The oil and gas industry has gotten its way in Washington for decades, thanks to favorable tax policy and gentler climate regulation than in many other developed nations. That joyride may be ending.
Democratic Sen. Ron Wyden of Oregon unveiled legislation on April 21 that would repeal longstanding tax breaks for the oil and gas industry and replace them with new ones that would incentivize clean energy. Wyden’s bill meshes with President Biden’s broad climate plan and other legislation meant to put the Biden plan into action.
Fossil fuel producers benefit from some tax incentives passed in the industry’s early days, to foster domestic energy production, and others that apply to manufacturing overall but benefit drillers in particular. The Tax Policy Center estimates those tax breaks are worth about $2.3 billion per year. Environmental groups put the value at $20 billion or more.
There are tax breaks for clean energy production too, but unlike the fossil-fuel tax breaks, clean-energy incentives tend to phase out once certain targets are met or get repealed as control of Congress changes. “We want the same kind of long-term incentives the fossil fuel sector has enjoyed for a long time,” says Gregory Wetstone, CEO of the American Council on Renewable Energy, a trade group. “Investors in the renewable sector should know the incentives are going to be there. Businesses want stability.”