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In what one tax watchdog called a “stealth” bailout, dozens of oil and gas companies are taking advantage of provisions in the CARES law to write off losses right away and get an immediate tax refund against prior years’ earnings going back to 2018, according to Bloomberg News. Meanwhile, after a press by a bipartisan group of Senators, it looks like the Treasury Department will give a “safe harbor” to companies in the midst of building renewable energy facilities so that their tax credits won’t expire before they can complete work since the virus has caused many of them construction delays.
Why This Matters: These refunds also carry forward – so oil and gas companies can expect to pay zero taxes for years to come, according to Bloomberg. Even firms in bankruptcy can use them to do things like pay bonuses to their executives, which is exactly what Diamond Offshore Drilling Inc. did. In total, companies tied to oil and gas have received $1.9B in stimulus monies, The Hill reported based on Bloomberg’s analysis. The Treasury Department’s decision on renewable tax credits is some consolation for projects begun in 2016 and 2017 that were nearing completion, but it would be even better if Congress extended those tax credits for new projects.
Oil and Gas Give Away
Companies that have been losing money over the last few years are using this tax break (which had been in place but expired in 2017) to get those losses back in the form of a check from taxpayers. Diamond Offshore Drilling, for example, used the “little-noticed” provision in the CARES Act to get a $9.7m tax refund, and then they immediately requested permission from the bankruptcy court to use it to pay the exact same amount in bonuses to 9 executives of the c0mpany. But it’s not only small drillers and rig operators that took advantage of the tax break so did big oil. For example, ConocoPhillips Executive Vice President Don Wallette said on April 30earnings call, “We’re going to have some large losses this year”…the company is in “a zero-tax-paying position in the U.S. and expect to remain there for quite some time.” And, as if they could not have foregone the break, Marathon Oil spokesman said, “we are obligated to follow the tax laws as passed by Congress, which apply to all corporate manufacturers nationwide,” who claimed the company had not “asked” for the help but took a $411 million check courtesy of the taxpayers nevertheless.
Renewable Safe Harbor
The energy tax credits, known as the production tax credit (PTC) and investment tax credit (ITC), are important to extend because the virus has jeopardized projects that are close to completion. Gregory Wetstone, CEO of the American Council on Renewable Energy (ACORE) told Renewables Now, “Extending these safe harbor deadlines would be immensely helpful as the renewable sector has been hit hard these last couple of months by supply chain disruptions, shelter-in-place orders and other significant pandemic-related delays.” But the plans for the extension are not clear — all the Treasury Department said was they plan to “modify the relevant rules in the near future.”
After reading the fine print, it turns out President Trump’s memo issued over the weekend extending his 10-year offshore oil and gas drilling ban from Florida all the way up the East Coast to Virginia, contains a poison pill — it also bans offshore wind development.
Why This Matters: It is disappointing from both a climate change perspective, but also because the offshore wind farm leases were selling for hundreds of millions of dollars all of which would be paid to the government.
Yesterday, California Governor Gavin Newsom announced that the state will phase out sales of all gasoline-powered vehicles by 2035. As Governor Newsom said in a separate event with Democratic governors yesterday, people have climate “goal fatigue” and are ready for the application of those goals–this move on gas-powered cars walks the walk on California’s ambitious […]
H/T to renews.biz, an energy news platform, for that headline, and to PepsiCo for making it possible. PepsiCo, one of the largest companies in the world — with a global carbon footprint — announced plans this week to transition to 100% renewable electricity across all of its company-owned and controlled operations globally by 2030 and […]
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