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Energy Bill Provides Billions to Polluting Industries
The conference report for H.R. 6, the Energy Policy Act of 2003, hands over billions in taxpayer dollars to big oil, gas, coal and nuclear companies. Between the bill’s tax breaks, direct spending, authorizations and other provisions, the conference report would provide more than $64 billion to polluting energy interests. The bill’s handouts to industry include: $45.7 billion for the oil and gas industry
• Shields MTBE producers from product liability. The conference report shields producers of the toxic gasoline additive MTBE from product liability lawsuits, forcing taxpayers to pick up an estimated $29 billion tab to clean up contaminated groundwater (Title XV, sec. 1502). The provision is retroactive to September 5, and would cut off lawsuits filed by several states. It even includes a $2 billion subsidy to MTBE producers to convert facilities to produce other chemicals (Title XV, sec. 1503). • Subsidizes coalbed methane development. The conference report extends and expands the tax credit for non-conventional fuels (Title XIII, sec. 1345). This incentive will speed destructive and very profitable coalbed methane drilling around the country. In addition, the coal industry has used very dubious schemes to qualify for the tax credit using conventional coal. The Joint Committee on Taxation estimates that this credit will cost more than $3 billion over the next 10 years. • Creates new tax breaks for oil and gas exploration. The conference report would allow oil and gas companies to immediately deduct geological and geophysical expenditures (Title XIII, sec. 1344). This change would grant oil and gas producers yet another method to avoid taxes and recover their costs faster than other energy producers. The Joint Committee on Taxation estimates the costs of these provisions would be more than $2.2 billion over 10 years. • Expands money-losing royalty-in-kind schemes. The conference report authorizes the Interior Secretary to expand the royalty-in-kind program (Title III, sec. 312). This would allow oil companies who drill on public lands to pay royalties owed to taxpayers in barrels of oil. In 1998, the Mineral Management Service estimated that similar provisions would cost the federal government between $140 million and $367 million annually. • Grants royalty exemptions for marginal wells and offshore oil development in the
• Provides price supports and loan guarantees for the
$9.3 billion for the coal industry • Create the first-ever investment tax credit for “clean coal.” The bill would expand an investment tax credit that currently benefits solar and geothermal energy to include clean coal (Title XIII, sec. 1351). This would be the first-ever investment tax credit for coal burning power plants. It provides a 15 percent deduction for existing plants that are installing new clean coal technologies and 17.5 percent for companies building advanced clean coal plants. The credit allows for investments in existing coal facilities between
• Establishes new “clean coal” programs. The bill establishes two new federally funded research and development programs (Title VI, sec. 401 and 441), even though a series of reports from the General Accounting Office (GAO) have documented egregious waste, mismanagement and failure in the use of existing clean coal subsidies. The Clean Coal Power Initiative would cost $1.8 billion and the brand new Clean Air Coal Program—which was added in conference and never considered on the House or Senate floor—would cost taxpayers $2 billion. • Continues the existing coal research and development program. The conference report establishes a federally funded research and development program to ensure coal remains a cost competitive source for electrical generation (Title IX, sec. 935). This program also supports the producing, refining and burning of coal. This provision will cost taxpayers more than $1.422 billion over the next five years. • Creates new loan guarantees for coal plants. The conference report authorizes loan and loan guarantees for coal-fired power plants (Title IV, sec. 411, 412, 413, 414). The section 411 loan would lend $125 million to the Healy Plant in
$9.2 billion for nuclear power • Create the first production tax credit for nuclear power. The conference report includes the first-ever electricity production credit for nuclear power (Title XIII, Sec. 1310). The credit is worth 1.8 cents per kilowatt-hour for advanced nuclear power plants that are placed into operation before Jan.1, 2021. It allows up to six 1,000 megawatt plants to qualify for the credit, allowing each plant to claim up to a $125 million deduction per year for eight years. The credits could benefit three companies—Dominion, Entergy and Exelon—which have applied with the Nuclear Regulatory Commission for early site review to build new nuclear power facilities. Over the lifetime of the credit, the nuclear power industry will reap $6 billion in tax benefits. The Joint Committee on Taxation has estimated the credit will cost $167 million during the last two years of the committee’s ten-year estimation window. • Remove tariffs on the importation of nuclear generators. The bill conference report benefits foreign manufacturers of nuclear power plant parts in France, Korea, Japan and Italy by exempting steam generators and reactor vessel heads from import tariffs (Title XIII, Sec. 1365). According to the Nuclear Energy Institute, the treasury would lose $15-20 million in tariffs for steam generator tubes replaced between 2007 through 2012 and $4.5 million for reactor vessel heads replaced before December 2007. The Joint Committee on Taxation has estimated that the credit will cost $8 million. • Leave taxpayers on the hook for nuclear accidents. The conference report reauthorizes the Price Anderson Act (Title VI, Sec. 601), which would extend liability caps on nuclear power plants in case of a nuclear accident, for 20 years. Worse, the bill contains specific provisions to facilitate the construction of the Pebble Bed Modular Reactor, a design that features no conventional protective containment structure. • Expand a tax break to unregulated power producers. The conference report extends tax benefits for state-regulated utilities with nuclear decommissioning funds to unregulated independent power producers that purchase nuclear power plants (Title XIII, Sec. 1328). The expansion of this tax benefit will allow unregulated nuclear power companies to hide profits at a reduced tax rate in a nuclear decommissioning fund. There are no caps on the amount of contributions, creating an incentive for companies to shield profits by investing far more money in a fund than needed to decommission a nuclear power plant. The Joint Committee on Taxation estimates this would cost more than $1.4 billion over 10 years • Encourage nuclear proliferation. The conference report provides $865 million for the Advanced Fuel Cycle Initiative (Title IX, Sec. 926). This program would subsidize the nuclear industry’s attempts to reprocess spent nuclear waste. This program reverses long-standing nonproliferation policy established under the Ford administration, which prohibited the reprocessing of nuclear fuel because it separates out dangerous plutonium that can be used for the creation of nuclear weapons. • Authorize more than $949 million for nuclear energy research and development. The conference report authorizes funding for the Nuclear Energy Research Initiative, the Nuclear Energy Plant Optimization, and other programs geared to address and overcome the principal technical obstacles to the expanded use of nuclear energy, and to create a domestic and overseas market for nuclear power (Title IX, Sec. 924). • Fund a nuclear hydrogen co-generation project. The conference report authorizes more than $1.1 billion to create a plant that generates hydrogen using nuclear power (Title VI, Sec.651). This project stretches the boundaries of legitimate federal research and development by making taxpayers liable for the construction and potential operation of a nuclear reactor to create hydrogen. |
