This week was a busy one for US energy policy, and renewable energy tax credits were the focus of legislative battles and Obama-Romney campaign rhetoric. Republicans in the Senate dealt Romney a blow when the Senate Finance Committee passed a one-year extension of the wind energy tax credit. The deciding factor was when Republican Senator Charles E. Grassley of Iowa-where wind energy creates thousands of jobs-threatened to side with the Democrats if Team Romney insisted on removing the $3.3 million tax break.
Also included in the tax break package is a proposal that would boost development in the biofuels sector and include algae among the lists of biomass for biofuels production for the first time. On Wednesday, the Senate Finance Committee submitted a proposal to extend the $1/gallon biodiesel tax credit and to include algae, extending the tax credit for another year after its expiration on 31 December 2013 and retroactively to 31 December 2011.
The tax package passed the committee on Thursday in a 19-5 vote. When the Senate returns in September, this will be a top legislative priority.
Solyndra was also a major feature of this week's DC energy news, with the release of a House GOP report on the government's backing of the failed solar firm. The report details what it calls a "cautionary tale" of political pressure and misguided policy that cost taxpayers half a billion dollars. The report, the result of an 18-month investigation, failed to find concrete evidence to support GOP allegations that Obama administration officials funded Solyndra in return for campaign donations.
Elsewhere in the world, the geopolitical energy dynamic that is culminating in a fast-moving showdown between the Iraqi central government and the Kurdistan Regional Government (KRG) in northern Iraq deserves particular attention. The mainstream media is just now catching up to this development, which Oilprice.com has covered extensively over the past couple of months. Notably, since ExxonMobil provoked the ire of Baghdad in October by cutting a deal with the KRG and bypassing the Iraqi central government, the past couple of months have seen this trend increase greatly in momentum, with Chevron, Total and Gazprom Neft following in ExxonMobil's footsteps.
This is the number one geopolitical game to monitor at present. Baghdad is attempting to regain the advantage by banning oil companies working with the KRG from involvement in Iraqi national oil ministry deals. So far, this threat has not proved a sufficient deterrent. This is a dangerous geopolitical game on the part of the oil majors and particularly the US and Turkey, which are supporting this maneuvering, the implications of which will have long-term consequences.
By. Oilprice.com Analysts