U.S. Congress Aims to End Tax Exemption for Tar Sands/Oil Sands, Set Price on Methane
Congressional Democrats in the United States are considering reversing a long-standing excise tax exemption for tar sands/oil sands crude entering the country, a move that could cost the Alberta industry US$665 million over the next decade.
They’re also pitching a plan to put a price on methane, a climate-busting greenhouse gas that is 84 times more potent than carbon dioxide over the crucial 20-year span when humanity will be scrambling to get climate change under control.
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Last week, Congressional Bike Caucus Co-Chair Rep. Earl Blumenauer (D-OR) and Green New Deal architect Sen. Ed Markey (D-MA) set the wheels in motion to reverse a 2011 Internal Revenue Service ruling that tar sands/oil sands bitumen is not technically crude oil, the Financial Post reports. That finding has exempted producers from a US5.5¢-per-barrel excise tax, proceeds of which go to a U.S. fund to help cover the cost of cleaning up oil spills.
“The facts are clear: we are in a climate emergency and must take action,” Blumenauer said in a release on the Tar Sands Loophole Elimination Act. “It is past time we hold fossil fuel polluters accountable for the impact they have on the environment.”
“We cannot allow any oil company to evade the bill for spills,” Markey added.
The legislative measure “is still in its early stages but has won the backing of influential members of Congress, including Senators Bernie Sanders and Elizabeth Warren, and from the House’s Natural Resources Chair Raúl Grijalva,” the Post says. And it’s taking predictable pushback from the Alberta government and its patrons at the Canadian Association of Petroleum Producers.
“The hundreds of millions of Americans who depend on Canadian oil should know that such a move would ultimately result in their paying this tax at the pumps,” said Kavi Bal, spokesperson for Alberta Energy Minister and ex-pipeline executive Sonya Savage. [There’s no record of Alberta commenting on the economic, environmental, and social costs Americans incur when oil is spilled and funding or penalties to cover the clean-up fall short—Ed.]
Ben Brunnen, CAPP’s vice-president of fiscal and economic policy, told the Post the fossil lobby is looking for U.S. tax policy that “is not discriminatory toward the Canadian energy sector,” adding that “we’ll continue to support efforts to open the door for collaboration with President Joe Biden and his administration in this vein.”
Earlier in the week, Sens. Sheldon Whitehouse (D-RI), Cory Booker (D-NJ), and Brian Schatz (D-HI) introduced a Methane Emissions Reduction Act that would direct the U.S. Treasury Department to “assess a fee on the potent greenhouse gas beginning in 2023,” Reuters writes, “a move they say could end those emissions, help achieve climate change targets, and improve air quality in communities near oil and gas facilities.”
The senators envision a fee that would be “assessed on a basin-by-basin basis and cover all companies that produce, gather, process, or transmit oil or natural gas,” the news agency explains, using a formula that reflects a company’s gas production and methane rate and allows them to opt out by voluntary reducing their emissions. Proceeds would go to a National Coastal Resilience Fund, a program administered by the U.S. National Fish and Wildlife Foundation and the National Oceanic and Atmospheric Administration (NOAA).
“This bill will hold oil and gas companies financially responsible for their methane pollution and make methane emissions from fossil fuel production cost prohibitive, steps that will go a long way in the fight against climate change and to protect air quality in local communities,” Booker said.