‘Easter eggs’ in climate bill delight oil and gas industry
The oil and gas industry does not hate the climate bill.
The industry as a whole has yet to sign on to the more than $700 billion reconciliation deal, which would penalize some forms of fossil fuel pollution while making one of the biggest investments in energy peculiar to the history of the United States. But the legislation also contains what some have called “easter eggs” that would benefit oil and gas companies, including access to new stretches of federal waters in Alaska and the Gulf of Mexico.
“Some things in there are useful to our business,” said Rich Walsh, senior vice president and general counsel at Valero, one of the nation’s largest fuel refiners, during a Thursday conference call with investors. .
Frank Maisano, a partner at law firm Bracewell, said the compromise deal offered benefits to both the fossil fuel and green energy industries.
“There are a lot of elements in there that will be valuable for different sectors,” said Maisano, whose company works with companies in both areas.
Maisano added that Sen. Joe Manchin (DW.Va.), who brokered the deal with Senate Majority Leader Chuck Schumer, “has been clear on his position — to have a mix of benefits and not to overdo it. to rely solely on renewable energy. That’s what he got here.
The bill, HR 5376 (117th), would spend about $370 billion to try to reduce carbon emissions in the U.S. economy by the end of the decade by about 40% below 2005 levels. But it includes proposals to loosen federal rules that the West Virginia senator says restrict fossil fuel production and slow needed upgrades to the power grid.
The compromise has infuriated some progressive environmental activists. One such group, the climate organization 350.org, called the bill a “sham” because of the fossil fuel provisions and accused the Biden administration of “engaging in bait and switch.” tactic on climate legislation”.
Still, other environmental groups have said they can accept the trade-offs. And the oil and gas industry has identified provisions that can make climate medicine a little easier.
Walsh at Valero pointed to part of the bill that would allocate $500 million to expand biofuels infrastructure such as storage tanks and blending facilities.
The bill would also require the Department of the Interior to offer at least 2 million acres annually for onshore oil and gas lease sales. Unless it holds those lease sales, the bill says, the department could not offer rights-of-way for solar and wind power projects.
Those lease provisions alone would offer a victory for oil and gas companies that are feuding with the Biden administration over the slow pace of indoor fossil fuel lease sales, an industry lobbyist has said. Meanwhile, the bill’s proposal to charge a fee of up to $1,500 a ton for the oil industry’s emissions of methane, a potent greenhouse gas, would be less of an issue for big oil companies already working to cut them, industry analysts said.
“If you look at the pros and cons, the pros usually outweigh the cons,” the lobbyist said, speaking on condition of anonymity because he was not authorized to speak to the media. “The easter eggs that Manchin forced into the rental bill, that’s a big deal. If you squint hard enough, you can see this is a two-party compromise.