US House approves climate bill in final vote

  • Market: Biofuels, Coal, Crude oil, Electricity, Emissions, Hydrogen, Natural gas, Oil products
  • 12/08/22

Democrats in the US House of Representatives today secured final passage of a budget bill with an estimated $369bn in spending on climate and energy security over the next decade.

The House voted 220-207 to approve what will be the largest-ever domestic climate law. The measure will now head to the White House, where President Joe Biden is expected to sign it.

The measure is expected to put the US on track to reduce greenhouse gas emissions by 40pc by 2030, relative to 2005, by offering tax credits and subsidies for resources like wind and solar, energy incentives for consumers and subsidies to grow clean energy manufacturing.

The bill will offer some victories for the oil and gas sector that were sought by US senator Joe Manchin (D-West Virginia), who spent months in negotiations seeking to lower the bill's price tag and support "innovation not elimination." Democratic leaders negotiated the bill with razor-thin majorities, including a 50-50 split in the US Senate, with hopes that its investments in energy and an anticipated $300bn in deficit reduction will address climate change and help ease inflation.

Democrats now can claim a legislative win on climate before the midterm elections in November, after months of negative headlines from high gasoline prices and the risks of a recession. But Republicans say the surge in spending, paid for by higher taxes, will add headwinds to the economy.

"All these taxes will hurt the economy, drive inflation further and harm workers' paychecks," House Ways and Means Committee ranking member Kevin Brady (R-Texas) said in floor debate.

The infusion of tax credits and spending in the bill could cause "growing pains" in the energy sector and higher service costs by adding to competition for limited supplies and labor, consultancy Rystad Energy said today.

Over the long term, the bill is expected to cut US consumption of petroleum products by 13pc and its use of natural gas by 9pc by 2030, compared with existing policy, according to a model by the Repeat Project at Princeton University.

The bill will extend through 2024 expiring federal tax credits worth about $70bn that benefit wind, solar, biofuels and other energy sources. From 2025-2031, it will switch to a technology-neutral approach with nearly $65bn for clean electricity and biofuels. The bill will also offer $30bn in new tax credits for existing nuclear plants, about $13bn for clean hydrogen and $3bn to expand carbon capture credits to up to $85/metric tonne (t).

Democrats structured the tax credits to be more lucrative if companies build up supply chains and manufacturing in the US. The requirements mean some tax credits — such as up to $7,500 for new electric vehicles — will not be available widely until industry adapts. The electric vehicle tax credit has drawn concerns from the EU, which last week said the tax credit violates rules at the World Trade Organization.

The victories for the oil sector in the bill include the revival of a $192mn offshore lease sale that was held up in court, along with a mandate for more lease sales in the future. Manchin also won assurances from top Democratic to advance a bill in the coming months to expedite energy infrastructure permitting, including for the long-delayed $6.6bn Mountain Valley natural gas pipeline.

Even so, the oil industry said it opposed the bill because of its new 15pc minimum tax on large corporations, higher royalties on new oil and gas leases, and a first-time fee on excess methane emissions starting at $900/t in 2024. The budget also imposes a 16.4¢/bl excise tax on crude and petroleum products that will pay for the cleanup of hazardous waste sites.

The budget bill "falls short" in addressing US energy needs by increasing taxes and imposing higher royalties, American Petroleum Institute president Mike Sommers said. Sommers said he was encouraged the bill would open the door to leasing and expand support for carbon capture.

Environmentalists have mostly rallied behind the bill, despite concerns that it would lock in more oil and gas leasing, as the single largest step the US can take to move closer to Biden's goal to cut its greenhouse gas emissions in half by 2030 relative to 2005. The bill offers a "fighting chance of avoiding devastating levels of warming," Union of Concerned Scientists president Chao Kreilick said.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
28/03/24

Long-term contracts needed to stabilise gas prices: MET

Long-term contracts needed to stabilise gas prices: MET

London, 28 March (Argus) — Germany and Europe need more LNG and business-to-business long-term contracts to even out supply shocks and stabilise gas prices, even as demand is unlikely to reach historical heights again, chief executive of Swiss trading firm MET's German subsidiary Joerg Selbach-Roentgen told Argus . Long-term LNG contracts have a "stabilising effect" on prices when "all market participants know there is enough coming", Selbach-Roentgen said. He is not satisfied with the amount of long-term LNG supply contracted into Germany, arguing that stabilisation remains important even now that the market has "cooled down" after the price shocks of 2022. Long-term contracts are important for the standing of German industry, Selbach-Roentgen said — not to be reliant on spot cargoes is a matter of global competitiveness for the industrial gas market, he said. The chief executive called for more long-term contracts in other areas as well, such as for industrial offtakers, either fixed price or index-driven. Since long-term LNG contracts are concluded between wholesalers and producers, the latter need long-term planning security for their projects, which usually leads to terms of about 20 years. But long-term LNG contracts in general do not represent a major risk for MET nor for industrial offtakers in Europe, Selbach-Roentgen said. LNG is a more flexibly-structured "solution" to expected demand drops in regard to the energy transition as the tail end can be shipped to companies on other continents such as Asia if European demand wanes, he said. Gas demand is not likely to recover to "historical heights" again, mostly driven by industrials "jumping ship", Selbach-Roentgen said. When talking to large industrial companies, the discussion is often about the option that they might divert investments away from the German market as the price environment is "not attractive enough" for them any longer in terms of planning security, the chief executive said. This trend started out of necessity in reaction to the price spikes but may now be connected to longer-term "strategic" considerations, he said. In addition, industrial decarbonisation — as well as industrial offtakers' risk aversion because of the volatile gas market following Russian gas supply curtailments — leads companies to invest less into longer-term gas dependencies in Germany, Selbach-Roentgen said. In addition, MET advocates for a green gas blending obligation of 1-2pc green gas or hydrogen, in line with legislative drafts under discussion by the German government. This has already met with interest by offtakers, despite uncertainties around availability and prices, and would provide a regulatory framework that allows firms to prepare for the energy transition, Selbach-Roentgen said. By Till Stehr and Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

