Energy Reps Sound Alarm On Dems’ Tax And Climate Bill As Recession Deepens
With the House of Representatives set to pass Democrats’ social spending, tax, and climate bill Friday, energy industry officials are ringing alarm bills that it will handicap their industry at the onset of a recession.
“We believe on balance that this bill is going to do more harm than good for America’s energy sector, given the increase in taxes and fees that are going to hit many American energy producers,” American Exploration and Production Council CEO Anne Bradbury told FOX Business. [bold, links added]
“With the potential that we are in a recession now, we think that it is a bad idea to be raising taxes on American companies, including American energy producers.”
But Sen. Joe Manchin, D-W.Va., said the bill will generally help the fossil fuel industry, and one energy policy expert says the overall effect of the bill may be more muted, in part due to poorly directed spending.
Sen. Bernie Sanders, I-Vt., has his own point of view.
“This legislation includes a huge giveaway to the fossil fuel industry – both in the reconciliation bill itself and in a side deal that was just made public the other day,” Sanders said.
The competing claims about the legislation, called the “Inflation Reduction Act,” come just over two weeks after Manchin and Senate Majority Leader Chuck Schumer, D-N.Y., unveiled the more than 700-page package.
The bill spends more than $400 billion and would raise over $700 billion in taxes.
Now, the House is set to sync up with the Senate Friday afternoon, sending the bill to President Biden’s desk in what many Democrats consider to be their biggest legislative win yet.
Energy industry groups say taxes in the bill are likely to be among the most harmful factors to their bottom lines.
The American Gas Association, along with more than two dozen other industry groups, said in a letter to Congress that a $6.5 billion tax on methane emissions would result in consumers paying about 17% more for natural gas.
The conservative group Americans for Tax Reform also lists multiple other levies on energy it objects to in the bill, including a $12 billion tax on imported petroleum products and a $1.2 billion tax on coal mining.
A coalition of state coal associations wrote to Manchin specifically railing against the taxes included in the bill, arguing that would make their tax bills more complex.
Manchin wrote back to them in a pointed letter, pushing back on the characterization of the coal mining levy as a new tax. That tax has been around since 1985, he wrote, and only recently lapsed.
“The argument that this is a new tax is a lie,” Manchin said. “[E]very coal company has and will continue to budget for this tax each and every year.”
Manchin also said the biggest tax increase in the bill would not touch coal companies, which often struggle with profits, at all.
“My staff analyzed the financial statements of the two largest U.S. coal companies — Peabody Energy and Arch Resources, Inc. — and neither were anywhere close to the $1 billion average needed to trigger the 15% corporate minimum,” Manchin said.
“As their filings reflect, Peabody reported an average annual income of $541 million over the past 3 years. Arch reported an average annual income of $76 million over the past 3 years.”
Bradbury of AXPC, however, said that while coal companies may be spared from the tax, it will fall on “some domestic oil and gas producers.”
The state coal groups also argued that the most harmful effect of the bill on them would be the subsidies directed primarily at helping green energy.
“[B]y turbocharging the lofty incentives that already extend to renewable energy, our nation’s baseload (reliable) coal electric generation assets will continue to be devalued and thrust into rapid decline as will the thousands of miners, plant workers, and the 371,000 American families whose household incomes depend on these jobs,” the coal groups’ letter said. …
Manchin touts other parts of the deal he made with Schumer as key for the fossil fuel industry. Among them are “direct pay” subsidies for carbon capture at fossil fuel plants, which Manchin blocked for similarly situated renewable energy companies during negotiations.
Also key, Manchin says, is a commitment he got from Schumer for a future vote on permit reform to allow domestic projects like pipelines to move forward.
Bradbury of AXPC said her group is evaluating permit reform separately from the reconciliation bill because they’re different pieces of legislation.
There’s no guarantee it will pass. Some Republicans are threatening to tank that legislation as retaliation against Manchin for agreeing to the party-line social spending and tax bill.
Bradbury also acknowledged the legislation the House is set to pass is not nearly as harmful to the fossil energy industry as a previous version called “Build Back Better” Democrats were considering this time last year.
But, Bradbury said, the new legislation will cost U.S. fossil fuel producers overall and leave many regulatory issues unsolved, all while boosting renewables and creating “an unlevel playing field.”
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