The Senate is advancing legislation aimed at reducing taxes, climate programs, and government spending, with Republicans set to secure significant benefits for the oil and gas industry.
The proposed tax changes for oil could result in a federal revenue loss of about $18 billion over a decade, according to an analysis by the Joint Committee on Taxation. In contrast, ending a tax credit for home energy improvements could save approximately $21 billion over the same period.
Environmental groups argue the proposal, detailed in a draft from the Senate Finance Committee, unfairly subsidizes fossil fuel companies. Lukas Shankar-Ross of Friends of the Earth Action criticized it as “reckless.”
The coalition launched a six-figure ad campaign on Monday to encourage opposition to the tax incentives.
Senate Finance Committee Chairman Mike Crapo did not respond to requests for comment but stated that the draft would offer tax relief to middle-class families and cut Green New Deal spending, claiming it would reduce waste.
Republicans in Congress are working to extend and expand tax cuts from 2017 using reconciliation rules. The House passed its version of the bill, repealing key climate provisions from the Inflation Reduction Act of 2022 and significantly cutting Medicaid spending and other social programs.
The Senate draft maintains most House changes and adds benefits sought by oil companies, notably affecting a tax incentive for carbon capture and storage.
Under current law, companies receive a tax credit of $85 per ton for carbon dioxide storage. Using captured CO2 for oil extraction grants a $60 per ton credit. The proposal raises the latter to $85 per ton.
Energy companies can claim a higher credit, $180 per ton, for direct air capture of CO2. The draft allows the same credit if CO2 is used for oil production, costing $14.2 billion over a decade, as per the Joint Committee.
Mike Sommers of the American Petroleum Institute praised the draft, emphasizing investment provisions.
The Senate’s proposal diverges from the House’s by enabling companies to qualify for the carbon capture tax credit.
Companies like Occidental Petroleum and ExxonMobil, involved in enhanced oil recovery, stand to benefit significantly.
An additional change allows oil companies to deduct drilling expenses against the corporate alternative minimum tax, reducing their tax burden. This will cost $427 million over a decade, according to United to End Polluter Handouts.
A proposed expansion of tax breaks would benefit pipeline companies, extending to those involved in nuclear or geothermal energy, costing $3.2 billion over a decade, per an analysis by the Bipartisan Policy Center.
The Senate draft also includes measures from the House bill, such as reduced royalty rates for public land drilling and repealing tax credits for electric vehicles.
The bill remains subject to change as it progresses through the Senate, with potential Republican conflicts over tax breaks for oil and gas companies.
Original Story at insideclimatenews.org