Conservatives Split on Omnibus Energy Tradeoffs

Tax and spending measures end oil export ban, but facilitate Paris climate agreement

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December 17, 2015

A tax-and-spending package hammered out by congressional leaders this week would accomplish some long-held conservative energy policy goals, but provisions that would subsidize renewable energy and finance a recent United Nations climate accord have some on the right fuming.

The "omnibus" spending bill unveiled on Tuesday evening would finance a handful of programs that will redirect money into what’s known as the Green Climate Fund, a program to support the international climate deal reached in Paris this week.

An accompanying slate of tax break extensions would preserve a number of subsidies for renewable energy development that conservatives have derided as distortions of the global energy market.

The White House cited those tax breaks in announcing Obama’s support for the bill on Wednesday afternoon. With sufficient Democratic support looking likely, the measure appears headed for passage and implementation.

Though it contains Democratic priorities, the omnibus would also lift the U.S. ban on crude oil exports, a measure long sought by conservatives and industry groups that say it would sustain the American energy industry in the face of plummeting oil prices and project U.S. financial power across the globe.

"This is a big win for American jobs and for our energy industry. It’s a big win for our manufacturers and for our foreign policy," said Speaker Paul Ryan in Wednesday remarks on the omnibus. The legislation is widely seen as an early test of his tenure atop of the House of Representatives.

Thomas Pyle, who leads the American Energy Alliance, an industry trade group, said that lifting the export ban is "an important policy that will benefit the economy in the long run."

However, Pyle hedged his praise.

"Republican leadership paid too high a price, capitulating on nearly every demand from the Left," he said in a statement. "Extending corporate handouts to the wind and solar industry will cost taxpayers tens of billions of dollars and hike electricity prices on middle class Americans, all while putting a down payment on Obama’s climate agenda."

Ryan spokesman Brendan Buck dismissed the criticism in an emailed statement, saying energy policy victories in the omnibus outweighed concessions to Democrats.

"A permanent win on the oil embargo vastly overshadows some temporary, expiring renewable provisions—just as many House Democrats have complained," Buck wrote.

Rep. Raul Grijalva (D., N.M.) is one of those Democrats. He complained that the bill "gives oil drillers an enormous policy win that does our economy no good and threatens the climate progress made in Paris."

However, conservatives said that the bill actually facilitates parts of the Paris deal by authorizing money for the Green Climate Fund, a program to subsidize renewable energy development in the third world and adapt to climate change.

Payments to the GCF will come from three programs financed by the omnibus bill. It authorizes $170 million in payments to the International Bank for Reconstruction and Development’s Clean Technology Fund, $50 million to the bank’s Strategic Climate Fund, and $168 million to its Global Environment Facility.

All three of those programs feed into the GCF. No language in the omnibus would prohibit the distribution of that money.

U.S. negotiators pledged to pay $3 billion into the GCF as part of the climate deal struck in Paris this week. Under the congressional budget deal, the United States will be able to make its first payment of $500 million into the GCF next year.

Ryan and the omnibus that he negotiated have won praise from some prominent conservative voices. The Wall Street Journal called the oil export ban repeal "a major, if rare, pro-growth victory" in a Thursday editorial.

Energy lobbyist Mike McKenna was less optimistic. In an email, he said the omnibus’ energy provisions represent "an enormous amount traded away so Exxon and [oil magnate] Harold Hamm can make a few more dollars (assuming the price of oil ever rises).

"And, despite all the noise and fury, [the omnibus turns] a blind eye towards reprogramming funds to the GCF and a continued flow of cash to the UN climate racket."

The legislation’s supporters say that those sorts of tradeoffs are the reality of governing in a divided Washington. "This kind of ugly Beltway compromise won’t make anyone feel better about Washington, but the hopeful way to think about the omnibus and the tax bill is as a reset for the next President and Congress," the Journal’s editorial board wrote.