On December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016 (H.R. 2029), which includes multi-year extensions for federal tax incentives for wind and solar generation facilities and lifts the 40-year-old ban on crude oil exports from the United States. The $1.1 trillion spending bill, which funds the government through September 2016, passed the U.S. House of Representatives by a 316-113 vote and the Senate by a 65-33 vote.
Among the obvious winners from the bill are the solar and wind industries, which will receive long-needed regulatory certainty, as well as crude oil producers in the U.S., currently seeking for export outlets to alleviate the domestic oil supply glut. Domestic refiners could see their margins shrink, however, as the price differential between West Texas Intermediate (WTI) and Brent is expected to shrink.
Lifting the crude oil export ban will provide U.S. producers with unlimited access to the global market at a time of low prices and new competition from Iranian oil. While the repeal is unlikely to immediately boost exports due to current low prices, it will provide flexibility for producers to develop contracts and explore options.
With a stable federal policy in place, the renewable energy industry can focus on state and local policies, permitting issues, and compliance strategies for the Environmental Protection Agency's (EPA) Clean Power Plan (CPP). From the utilities perspective, the renewable energy tax extenders assist in the planning process to displace fossil fuel loads with renewable power by facilitating a measured approach and better access to renewable energy technologies at favorable prices before the subsidies expire.
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