(Oil & Gas 360) – After two years of industry opposition to the $740 billion Inflation Reduction Act (IRA), touted by its proponents as the single largest effort by the U.S. government to promulgate a federal-level climate change investments and tax credit policy, several of the country’s largest oil companies are finding elements of the law so attractive that they are asking a possible Trump administration to consider keeping some of them should he win in November.
The Act’s tax credits appear to be an incentive for Occidental, Chevron, ExxonMobil, Phillips 66, and others by helping offset their risks to develop and implement carbon capture and low-carbon technologies.
Occidental, for instance, is building a $1.3 billion direct air capture facility in the Permian Basin to collect carbon. Along the same lines, Exxon and Chevron are reportedly investing $30 billion in carbon capture, hydrogen biofuels, and other low-carbon technologies, all of which, in various guises, are eligible for some of the IRA’s tax credits.
Such credits extend not only to activity in the oil field. Phillips 66, for instance, is looking to test the viability of renewable fuels from vegetable oil, fat, and used cooking oil, all of which are likewise eligible for tax breaks. Others within the industry who have found things they like within the IRA say it can help create more energy and manufacturing jobs.
The lines drawn between retaining components of the IRA and its full-throated opposition appear to fall between the large publicly traded companies for whom renewable projects and climate change and emissions initiatives resonate with the investment community and the bulk of oil and gas companies, known as independents, who almost universally aren’t structured for or invest in low-carbon technologies.
Many say tax credits for renewable energy and electric vehicles put gas and diesel-powered vehicles at a disadvantage.
Trump has regularly derided the legislation as “The Green New Scam” and has said that, if elected, he will cut off funds remaining in the IRA. Previous efforts by Congress to prune some of its provisions and even to repeal it outright have failed.
Trump, who has clearly cast his political fortunes with oil and gas through his Drill Baby Drill sloganeering, has enjoyed widespread industry support, but the appeals for caution against wholesale cuts from the super majors complicate his policy considerations regarding the IRA.
Industry opposition from the American Petroleum Institute and Independent Petroleum Producers of America when the IRA was introduced two years ago involved marshalling opposition from five dozen other industry groups.
The legislation was highly contested with many feeling it unfairly placed the government in the role of picking winners and losers. It took a vote from Vice President Kamala Harris to assure passage of the bill.
By Jim Felton for oilandgas360.com
