Oil Export Opponents Reject Environmental Incentives

By Ari Natter

Dec. 10 — A congressional deal to end the long-standing ban on exporting crude oil could provide tens of billions of dollars in tax credits for the solar and wind industries and other incentives sought by environmental groups.

But the groups are fighting the potential plan because they say it would be a raw deal for the environment and exacerbate climate change by encouraging more oil production and carbon emissions.

“Legislation to lift the export ban represents yet another giveaway to the oil industry and would erode progress we've made protecting consumers, the environment and combating climate change,” the Natural Resources Defense Council, the League of Conservation Voters and 16 other environmental groups wrote in a letter to the Senate earlier this month. “To be clear, there is no conceivable ‘deal' that would be sufficient for our organizations to withdraw our objections to lifting the crude export ban.”

Groups such as the Sierra Club and Oil Change International, a Washington-based advocacy organization, have launched grassroots efforts and other means to try to convince lawmakers that ending the trade prohibition put in place in 1975 is a bad idea.

Calls, E-mails Sent to Congress

“Tens of thousands of supporters have been calling Congress and e-mailing Congress” to oppose the change, Steve Kretzmann, executive director of Oil Change International, told Bloomberg BNA in a phone interview. “The [chief executive officers] of the biggest environmental groups are reaching out to senators themselves. We are trying to win this one.”

At issue are negotiations to add a provision to end the ban on oil exports to must-pass omnibus government funding legislation. The oil export ban was put in place after gasoline prices spiked following the Arab oil embargo in the early 1970s.

Over a dozen oil producers such as ConocoPhillips, Hess Corp. and Pioneer Natural Resources Co., who could make as much as $30 billion in additional annual revenue from the change starting in 2025, have been lobbying to have the ban ended, arguing it makes no sense in the face of booming domestic production. The issue is also a priority for congressional Republicans such as Senate Majority Leader Mitch McConnell (Ky.).

While most Democrats have been opposed to stand-alone legislation to lift the ban, some see the change as a chance to bargain for priorities of their own such as a long-term extension of the wind production tax credit that expired at the end of 2014 and an extension of an investment tax credit for the solar industry. Making those tax credits permanent would cost $32 billion over 10 years, according to consulting firm ClearView Energy Partners.

Other Democratic Priorities

Other Democratic requests in exchange for lifting the ban included the reauthorization of the Land and Water Conservation law, which uses oil and gas royalties for recreation and conservation projects. It was estimated to cost more than $8 billion in the Obama administration's fiscal 2016 budget request.

Democrats also asked for passage of long-stalled energy efficiency legislation (S. 720); money to fulfill President Barack Obama's pledge for $100 billion for the Green Climate Fund to help developing countries; and elimination of some policy riders in the omnibus that Republicans wanted, including measures targeting the Environmental Protection Agency's Clean Power Plan and Clean Water Rule.

“There is a strong feeling in the environmental community against any export program, but I think there are some, certainly on the Democratic side, who are willing to sit down and see if we could come up with something balanced, and that's what we're working” on, Sen. Dick Durbin (Ill.), the Senate's No. 2 Democrat, told reporters Dec. 10.

“There is a strong feeling that something that is worth up to $200 billion to the oil industry ought to be of some value to the rest of America, too,” Durbin said. “I can tell you this is a very profitable industry and that this will add to their profitability, and paying more into sustaining our nation and helping it grow is not unreasonable.”

Negative Carbon Impact

But environmental opponents, such as Kretzmann, say that lifting the ban will almost certainly have a more negative carbon impact than extending the renewable tax credits will have a positive impact.

“We are concerned it is going to create much more carbon emissions than it will save,” Kretzmann said.

Oil Change International, citing American Petroleum Institute figures that said lifting the oil export ban would lead to an increase of 500,000 barrels per day by 2020, estimates the change would lead to an emissions increase of as much as 110 million metric tons of carbon dioxide equivalent a year. That figure represents the emissions from 29 average U.S. coal-fired power plants or more than 23 million average passenger vehicles, the group said.

“We don't want to see the ban lifted, and we don't want to see any deal that would do that,” Athan Manuel, the Sierra Club's director of lands protection, told Bloomberg BNA. “We think it would be bad for climate, bad for oil drilling and certainly terrible optics during Paris” climate talks.

To contact the reporter on this story: Ari Natter in Washington at anatter@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com