WATFORD CITY, ND - JULY 30: An oil drilling rig is seen in an aerial view in the early morning hours of July 30, 2013 near Watford City, North Dakota. The state has seen a boom in oil production thanks to new drilling techniques including horizontal drilling and hydraulic fracturing. Getty Images

This article is from the archive of our partner National Journal

President Obama's 2016 budget proposal lays bare the deep divisions between the White House and ascendant Capitol Hill Republicans over climate change, oil-and-gas policy, and much more.

The bulk of the plan will go nowhere on Capitol Hill, but it's a useful road map to the political battles that will play out for the remainder of Obama's second-term.

As National Journal reports, the plan would boost federal spending on green-energy technologies. Here are five more important pieces.

Obama really wants to tackle climate through the tax code

The collapse in oil prices is battering the industry, but the White House isn't letting up on his long-proposed (and long-rejected) call to strip billions in tax incentives for oil-and-gas producers. The latest budget plan would strip an estimated $44 billion in industry tax breaks over a decade. That includes the lucrative Section 199 deduction for domestic manufacturing, which Obama doesn't want the oil industry to be able to claim.

On the flip side, the plan continues, despite years of headwinds in Congress, a major push to make the tax code much sweeter for the renewable-energy sector and deployment of its products. It would permanently extend the 30 percent investment for solar-energy systems, and permanently reinstate the lapsed wind-energy production tax credit, at a combined price tag of $31.5 billion over the next decade alone. Those are two of several energy- and climate-related tax proposals, such as $2 billion in refundable credits for installing equipment that traps carbon emissions from power plants, and credits for heavy-duty alternative-fueled vehicles.

The White House hopes EPA's power-plant rule is a floor, not a ceiling

EPA's big draft rule to cut power-plant carbon emissions, a pillar of Obama's climate agenda, drew some grumbles from green activists who wanted a more ambitious proposal. The new budget plan suggests that Obama feels their pain.

The budget proposes a $4 billion Clean Power State Incentive Fund to help states go even further than the EPA plan, which nationwide would require cuts in carbon emissions from existing power plants that reach 30 percent by 2030. It would help states that want to quicken the pace or total degree of pollution cuts.

"This funding will enable states to invest in a range of activities that complement and advance the Clean Power Plan, including efforts to address disproportionate impacts from environmental pollution in low-income communities and support for businesses to expand efforts in energy efficiency, renewable energy, and combined heat and power through, for example, grants and investments in much-needed infrastructure," a White House summary states.

Making the case for climate action in dollars and cents

In an effort to win over critics, the White House makes the case that a failure to address climate change will make the U.S. bleed money.

The federal government has already spent more than $300 billion fixing damages from extreme weather and fires, according to the White House, and it adds that the costs of climate change go far beyond that. The budget warns that climate change will wreck havoc across nearly all sectors of the economy, with resulting costs for health care, national security, and property management.

Emphasizing the spiraling costs of climate inaction has become a pillar of the administration's message on climate change following the White House's release of a report last year that spelled out potential costs of delaying action on global warming.

With its calls for oversight, the administration is setting up a clash with oil and gas industry

Obama wants to keep a close eye on oil and gas drilling and is asking the industry to pick up the tab, a proposal that energy producers are sure to say is overreach. The budget slaps fees on oil and gas production to pay for "a $10 million increase in funding" for inspections and oversight by the Bureau of Land Management.

Energy producers are sure to bristle at the proposal. The industry routinely complains that administrative red tape has pushed oil and gas production on public lands to a crawl. And Obama's call for greater oversight runs counter to industry demands for less federal involvement. But the president's proposal is guaranteed to win praise from environmentalists who have pushed for more inspections amid concerns over crude oil volatility, spills, and other accidents.

White House kicks off a fight with Republicans over climate funding

Obama wants Congress to dole out $500 million for a controversial climate fund.

That request will prove an early test of how Republicans will respond to the president's pledge to set aside a total of $3 billion to fill the coffers of the Green Climate Fund, an international pot of money designed to assist poor countries adapt to the impacts of climate change.

Last fall, Obama made a commitment to pony up the money as part of his second-term climate push. But without Republican support, that pledge is an empty promise.

