Page 4 - NorthAmOil Week 33 2022

NorthAmOil COMMENTARY NorthAmOil

US oil and gas industry weighs

impact of Inflation Reduction Act

The oil and gas industry is assessing the impact of the Inflation Reduction Act, which

has been signed into law by US President Joe Biden

US THE oil and gas industry is assessing how it utilisation project that begins construction
will be affected by the Inflation Reduction Act before January 1, 2033. Perhaps more signif-
WHAT: of 2022, which US President Joe Biden signed icantly, the act also increases the value of the
The US oil and gas into law this week. The early response has been available credits as it seeks to spur wide-scale
industry’s early response mixed. carbon sequestration across all industrial sec-
to the Inflation Reduction The bill has far-reaching implications for the tors in line with the Biden administration’s
Act has been mixed. industry, given that it is aimed – in line with energy transition goals.
much of Biden’s other legislation – at fight- This has drawn praise from organisations
WHY: ing climate change, reducing the US’ green- including the National Ocean Industries
Aspects of the act house gas (GHG) emissions and accelerating Association (NOIA), which highlighted the
have been welcomed, the adoption of renewable energy. Indeed, it incentives to spur offshore carbon sequestra-
including the expansion includes $370bn worth of spending on these tion innovation contained within the Inflation
of a CCS credit and a goals. While the industry has welcomed some Reduction Act.
mandate to hold planned of the measures included in the legislation, con- “No legislation is perfect, but the IRA’s off-
lease sales. cerns are also being raised about certain other shore energy provisions will enable continued
provisions within the bill. investment in US energy projects by an indus-
WHAT NEXT: try that is already solving, scaling and deploying
At the same time, the Welcome provisions low-carbon energy solutions,” said NOIA’s presi-
industry has expressed Among the provisions that have been welcomed dent, Erik Milito, in the organisation’s statement
concern over the bill’s tax by the industry are the expansion of the 45Q tax on the passage of the act into law.
implications. credit programme for carbon capture and stor- The American Petroleum Institute, while
age (CCS), as well as a mandate for previously generally being more critical of the Inflation
announced federal oil and gas lease sales to be Reduction Act, nonetheless acknowledged the
held. “important steps” the legislation takes towards
Under the Inflation Reduction Act, the 45Q new investments in CCS.
tax credit is being extended to any carbon Executives from various oil and gas compa-
capture, direct air capture (DAC), or carbon nies including Occidental Petroleum have also

US President Joe Biden
signs the Inflation
Reduction Act into law.

P4 www. NEWSBASE .com Week 33 18•August•2022