OUS Updates and news.
US President Joe Biden’s climate bill is only six months old, but its impact on the energy industry around the world continues to grow as pressure on countries to offer similar subsidies to green energy or risk of loss on valuable investment dollars.
The Incremental Reduction Act (IRA) is a multi-billion-dollar program that commits federal dollars to low-carbon energy development. The policy aims to boost the country’s manufacturing sector and aims at China’s superior position in the clean technology supply chain.
The law was considered the most ambitious climate bill ever passed in the U.S. However, the IRA could force governments around the world, including Canada, to reveal their own collection of subsidies and influence greatly affected by climate change.
It’s a big wake-up call for world leaders, said Marcel van Poecke, head of Carlyle International Energy Partners, a global investment firm based in Washington, DC.
“That will be very, very strong, and in Europe, people are surprised, but I think it is what we need,” he said during the stage at CERAWeek, an energy conference in Houston.
There are many aspects of the IRA, such as tax incentives aimed at increasing the production of wind turbines, solar panels, and electric vehicle batteries. There are also subsidies to promote the development of hydrogen, biofuels and carbon capture and storage facilities. Financial support is estimated to total US$60 billion ($82.5 billion Cdn) over the next 10 years.
“The IRA will have the effect of attracting capital back to the US for reasons and results that are of such interest,” Tengku Muhammad Taufik, CEO of Petronas, told the CERAWeek audience.
The IRA is a policy that is easy to understand and offers clear incentives for the company, compared to the more complex system in Europe, said Sanjiv Lamba, CEO of Linde, the domestic gas company – a European project.
“There is no denying the fact that people suddenly woke up with the IRA and said ‘Hey, we can do a lot more,'” said Lamba, who does not think the European Union will be able to match the level of contributions.
Carrot vs
Canada has offered subsidies to promote low carbon energy sources, although its main policy to promote the decarbonization of the energy sector is a carbon tax. Putting a money on garbage is described by some experts as using a stick to stimulate industry, while an IRA is like dangling a carrot.
“You can really feel that the rest of the world is looking at the Anti-Inflation Act and saying, ‘How can we participate?’ and that will help change the pace and accelerate the changes,” said Lance Uggla, chief executive of BeyondNetZero, a climate-focused private equity fund. Uggla is a former bank executive with TD and CIBC.
In Canada, oil companies are pressing the federal government to increase the level of financial support for building and maintaining carbon capture and storage facilities. Ottawa has already introduced the tax credit, although the government has admitted that the policy is not as robust as the IRA.
Oilsands executives have formed a group called Pathways to Net Zero to work together to cut emissions. It is also seeking provincial government grants in Alberta.
Cenovus Energy CEO Alex Pourbaix spoke with CBC News in Houston about grants for a carbon capture project in northern Alberta, saying it will need support from both levels of government to move forward.
“People just need to think a lot about what failure will mean,” he said. “What we need is some help on the authority of what we see in the US with the IRA, and I would be very surprised if people don’t see that value.”
SEE | Why eposands companies want more federal dollars to decarbonize:
Cenovus Energy CEO Alex Pourbaix wants the federal government to provide more support to carbon capture and storage projects to help cut emissions in the oil sands.
Canadian answer
The next federal budget may include more financial commitments aimed at cutting greenhouse gas emissions and promoting low-carbon energy sources.
In October, the government indicated further action to boost subsidies as part of its fall economic statement, which said, “Canada will need to do even more to protect our competitive advantage and continue to create opportunities for Canadian workers. This challenge has become more pressing with the United States’ recent enactment of the Additional Reductions Act.”
The oil sector has taken record profits in 2022 as commodity prices increased following Russia’s invasion of Ukraine. The company has faced criticism for not using those profits to move quickly enough to respond to climate change.
Some corporate executives in the US have questioned the effectiveness of IRAs because of the approval process in the country, which they say takes too long. Climate legislation has a lot of potential, but it could falter without improvements to speed up the permitting process for energy projects.
It’s a “strategic impossibility” for the country to switch to cleaner and more sustainable energy sources, ConocoPhillips CEO Ryan Lance said, even if the IRA makes those types of projects more economical.
Adblock test (Why?)
Link source