Although it may seem counterintuitive, some of the largest polluters in the US – oil companies might actually profit from President Joe Biden’s climate bill.
With the recent dramatic change of heart in Senator Joe Manchin, who was famously opposed to the bill, the new climate agenda has been called by some a ‘bipartisan compromise’ on the mild end of the spectrum and ‘a sham’ on the more extreme end, such as by the climate organization 350.org, where both renewables and fossil fuels can benefit from different parts of the legislation.
As part of this compromise, oil and gas companies in the United States may enjoy an easement of certain federal rules that have so far been constricting the industry and delaying long overdue upgrades to the power grid.
For one, oil and gas producers will now benefit from a minimum of 2 million acres of onshore oil and gas lease sales per year, which will alleviate what has been the cause of a feud between the fossil fuels sector and the Biden administration.
Another significant ‘easter egg’, as some have described it as, hidden inside the bill for oil and gas companies is that part of the massive $370 billion spending will make it easier for them to make use of the 45Q tax credit.
The tax credit is intended to support the large-scale deployment of carbon management technologies, including carbon capture, which at this point has already become a strong focus of oil and gas supermajors like Chevron, Occidental and Exxon Mobil.
In fact, the legislation might even increase the credit, which is currently pinned at $50 per ton of captured and permanently stored CO2, up to $85 per ton.
A BP executive already pointed out that the bill would help oil companies transition to more sustainable practices by reaching deeper into carbon capture, renewables and other climate innovations.
Thus, if the climate bill now known as the Inflation Reduction Act does make its way through Congress, a number of oil and gas giants may be looking at significantly higher profits.
Exxon Mobil, for instance, has made carbon capture the focal point of its emissions reduction strategy and is working towards building CO2 capture hubs around the country, with one in particular near Houston having an estimated capacity of capturing 100 million tons of CO2 per year.