OVERNIGHT ENERGY: White House to meet with EU climate chief

COMING FRIDAY: Connie Hedegaard, the European Union’s climate chief, will meet with top Obama administration officials.

The officials include White House aide Michael Froman, the deputy national security adviser for international economic affairs, and Todd Stern, the State Department’s special envoy for climate change.

And there’s plenty to talk about at a time when Obama has vowed to make climate change a second-term focus in recent speeches.

{mosads}“That is of course sweet music to European ears,” Hedegaard, the European Commissioner for Climate Action, said Thursday of Obama’s recent comments.

“But it is also clear that we are looking forward very much to know what are … the more specific contents of this new focus,” she said in a briefing with reporters in Washington, D.C.

One topic facing U.S. and European officials is EU carbon emissions fees on flights coming in and out of the continent, which have faced bitter resistance from the U.S., China and other nations.

European officials agreed late last year to pause implementation of the fees to provide time for nations to hammer out a global deal through the United Nation’s International Civil Aviation Organization.

But EU officials plan to move ahead with the fees if the U.N. group can’t reach a deal next September.

Hedegaard told reporters Thursday that the fate of the aviation emissions plan will be a test of Obama’s recent pledges to make climate change a major priority.

“That … may be the first test internationally where the rest of the world will be able to see whether there are any new signals coming out of Obama Two compared to Obama One,” she said, referring to Obama’s first and second terms.

Hedegaard also said Thursday that rejecting the proposed Keystone
XL oil sands pipeline would be an “extremely strong signal” of Obama’s
intent to address climate change during his second term.

Click here for more on her visit.

ALSO FRIDAY: Climate conference heads into final day

The Environmental Protection Agency-sponsored Climate Leadership Conference wraps up Friday with a discussion with the conference’s award winners and a handful of panels.

Beth Craig, director of EPA’s Climate Protection Partnerships Division, will lead the conversation with the award winners.

That talk will follow Bank of America Board Chairman Chad Holliday’s keynote address.

For more information on the event, hosted at the Marriott Wardman Park Hotel, click here.

IN CASE YOU MISSED IT:

Check out these stories that ran on E2-Wire Thursday …

— US nuclear regulators on hot seat over post-Fukushima rules

— Gore: Rubio was ‘pitiful’ choice to deliver State of the Union response
— Nuclear weapons arm of DOE warns of furloughs

— EU climate chief: Obama would send ‘strong signal’ by nixing Keystone
— Gulf oil exploration deal with Mexico headed to Congress, State Dept. says
— US oil production hits 20-year high

— No sequester furloughs for NRC staff

NEWS BITES:

White House claims Reagan’s mantle in oil tax fight

White House press secretary Jay Carney said Thursday that the late GOP President Reagan and President Obama are pals in the fight to nix oil industry tax breaks.

“That’s something that actually Ronald Reagan agrees with. He said
numerous times he had proposed to close that special tax break and
loophole for the oil-and-gas industry back in 1985 when he thought at
the time that the need for that subsidization of the oil-and-gas
industry had run its course,” Carney said at a press briefing.

Obama’s White House has urged Congress to repeal several industry tax breaks, including the so-called percentage depletion deduction on production income, which is available to independent oil-and-gas producers (as opposed to behemoths like Exxon that both produce and refine oil).

Reagan appears to have gone after that particular deduction, too.

“Under our new tax proposal the oil and gas industry will be asked to pick up a larger share of the national tax burden. The old oil depletion allowance will be dropped from the tax code except for wells producing less than 10 barrels a day. By eliminating this special preference, we’ll go a long way toward ensuring that those that earn their wealth in the oil industry will be subject to the same taxes as the rest of us,” Reagan said in a 1985 speech on tax reform.

But Lee Fuller of the Independent Petroleum Association of America, an industry trade group, said nixing the percentage depletion deduction would hinder U.S. production, making some small companies’ wells uneconomical to keep open.

“These small producers are able to keep these wells operating by reinvesting the capital they get from selling their product,” said Fuller, the trade group’s vice president for government relations.

Ending the deduction would mean “reducing their ability to reinvest that capital back into keeping those wells in production,” he said in an interview.

He said killing the incentive would mostly affect small wells that jointly make a big difference in U.S. energy output, accounting for 20 percent of oil production.

But Carney said industry tax incentives are not needed.

“If you’re asking if subsidies that have been in effect for 100 years
for the oil and gas industry, taxpayer subsidies given to an industry
that is doing quite well, as everyone here who has filled up their tank
recently can attest, whether those subsidies and special tax breaks
should be continued, the answer is no,” Carney said Thursday.

The White House is going after a broader array of incentives than just the percentage depletion, as detailed here.

Yet Reagan, for his part, appeared to argue in the 1985 speech that some
deductions should remain in place.

“To continue our drive for energy
independence, the current treatment of the costs of exploring and
drilling for new oil will be maintained,” he said in the 1985 speech.

Offshore wind bill floated in House, Senate

Bipartisan pairs of lawmakers in both the House and the Senate introduced legislation Thursday that would offer tax incentives for offshore wind energy projects.

The bills would offer investment tax credits for up to 3,000 megawatts’ worth of offshore wind projects. 

The Obama administration has begun offering lease sales for federal offshore wind projects. While there’s interest in commercial offshore wind, no such projects have been built — largely because of financing issues, the bill’s proponents contend.

“If we want to harness this untapped, domestic energy source, providing investment tax incentives for our country’s first offshore wind projects is essential. Our bill would do just that,” Sen. Tom Carper (D-Del.), who is co-sponsoring the Senate bill with Sen. Susan Collins (R-Maine), said in a statement.

Reps. Bill Pascrell (D-N.J.) and Frank LoBiondo (R-N.J.) are spearheading the House version.

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