5 Things Oil and Gas Companies Need to Know About Biden’s Inflation Reduction Act
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US President Joe Biden has just signed into law the Inflation Reduction Act (IRA), which has been called the largest energy and climate change act in American history.
"This bill is the biggest step forward on climate ever,” said the President on Tuesday. “It’s going to allow us to boldly take additional steps toward meeting all of my climate goals — the ones we set out when we ran."
So what does the $700 billion dollar act mean for the oil and gas industry?
#1: Tax credits aim to incentivize companies to reduce their emissions, capture carbon and spur on investment in new energy systems and storage.
#2: Corporate tax increases from 5% to 15% on corporations with profits over $1billion
#3: Commits about $370 billion dollars worth of funding for clean energy development and climate change mitigation including $6bn to help industries like cement and steel reduce their emission, $30bn in tax credits for clean energy and energy storage, and $60bn for manufacturing clean energy systems.
#4: Increases the 45Q tax credit for capturing carbon dioxide at industrial facilities and power plants from $50 per ton today to up to $85 per ton if the carbon is stored, or $60 per ton if used for oil drilling. Direct Air Capture would increase to $180 per ton if the C02 is stored, and $130 per ton if used.
#5: Tax on methane emissions begins in 2024 starting at $900 per metric ton of methane, increasing to $1500 per metric ton of methane in 2026. The charge will apply to operations that emit more than 25,000 tons of C02 equivalent per year. The Act will also allocate funds towards better methane mitigation and monitoring, and reducing emissions from marginal wells.
The Whitehouse estimates that the act will reduce greenhouse gas emissions by about 1 gigaton in 2030, or a billion metric tons.
Interested in learning more about this topic?
If you’re tasked with reducing GHG emissions in your operations, join us at the National Summit on Methane Mitigation, taking place at the Norris Conference Centre, Houston on December 6-8, 2022. Join over 200 of your industry peers to learn more about the cutting edge technology and approaches that will help you reduce GHGs in your operations.
