On Wednesday, the IRS announced it and the Treasury Department are providing tax relief for renewable energy projects “… that produce electricity from sources such as wind, biomass, geothermal, landfill gas, trash, and hydropower, and use technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems.” This favorable action toward renewable energy companies comes when some 600,000 renewable energy workers have been laid off due to the pandemic.
It also follows petitions by senators regarding the Energy Investment Tax Credit.
On May 21, three Republican senators wrote to the Treasury Department seeking aid for renewable energy companies by extending the time companies can qualify for Energy and Production Tax Credits.
In a bi-partisan April 23 letter, six senators wrote to the Treasury Department asking for the same extensions, without mentioning renewable energy companies.
The IRS and Treasury Department’s pro-renewable energy actions seem a departure from the Trump administration’s pro-oil and gas stance, especially since many tax incentives for renewable energy companies developed during the Obama administration were rescinded after Donald Trump became president.
It is also what Akin Gump oil lobbyists suggested would happen when they briefed analysts from Morgan Stanley during an April 22 private teleconference. As The Young Turks previously reported, an internal Morgan Stanley report on the call said no money for oil and gas companies was expected in the next stimulus package.
However, the report also said Akin Gump’s lobbyists thought that an oil bailout could be coupled with tax credits for renewables. Such a bailout, the report said, “could be coupled with renewables tax credit extensions, while regulatory support could be in the form of SPR [Strategic Petroleum Reserve] purchases, relaxation in regulations, and diplomatic support from negotiations with other oil producing countries.”
In other words, quid pro quo bartering.
Akin Gump Senior Consultant Lamar Smith, a former Republican congressman from Texas, said on the call, “I am hopeful in the 4.0 [stimulus package]…there will be some provisions in there that will be helpful to the energy industry. One: There may be more money for storage, I think specifically there’s gonna be a big effort made to get loans to at least mid-size energy companies that are not necessarily qualifying for loans right now.”
The Treasury Department is allowing loans intended to help struggling small and mid-sized companies be used by oil companies to pay off debt. Some shale oil companies were pumping oil just to pay off debt even before the pandemic. There has also been relaxation of some regulations for pollution.
Since some parts of the lobbyist’s predictions have come to fruition, will the other parts, as well?
On May 21, 60 House Republicans wrote to the Interior Department requesting it speed up reducing payments by fossil fuel companies leasing public lands.
President Trump, though, has not purchased oil for the country’s Strategic Petroleum Reserve, which he could do if he invoked the Defense Production Act. Nor has the Trump administration pushed for diplomatic support for negotiations with other oil-producing countries. Major oil industry supporter Sen. James Inhofe (R-OK) has called for that in the form of tariffs on foreign oil.
Are those next?
In response to the IRS and Treasury Department actions, Sierra Club Legislative Director Melinda Pierce said, “This administrative action demonstrates that it is well past time for Congress to step up and protect clean energy jobs. [Senate Republican Leader] Mitch McConnell can hurl politically tinged insults around all he likes but the truth is that when even THIS Treasury Department is finding small ways to help clean energy companies, Congress and its tax writers are clearly in a position to do vastly more."
But one staffer for a key Democrat, who once worked as a Washington lobbyist, doubts the IRS and Treasury actions will lead to any bartering with Congress later. The staffer believes this was just a lobbyist being effective at lobbying for renewable energy companies and noting “it’s a lot easier to lobby the administration than to lobby Congress. No regulations, no voting.”