cents
• 2016: 100% of 2.3 cents
• 2017: 80% of 2.3 cents
• 2018: 60% of 2.3 cents
• 2019: 40% of 2.3 cents
• 2020: Expires


Solar Investment Tax Credit

Offers a 30 percent tax credit

• 2017: 30% tax credit
• 2018: 30% tax credit
• 2019: 30% tax credit
• 2020: 26% tax credit
• 2021: 22% tax credit
• 2022: 10% tax credit*


*Credit expires for residential projects, reverts to existing 10% credit for commercial projects

‘Gave Away the Store.'

“I think our success with our members is that [with] the Republicans’ obsession with lifting the oil-export ban, they gave away the store,” House Minority Leader Nancy Pelosi (D-Calif.) told reporters after the House vote. “The wind and solar tax credits we added to the omnibus bill eliminate about 10 times more carbon pollution than the export of crude oil will add.”

Specifically, the extensions, estimated to cost a combined $24 billion over 10 years, would extend the 2.3-cent-per-kilowatt-hour wind production tax credit that expired in 2014 and begin ramping it down 20 percent a year starting in 2017 until it expires in 2020. The bill also would extend a 30 percent tax credit for the solar industry through 2019. That credit had been scheduled to drop from 30 percent to 10 percent for commercial projects and expire for residential solar projects at the end of 2016. It now will ramp down starting in 2020 and expire in 2022.

The credit is expected to spur $40 billion in investment by 2020 and more than double the number of jobs in the industry to 420,000, according to the Solar Energy Industries Association. A five-year extension of the investment tax credit will drive U.S. solar installations to 100 gigawatts of capacity in 2020, according to the industry's main trade group. That is almost enough to match the capacity of the country's fleet of nuclear reactors.

The bill also includes a tax break allowing independent refiners that could be negatively affected by the ban to exclude 75 percent of their oil transportation costs from their calculations of a manufacturing tax deduction.

Environmental Opposition

Despite the extension of the renewable tax break and other environmental priorities, such as a three-year reauthorization of the Land and Water Conservation Fund, the omnibus bill was rejected by environmental groups that said it would exacerbate climate change by encouraging more oil production and carbon emissions (237 ECR, 12/10/15).

“The centerpiece of this bill, lifting the crude-oil export ban, is an outrage,” Sierra Club Executive Director Michael Brune said in a statement. “This early Christmas gift to Big Oil, ExxonMobil, and the Koch brothers from congressional Republicans will send American jobs overseas, rip up more iconic American landscapes to pump oil that nobody needs, and increase the carbon pollution that's driving the climate crisis.”

—With assistance from Bloomberg News.

To contact the reporter on this story: Ari Natter in Washington at

To contact the editor responsible for this story: Larry Pearl at