The administration plans to ask for the full $3 billion over the course of several years. But Obama is expected to face significant headwinds on Capitol Hill as he tries to secure the funds. And if Republicans refuse Obama's 2016 ask for the first $500 million, it could spell trouble for the future of the U.S. contribution to the fund, at least as long as the GOP calls the shots on Capitol Hill.

Obama really wants to tackle climate through the tax code

The collapse in oil prices is battering the industry, but the White House isn't letting up on his long-proposed (and long-rejected) call to strip billions in tax incentives for oil-and-gas producers. The latest budget plan would strip an estimated $44 billion in industry tax breaks over a decade. That includes the lucrative Section 199 deduction for domestic manufacturing, which Obama doesn't want the oil industry to be able to claim.

On the flip side, the plan continues, despite years of headwinds in Congress, a major push to make the tax code much sweeter for the renewable-energy sector and deployment of its products. It would permanently extend the 30 percent investment for solar-energy systems, and permanently reinstate the lapsed wind-energy production tax credit, at a combined price tag of $31.5 billion over the next decade alone. Those are two of several energy- and climate-related tax proposals, such as $2 billion in refundable credits for installing equipment that traps carbon emissions from power plants, and credits for heavy-duty alternative-fueled vehicles.

The White House hopes EPA's power-plant rule is a floor, not a ceiling

EPA's big draft rule to cut power-plant carbon emissions, a pillar of Obama's climate agenda, drew some grumbles from green activists who wanted a more ambitious proposal. The new budget plan suggests that Obama feels their pain.

The budget proposes a $4 billion Clean Power State Incentive Fund to help states go even further than the EPA plan, which nationwide would require cuts in carbon emissions from existing power plants that reach 30 percent by 2030. It would help states that want to quicken the pace or total degree of pollution cuts.

"This funding will enable states to invest in a range of activities that complement and advance the Clean Power Plan, including efforts to address disproportionate impacts from environmental pollution in low-income communities and support for businesses to expand efforts in energy efficiency, renewable energy, and combined heat and power through, for example, grants and investments in much-needed infrastructure," a White House summary states.

Making the case for climate action in dollars and cents

In an effort to win over critics, the White House makes the case that a failure to address climate change will make the U.S. bleed money.

The federal government has already spent more than $300 billion fixing damages from extreme weather and fires, according to the White House, and it adds that the costs of climate change go far beyond that. The budget warns that climate change will wreck havoc across nearly all sectors of the economy, with resulting costs for health care, national security, and property management.

Emphasizing the spiraling costs of climate inaction has become a pillar of the administration's message on climate change following the White House's release of a report last year that spelled out potential costs of delaying action on global warming.

With its calls for oversight, the administration is setting up a clash with oil and gas industry

Obama wants to keep a close eye on oil and gas drilling and is asking the industry to pick up the tab, a proposal that energy producers are sure to say is overreach. The budget slaps fees on oil and gas production to pay for "a $10 million increase in funding" for inspections and oversight by the Bureau of Land Management.

Energy producers are sure to bristle at the proposal. The industry routinely complains that administrative red tape has pushed oil and gas production on public lands to a crawl. And Obama's call for greater oversight runs counter to industry demands for less federal involvement. But the president's proposal is guaranteed to win praise from environmentalists who have pushed for more inspections amid concerns over crude oil volatility, spills, and other accidents.

White House kicks off a fight with Republicans over climate funding

Obama wants Congress to dole out $500 million for a controversial climate fund.

That request will prove an early test of how Republicans will respond to the president's pledge to set aside a total of $3 billion to fill the coffers of the Green Climate Fund, an international pot of money designed to assist poor countries adapt to the impacts of climate change.

Last fall, Obama made a commitment to pony up the money as part of his second-term climate push. But without Republican support, that pledge is an empty promise.

The administration plans to ask for the full $3 billion over the course of several years. But Obama is expected to face significant headwinds on Capitol Hill as he tries to secure the funds. And if Republicans refuse Obama's 2016 ask for the first $500 million, it could spell trouble for the future of the U.S. contribution to the fund, at least as long as the GOP calls the shots on Capitol Hill.

This article is from the archive of our partner National Journal.

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