Oil industry pivots to low carbon projects to rake in US green subsidies
The oil industry is positioning itself to take advantage of billions of dollars of US tax credits established through the US Inflation Reduction Act.
President Joe Biden’s flagship climate law, which was passed last year, aims to slash greenhouse gas emissions through supercharging clean energy industries.
This includes $391bn (£329bn) in tax cuts and subsidies directed at renewable power generation and the manufacturing of clean energy technology such as electric vehicle batteries and solar panels.
However, the law also includes generous incentives for a set of lower-carbon technologies and fuels.
This is where oil and gas firms are hoping to take advantage, according to The Financial Times.
It reports that shale producer Continental Resources, Gulf of Mexico-focused oil company Talos Energy and oil refiner Phillips 66 are all looking to make the most of the relief on offer.
The companies are starting to plough cash into projects to capture and lock away carbon dioxide, retool refineries for making biofuels and produce low-emission hydrogen, all supported by the green subsidies.
Meanwhile, Exxon Mobil in December ramped up planned low-carbon spending by 15 per cent and outlined plans to invest $17bn in its low-carbon business through to the end of 2027, around 10 per cent of overall spending.
“There’s a lot of activity in this space, a lot of interest, particularly with the Inflation Reduction Act,” Exxon Mobil chief executive Darren Woods told investors last month.
“I think we’re very well positioned there,” he said. “This is not a game for start-ups. These are large, world-scale projects that require the kind of project expertise that we have, require the kind of size and balance sheet capacity that we have.”