OPINION: The surprise Inflation Reduction Act proposed by US senators Chuck Schumer and Joe Manchin could be a major boon for clean energy efforts with high levels of investment into the industry.
The act, which includes $369 billion in new spending for clean energy technologies and greenhouse gas reduction, salvages some elements of US President Joe Biden’s more ambitious Build Back Better legislation.
However, its opponents conflict on where the bill falls short: some feel the methane fee is unnecessary and punishes oil and gas, while others believe its measures undermine climate goals.
A comprehensive energy transition strategy will require development in all energy sectors, despite the criticism certain measures will receive.
Even the extension to 45Q tax credits, a decidedly bipartisan inclusion, faces opposition from those who believe it merely reinforces oil and gas production.
Both sides of the fossil fuel debate will need to make concessions moving forward to achieve a successful energy transition.
While oil and gas benefits from mandatory annual lease sales and exploration in Alaska and the Gulf of Mexico, it also hindered by a levy on methane emissions.
The oil and gas industry shouldn’t need any more incentives to reduce its methane emissions — which result in a loss of product and harm the environment, literally a lose-lose situation — but based on its reaction to the methane fee, perhaps more pressure is necessary.
With its several compromises, the bill is a valuable step towards a thorough energy evolution, but still only touches the surface of the massive progress that will need to take place to reach climate goals.
(This is an Upstream opinion article.)