Today’s Key Takeaway: “A year of energy shortages, volatile prices and recalibrating the global supply chain following Russia’s invasion of Ukraine has underscored the enduring importance of oil and gas, even as the world attempts to transition to cleaner fuels.”
US Energy Regains Swagger While Rest of World Gets IRA Envy
Kevin Crowley, Jennifer Dlouhy, Bloomberg, March 9, 2023
- Granholm, oil CEOs say rivals should copy US green tax breaks
- EU worries that IRA handouts give US edge in clean tech race
Energy executives and Biden administration officials in Houston had a simple message for Europe and other regions griping that US climate spending will starve them of investment: Stop complaining and put up the cash to enact measures of your own.
In a standing-room-only luncheon address at the CERAWeek by S&P Global conference, Energy Secretary Jennifer Granholm boasted the newly enacted infrastructure law and Inflation Reduction Act have made the US “irresistible” for clean energy investments. The more than $360 billion in support for clean energy and advanced manufacturing — as well as preferences for domestic content — have provoked tensions with allies including the European Union
There’s nothing wrong with “a little friendly competition,” she said. “As we keep saying, have at it. You should do the same thing. You should incentivize the production of clean energy in your country as well.”
Democratic President Joe Biden’s signature climate and infrastructure laws received almost universal praise from the world’s top fossil fuel executives at the conference, as they struck a more confident tone than in years gone by.
A year of energy shortages, volatile prices and recalibrating the global supply chain following Russia’s invasion of Ukraine has underscored the enduring importance of oil and gas, even as the world attempts to transition to cleaner fuels.
The billions of dollars of fiscal incentives baked into the IRA mean the world’s biggest energy and industrial companies now view the US as the most attractive place to build renewable, carbon capture, and hydrogen facilities. That’s a problem for allies in Europe, Canada and elsewhere who are now playing catch-up to attract the capital for large-scale clean-energy projects.
“My speech to European leaders is: Don’t complain, do the same,” said Patrick Pouyanne, Chief Executive Officer of Paris-based TotalEnergies SE. The IRA is “exactly what we need to do” to accelerate the energy transition. “We say to European governments, since you want us to invest in Europe, you have to put the same incentive schemes as the US, or even more.”
Exxon Mobil Corp. CEO Darren Woods said the EU first needs to scrap a “punishing” windfall profits tax on oil companies that will wipe out years of profits from recent investments in its European refineries. As a result, the Texas oil giant has “stepped back and reevaluated” in Europe and is investing more in the US, he said.