offshore oil and gas - fossil fuels

U.S. climate bill promotes clean energy but ‘does not arbitrarily shut off’ oil and gas

U.S. Senator Joe Manchin and Senate Majority Leader Chuck Schumer on Wednesday announced a decision to add climate provisions to a budget reconciliation legislation that is expected to provide $369 billion in energy and climate investments. The package is said to promote zero and low carbon energy and support domestic production of offshore oil and gas.

For illustration purposes; Source: BOEM

This announcement comes after months of negotiations to reach an agreement on budget reconciliation legislation, now finalising legislative text to invest $369.75 billion in energy security and climate change programmes over the next ten years.

The deal includes climate investments to reduce carbon emissions by roughly 40 per cent by 2030. The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations. The full Senate will consider the bill next week.

In a statement on Wednesday, Manchin said the Inflation Reduction Act of 2022 addresses the nation’s energy and climate crisis by adopting commonsense solutions through strategic and historic investments that allow it to decarbonise while ensuring American energy is affordable, reliable, clean and secure.

“The need to balance all of these critical energy priorities is no longer open to debate given the energy threats we face,” he said.

Therefore, Manchin said he supports a plan that will “advance a realistic energy and climate policy that lowers prices today and strategically invests in the long game. As the superpower of the world, it is vital we not undermine our superpower status by removing dependable and affordable fossil fuel energy before new technologies are ready to reliably carry the load. This legislation ensures that the market will take the lead, rather than aspirational political agendas or unrealistic goals, in the energy transition that has been ongoing in our country.”

He also said that the plan is to invest in the technologies needed for all fuel types – from hydrogen, nuclear, renewables, fossil fuels and energy storage – to be produced and used in the cleanest way possible.

“It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels. It invests heavily in technologies to help us reduce our domestic methane and carbon emissions and also helps decarbonise around the world as we displace dirtier products,” he said.

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‘Bill promotes low carbon energy and supports offshore oil & gas production’

National Ocean Industries Association (NOIA), a non-profit organisation representing the offshore energy industry, welcomed the announcement, saying the legislation appears to offer a serious path forward on all forms of energy and supports the American offshore.

NOIA also said the legislation would reinstate the vacated Gulf of Mexico Lease Sale 257 and hold the cancelled Lease Sales 258, 259, and 261. It also would require the Interior to hold a region-wide Gulf of Mexico oil and gas lease sale in the year prior to the issuance of an offshore wind lease.

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Furthermore, NOIA said the package also lifts the offshore wind lease moratorium in the Southeastern US and the Eastern Gulf of Mexico, while extending Production Tax Credits for offshore wind and establishing new tax credits for offshore wind vessels.

NOIA President, Erik Milito, commented: “Senator Manchin and Senate Majority Leader Chuck Schumer have negotiated an energy and climate deal grounded in reality: a package that promotes zero and low carbon energy and supports domestic production of offshore oil and natural gas.

Milito added: “This legislation recognises the U.S. Gulf of Mexico region is a premier oil-producing region. It is world-class, high-tech, and is an economic anchor for countless communities along the Gulf Coast and beyond. The Gulf of Mexico anchors our national security – and that of our allies. The Gulf of Mexico is characterized by low carbon emissions and is consistently solving, scaling, and deploying new solutions to further improve emissions performance. In other words, a stronger Gulf of Mexico means a stronger America.”

‘Biggest climate & clean energy investment in American history’

American environmental advocacy group, League of Conservation Voters (LCV), shared its excitement over the deal. LCV SVP of Government Affairs, Tiernan Sittenfeld, commented: “We are so excited that Majority Leader Schumer and Senator Manchin have reached a deal that includes climate investments to reduce carbon emissions by roughly 40 per cent by 2030, and we are eager to see the details.

“As families struggle with high gas prices, inflation, and devastating climate-fueled extreme weather, this is such welcome news.”

In response, Jason Walsh, Executive Director of the BlueGreen Alliance, a coalition of labour unions and environmental organizations, stated: “While we eagerly await the details, we welcome the news that the Senate will move forward with a budget reconciliation deal focused on creating good union jobs, addressing climate change, building clean energy supply chains, reducing energy and health care costs for consumers, and tackling inflation.”

American Clean Power (ACP) Association CEO, Heather Zichal, said the entire clean energy industry just breathed an enormous sigh of relief.

“This is an 11th-hour reprieve for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy, Zichal said.

“Congress now is inches away from passing a $369.75 billion investment in energy security and climate change programs over the next ten years – the biggest climate and clean energy investment in American history. Passing this bill sends a message to the world that America is leading on climate, and sends a message at home that we will create more great jobs for Americans in this industry.

“This deal includes long-term clean energy tax credits that will translate into the rapid deployment of affordable, reliable clean energy, thousands of new domestic jobs, and promote domestic clean energy that bolsters our national security.”