The Senate has struggled since June 2007 to extend or create tax incentives for utilities, businesses, and home owners to invest in clean energy technologies, including wind, solar, and geothermal energy, and energy efficiency. These provisions would be paid for by closing a tax loophole for big oil companies. The Senate debated and voted on a clean energy tax package three times, and three times a majority of senators voted for it. But three times a minority of senators were able to block its passage—once by only a single vote. Big oil efforts to block the shift of tax incentives from drilling to clean energy succeeded.
Because of this roadblock, the Senate is expected to pass a $6 billion package authored by Sens. Jon Ensign (R-NV) and Maria Cantwell (D-WA) that extends some of the renewable electricity and energy efficiency tax incentives set to expire at the end of this year, but does not include the entire package of clean energy incentives that failed by a single vote last December.
The clean energy tax package—expected to be added to the Senate version of the House housing package, H.R. 3221—does not pay for the incentives. Due to opposition from conservatives, Senate leaders were forced to jettison the provisions to close $18 billion in oil tax breaks to pay for a more comprehensive renewables and efficiency package. The prospects for inclusion of the Senate clean energy amendment as part of the final housing bill are very uncertain.
With oil over $100 per barrel, and global warming evidence growing, a proposal that invests in clean energy, creates jobs, reduces oil use, and slows global warming pollution ought to easily pass. But a dedicated cadre of three dozen conservative senators has managed to thwart the majority of the Senate because it has been unable to muster a super majority of 60 votes to end debate and pass the bill. View comprehensive breakdowns of how senators voted and how much money they received from big oil companies.
The reason? Two words: Big Oil. A majority of senators want to pay for these clean energy incentives by closing tax loopholes for big oil worth $1.8 billion annually. This sum is paltry compared to the $123 billion profit made in 2007 by the big five oil companies—BP, Chevron, Conocco Phillips, ExxonMobil, and Royal Dutch Shell.
The value of loopholes amounts to couch change compared to the record profits recorded last year. The big five earned profits of $230,000 per minute in 2007, which is more than what 96 percent of all Americans earn in a year. In fact, since 2001, the big five oil companies have made half a trillion dollars in profits.
Despite these record-setting earnings, big oil continues to oppose the modest investment in clean energy. To ensure that they had the votes to prevail, big oil company political action committees and employees donated more than $12.3 million in campaign contributions to senators who are members of the 110th Congress. The big five companies spent another $37.3 million on lobbying in 2007 alone. These investments had a huge return rate—big oil’s Senate allies were able to keep a $18 billion tax break alive. That’s at least $264 in tax breaks for every $1 spent on lobbying and campaign contributions.
Not surprisingly, the senators who voted against renewable energy incentives and for big oil tax loopholes received nearly three times more campaign contributions than senators who voted to shift incentives from high- to low-carbon energy. Renewable opponents received an average of $195,973 from 2002-2007, while renewable supporters received only $67,966 during the same period. Of the 28 senators running for reelection in 2008, those opposed to renewables received $251,449 in big oil campaign contributions, compared to $82,346 for supporters.
Among the remaining presidential candidates, Sens. Hillary Clinton (D-NY) and Barack Obama (D-IL) received $289,950 and $163,840, respectively. Both senators voted for the clean energy tax package on all three occasions despite the opposition from big oil. Sen. John McCain (R-AZ) received $291,658 from big oil, and missed all three votes. He announced after the third vote, on December 13, that he would have voted against cloture and for killing the bill.
While big oil’s investments paid off, the cost to the rest of us grows. The clean energy tax package would have extended the production and investment tax credits for wind, solar, geothermal, and other renewable energy sources that are due to expire at the end of 2008. As uncertainty about the extension of these vital tax credits grows, companies are becoming hesitant to invest in wind or solar projects for fear that the tax incentives will expire, driving up the project cost.
As ventures come to a standstill, construction and renewable energy workers could lose their jobs. Randall Swisher, executive director of the American Wind Energy Association, fears that the wind and solar industries could lose 116,000 jobs and almost $19 million in investments if these renewable energy tax credits are not renewed. That would be bad news for an economy already on the verge of a recession.
There is still hope that Congress will act to shift $18 billion from incentives for big oil to renewable energy. On February 27, the House of Representatives passed a less expensive version of the clean energy tax package, H.R. 5351. It was supported by DuPont, Dow, United Steelworkers, Wal-Mart, Target, National Home Builders Association, National Realtors Association, and many other businesses. And the narrower incentives and the package likely to be included in the Senate housing bill is a first move in the right direction.