Inflation Reduction Act: Good news for offshore

Written by Nick Blenkey
Ferry Service Expansion Act is now before Congress

Image (C) Architect of the Capitol

Legislation that started life as “The Build Back Better Act” is now headed for likely passage by the House as “The Inflation Reduction Act” and there looks to be a lot in it for the U.S. offshore industry.

“The Senate’s passage of the Inflation Reduction Act is a watershed moment in America’s renewable energy transition. This historic legislative package sends a message to the world that the U.S. is serious about bolstering supply chain resiliency, increasing American energy security, and reaching our ambitious goal to deploy 30 gigawatts of offshore wind power by 2030,” said Liz Burdock, president and CEO of the Business Network for Offshore Wind. “The bill’s $40 billion investment in domestic clean energy manufacturing and shipbuilding is an important down payment that will unleash the vast potential of offshore wind and localize a supply chain on American shores creating thousands of good-paying jobs.”

The bill only survived following a compromise reached by Senate Majority Leader Chuck Schumer (D.-N.Y.) and Senator Joe Manchin (D-W.Va.) That brought offshore oil and gas leasing back into the picture — along with funding for carbon capture research.

Expect more details on all of this to emerge in the coming weeks, but the deal was acclaimed by Erik Milito, president of the National Ocean Industries Association, who released this statement:

“Senator Manchin and Senate Majority Leader Chuck Schumer have negotiated an energy and climate deal grounded in reality: a package that promotes zero and low carbon energy and supports domestic production of offshore oil and natural gas. We are still reviewing the language, but it appears to offer a serious path forward that lifts offshore energy of all types, to the betterment of our nation. We applaud Senator Manchin’s leadership on an issue of national – and global – consequence.

“We need to look no further than the U.S. Gulf of Mexico and our offshore areas to achieve the policy goals critical to our nation’s sustained success. There is a proven bipartisan spirit of collaboration to advance energy policy that offers affordable, reliable, and environmentally responsible energy here at home, while also widening the pathway for deployment of low and zero carbon technologies and energy sources. We look forward to working with Congress and the Administration to advance common-sense energy and climate policies past the goal line.

“This legislation recognizes the U.S. Gulf of Mexico region is a premier oil producing region. It is world class, high-tech, and is an economic anchor for countless communities along the Gulf Coast and beyond. The Gulf of Mexico anchors our national security – and that of our allies. The Gulf of Mexico is characterized by low carbon emissions and is consistently solving, scaling, and deploying new solutions to further improve emissions performance. In other words, a stronger Gulf of Mexico means a stronger America.”

CARBON CAPTURE … AND MORE

A detailed analysis of the potential impacts of the Inflation Reduction Act by the Princeton University Zero Lab notes that the legislation would drive nearly $3.5 trillion in cumulative capital investment in new American energy supply infrastructure over the next decade (2023-2032).

“That includes more than $20 billion in annual investment in CO2 transport & storage and fossil power generation w/carbon capture by 2030.

“Annual investment in hydrogen production (including electrolysis and methane reforming w/carbon capture) increases to $3 billion annually by 2030, triple levels under current policy, and rises to over $50 billion by 2035.

“The Act has the greatest impact on investment in wind power and solar PV, which nearly doubles to $321 billion in 2030, versus $177 billion under current policy.”

Maybe hydrogen-fueled vessels carrying captured carbon to depleted offshore oil and gas facilities are nearer than we think?

Categories: News, Offshore, Offshore Wind, Oil & Gas Tags: , ,