Five Takeaways From Obama’s Climate and Energy Budget

White House budget plan escalates the collision between the White House and Capitol Hill Republicans over global warming.

WATFORD CITY, ND - JULY 30: An oil drilling rig is seen in an aerial view in the early morning hours of July 30, 2013 near Watford City, North Dakota. The state has seen a boom in oil production thanks to new drilling techniques including horizontal drilling and hydraulic fracturing. 
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Ben Geman and Clare Foran
Feb. 2, 2015, 6:31 a.m.

Pres­id­ent Obama’s 2016 budget pro­pos­al lays bare the deep di­vi­sions between the White House and as­cend­ant Cap­it­ol Hill Re­pub­lic­ans over cli­mate change, oil-and-gas policy, and much more.

The bulk of the plan will go nowhere on Cap­it­ol Hill, but it’s a use­ful road map to the polit­ic­al battles that will play out for the re­mainder of Obama’s second-term.

As Na­tion­al Journ­al re­ports, the plan would boost fed­er­al spend­ing on green-en­ergy tech­no­lo­gies. Here are five more im­port­ant pieces.

Obama really wants to tackle cli­mate through the tax code

The col­lapse in oil prices is bat­ter­ing the in­dustry, but the White House isn’t let­ting up on his long-pro­posed (and long-re­jec­ted) call to strip bil­lions in tax in­cent­ives for oil-and-gas pro­du­cers. The latest budget plan would strip an es­tim­ated $44 bil­lion in in­dustry tax breaks over a dec­ade. That in­cludes the luc­rat­ive Sec­tion 199 de­duc­tion for do­mest­ic man­u­fac­tur­ing, which Obama doesn’t want the oil in­dustry to be able to claim.

On the flip side, the plan con­tin­ues, des­pite years of head­winds in Con­gress, a ma­jor push to make the tax code much sweeter for the re­new­able-en­ergy sec­tor and de­ploy­ment of its products. It would per­man­ently ex­tend the 30 per­cent in­vest­ment for sol­ar-en­ergy sys­tems, and per­man­ently re­in­state the lapsed wind-en­ergy pro­duc­tion tax cred­it, at a com­bined price tag of $31.5 bil­lion over the next dec­ade alone. Those are two of sev­er­al en­ergy- and cli­mate-re­lated tax pro­pos­als, such as $2 bil­lion in re­fund­able cred­its for in­stalling equip­ment that traps car­bon emis­sions from power plants, and cred­its for heavy-duty al­tern­at­ive-fueled vehicles.

The White House hopes EPA’s power-plant rule is a floor, not a ceil­ing

EPA’s big draft rule to cut power-plant car­bon emis­sions, a pil­lar of Obama’s cli­mate agenda, drew some grumbles from green act­iv­ists who wanted a more am­bi­tious pro­pos­al. The new budget plan sug­gests that Obama feels their pain.

The budget pro­poses a $4 bil­lion Clean Power State In­cent­ive Fund to help states go even fur­ther than the EPA plan, which na­tion­wide would re­quire cuts in car­bon emis­sions from ex­ist­ing power plants that reach 30 per­cent by 2030. It would help states that want to quick­en the pace or total de­gree of pol­lu­tion cuts.

“This fund­ing will en­able states to in­vest in a range of activ­it­ies that com­ple­ment and ad­vance the Clean Power Plan, in­clud­ing ef­forts to ad­dress dis­pro­por­tion­ate im­pacts from en­vir­on­ment­al pol­lu­tion in low-in­come com­munit­ies and sup­port for busi­nesses to ex­pand ef­forts in en­ergy ef­fi­ciency, re­new­able en­ergy, and com­bined heat and power through, for ex­ample, grants and in­vest­ments in much-needed in­fra­struc­ture,” a White House sum­mary states.

Mak­ing the case for cli­mate ac­tion in dol­lars and cents

In an ef­fort to win over crit­ics, the White House makes the case that a fail­ure to ad­dress cli­mate change will make the U.S. bleed money.

The fed­er­al gov­ern­ment has already spent more than $300 bil­lion fix­ing dam­ages from ex­treme weath­er and fires, ac­cord­ing to the White House, and it adds that the costs of cli­mate change go far bey­ond that. The budget warns that cli­mate change will wreck hav­oc across nearly all sec­tors of the eco­nomy, with res­ult­ing costs for health care, na­tion­al se­cur­ity, and prop­erty man­age­ment.

Em­phas­iz­ing the spiral­ing costs of cli­mate in­ac­tion has be­come a pil­lar of the ad­min­is­tra­tion’s mes­sage on cli­mate change fol­low­ing the White House’s re­lease of a re­port last year that spelled out po­ten­tial costs of delay­ing ac­tion on glob­al warm­ing.

With its calls for over­sight, the ad­min­is­tra­tion is set­ting up a clash with oil and gas in­dustry

Obama wants to keep a close eye on oil and gas drilling and is ask­ing the in­dustry to pick up the tab, a pro­pos­al that en­ergy pro­du­cers are sure to say is over­reach. The budget slaps fees on oil and gas pro­duc­tion to pay for “a $10 mil­lion in­crease in fund­ing” for in­spec­tions and over­sight by the Bur­eau of Land Man­age­ment.

En­ergy pro­du­cers are sure to bristle at the pro­pos­al. The in­dustry routinely com­plains that ad­min­is­trat­ive red tape has pushed oil and gas pro­duc­tion on pub­lic lands to a crawl. And Obama’s call for great­er over­sight runs counter to in­dustry de­mands for less fed­er­al in­volve­ment. But the pres­id­ent’s pro­pos­al is guar­an­teed to win praise from en­vir­on­ment­al­ists who have pushed for more in­spec­tions amid con­cerns over crude oil volat­il­ity, spills, and oth­er ac­ci­dents.

White House kicks off a fight with Re­pub­lic­ans over cli­mate fund­ing

Obama wants Con­gress to dole out $500 mil­lion for a con­tro­ver­sial cli­mate fund.

That re­quest will prove an early test of how Re­pub­lic­ans will re­spond to the pres­id­ent’s pledge to set aside a total of $3 bil­lion to fill the cof­fers of the Green Cli­mate Fund, an in­ter­na­tion­al pot of money de­signed to as­sist poor coun­tries ad­apt to the im­pacts of cli­mate change.

Last fall, Obama made a com­mit­ment to pony up the money as part of his second-term cli­mate push. But without Re­pub­lic­an sup­port, that pledge is an empty prom­ise.

The ad­min­is­tra­tion plans to ask for the full $3 bil­lion over the course of sev­er­al years. But Obama is ex­pec­ted to face sig­ni­fic­ant head­winds on Cap­it­ol Hill as he tries to se­cure the funds. And if Re­pub­lic­ans re­fuse Obama’s 2016 ask for the first $500 mil­lion, it could spell trouble for the fu­ture of the U.S. con­tri­bu­tion to the fund, at least as long as the GOP calls the shots on Cap­it­ol Hill.


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