U.S. energy bill wins environmentalists over as ‘huge step forward’ but comes under fire from oil & gas lobby

U.S. energy bill wins over environmentalists but not oil & gas lobby

After President Biden signed into law a new energy bill, which contains climate provisions, describing it as “a big deal,” both the oil and gas industry and environmental groups found grounds to complain. However, the latter still celebrated the new bill while the former claims this bill does not address America’s long-term energy needs as it discourages needed investment in oil and gas.”

Illustration; Source: BOEM

At the end of July 2022, U.S. Senator Joe Manchin and Senate Majority Leader Chuck Schumer revealed a decision to add climate provisions to a budget reconciliation legislation, expected to provide $369 billion in energy and climate investments.

As explained at the time, the package was said to promote zero and low carbon energy while also supporting domestic production of offshore oil and gas. The plan is to invest in the technologies needed for all fuel types – hydrogen, nuclear, renewables, fossil fuels and energy storage – to be produced and used in the cleanest way possible.

The Inflation Reduction Act (IRA) of 2022 would also reinstate the vacated Gulf of Mexico Lease Sale 257 and hold the cancelled Lease Sales 258, 259, and 261. The bill was approved by the Senate on Sunday, 7 August, and sent to the House of Representatives for consideration. As the bill was approved by the House, President Joe Biden signed the bill into law on Tuesday.

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The White House released a statement on the occasion, explaining that President Biden was “delivering on his promise to meet the climate crisis and build an economy that works for working families” by signing the Inflation Reduction Act, which “makes historic investments in America’s future while lowering health care and energy costs.”

According to the White House, this is “the most aggressive action” the U.S. has taken to “tackle the climate crisis and create clean energy solutions in American history.” This law is expected to bring down energy costs for families and create thousands of jobs while reducing climate pollution and ensuring a “clean, secure future energy supply.”

Regarding the signing of the bill into law, Biden remarked: “The promise of this nation is real. The Inflation Reduction Act is not just about today, it’s about tomorrow. It’s about showing that America – and American democracy – works. Not just for the privileged few. But for all of us.”

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Environmentalists see IRA as ‘huge step forward’

The bill was welcomed by many, including European Commission President, Ursula von der Leyen, and environmentalist groups. In a statement on Tuesday, Earthjustice, an environmental group, said the bill would put the U.S. on a path to 40 per cent emissions reduction by 2030 while “restoring U.S. credibility to lead climate action on the global stage.”

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The environmental group confirmed it was aware that there would be “painful provisions in any bill that could get Sen. Joe Manchin’s support,” adding that the bill contained “some troubling giveaways” to the fossil fuel lobby that would “cause undue harm” to communities in the Gulf and Alaska. However, as a whole, the Inflation Reduction Act represents “a huge step forward in the fight to preserve a livable planet and is one we need to take while we have the chance,” according to Earthjustice, which “celebrated” the bill’s passage as “climate cannot wait.”

The environmental group underlines that this bill includes tax credits for carbon capture and sequestration (CCS) that could extend the life of “dirty coal plants,” which would make it harder to reach critical targets for clean power while exposing residents to toxic coal pollution.

In addition, Earthjustice highlights that there is “a side deal” to move a separate bill in September for a permitting reform that could “weaken core protections” under the National Environmental Policy Act, the federal law that gives communities a voice in what happens to the environment around them.

“We will fight alongside communities in the Gulf Coast, Appalachia, and Alaska to beat back a wave of dirty energy projects while defending bedrock environmental laws like the National Environmental Policy Act from any attack,” underscored Earthjustice.

Oil & gas: Bill detrimental to energy security & production

On the other hand, opponents of the Inflation Reduction Act from the fossil fuels lobby believe that the policies contained within this legislation could be detrimental to domestic energy production and energy security.

In line with this, the American Petroleum Institute (API), which calls for a “comprehensive plan for critical investment” in American oil and natural gas and associated infrastructure – consistent with goals detailed within its 10-point-plan – emphasises that even though the IRA legislation makes “incremental progress” on leasing, the bill’s “tax hikes and other problems complicate the goal of increasing badly needed U.S. oil and natural gas production.”

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After Biden signed into law the Inflation Reduction Act, Mike Sommers, API President and CEO, stated: “While the Inflation Reduction Act takes important steps toward new oil and gas leasing and investments in carbon capture and storage, it falls well short of addressing America’s long-term energy needs and further discourages needed investment in oil and gas.”

Sommers points out that the American Petroleum Institute shares the goal of addressing climate change, however, he believes that “the considerable tax increases are simply the wrong policies at the wrong time.”

“From a new corporate minimum tax to an $11.7 billion tax on crude oil and petroleum products to a new natural gas tax, this legislation imposes additional costs on American families and businesses at a time when policymakers should be looking for solutions to provide relief,” added Sommers.

Moreover, API and around 60 other trade groups representing America’s natural gas and oil industry sent a letter to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy last week to urge them to reconsider problematic policies within the legislation that “undermine the industry’s ability to promote energy security for the American consumer.”

Sommers claims that permitting reform, which the bill “fails to address” is “essential to delivering affordable, reliable energy to consumers in a growing economy.”

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