Stalling climate finance an energy security risk : WRI


28/03/24
News
28/03/24

Stalling climate finance an energy security risk : WRI

London, 28 March (Argus) — The "best bet" to achieving global energy security is through mitigation funding and multilateral cooperation, according to the World Resources Institute (WRI). WRI highlighted that governments are funding more domestic renewable energy projects but have increased oil and gas production in the name of "energy security" at home in the years following the Russia's invasion of Ukraine. The recent rebrand of energy transition funding to energy security funding has allowed some developed nations to justify domestic oil and gas licences and drag their feet on multilateral financial commitments. This is causing "real worry" among climate-vulnerable developing nations, WRI chief executive Ani Dasgupta said. He said that although the initial "shock" to the world's energy markets after the invasion of Ukraine "quickly went away", it has triggered "real worry among poorer countries that when push comes to shove, it won't be an even game, or have a fair outcome." Developing countries have long complained about the lack of access to climate funding. Richer nations have only recently met the $100bn/yr target in climate finance to developing countries agreed in 2009, while discussions on setting a new climate finance goal for 2025 at Cop 29 in Baku in November could prove difficult. President of the Republic of Congo (Brazzaville) Denis Sassou-Nguesso said last year that the $100bn/yr in climate financing to developing countries promised by rich countries "never reached us", adding that the annual UN Cop climate conferences have become little more than a talking shop. "Just after the invasion of Ukraine, every country started to think about energy security," Dasgupta said. "In theory, good things could have happened, countries could have concluded that their best bet to getting energy security is by going renewable". But it was not the case in key consumer countries or regions, Dasgupta pointed out. China bought the majority of Russian gas following the EU's withdrawal, he said, and has since upped production at coal-fired power stations despite an "extraordinary" acceleration towards renewables set for 2023-28, according to Paris-based energy watchdog IEA . In Europe, the UK and Norway continue to award new oil and gas licences . "In the US, the fossil fuel lobby argues that the best route to energy security is to invest more in fossil fuels". But the best route is to invest in more renewables, he said. "Even if the US produces a large amount of oil and gas, it is still a traded commodity, and so you have to pay a price for it that is set globally." The US special presidential co-ordinator for energy security Amos Hochstein has also suggested in September that a widening climate finance gap could ultimately threaten global security. "We have seen the percentage of dollars spent on the energy transition outside the OECD, in developing and middle income countries actually go down instead of up…" By Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

ACT to partner with LR, Wartsila, and UECC on CNSL


28/03/24
News
28/03/24

ACT to partner with LR, Wartsila, and UECC on CNSL

London, 28 March (Argus) — Dutch supplier ACT Group is collaborating with classification society Lloyd's Register, Finnish engine manufacturer Wartsila, and Norwegian shipping firm United European Car Carriers (UECC) on the development and evaluation of cashew nut shell liquid (CNSL) as a biofuel in marine biodiesel blends. ACT confirmed the launch of a CNSL-based biofuel called "FSI.100", which has gone through extensive engine testing with various blend combinations. The CNSL-based biofuel has now received approval from engine manufactures to be blended as a 30pc component with marine gasoil (MGO) to form a marine biodiesel blend for the purpose of further sea trials. ACT confirmed that the FSI.100 product will benefit from lower acidity, and there is potential for the product to be compatible for blending with fuel oil. CNSL is an advanced biodiesel feedstock, making it a more appealing and price competitive option to buyers compared with other biodiesel feedstocks. The development follows a report by Lloyd's Register fuel oil bunkering analysis and advisory service (FOBAS) that pointed to a correlation between engine fuel pump and injector-related damage in vessels and the presence of "unestablished" CNSL in the utilised marine fuels. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia to delay mandatory climate reporting to 2025


28/03/24
News
28/03/24

Australia to delay mandatory climate reporting to 2025

Sydney, 28 March (Argus) — Australia's biggest companies will likely face mandatory climate reporting from 1 January 2025, six months later than originally planned, according to a bill the Australian federal government introduced in parliament. Under the revised proposal, the country's largest companies and financial institutions will need to start disclosing their climate-related risks and opportunities, including scope 1 and 2 greenhouse gas (GHG) emissions, within their annual sustainability reports from 1 January 2025 instead of 1 July as previously intended . Scope 3 emissions disclosure will continue to be required from the second year of reporting. Companies will be arranged in three groups, with group 1 entities including companies meeting at least two of three criteria: more than A$500mn ($324mn) of annual revenues, over A$1bn of gross assets, 500 or more employees. Group 2 companies will have lower thresholds — above A$200mn of revenues, $500mn of assets and 250 employees — and will start reporting from the financial year starting on 1 July 2026. Reporting for group 3 entities — those with more than A$50mn of revenues, $25mn of assets and 100 employees — will begin from 1 July 2027. The 1 January 2025 start date might be pushed further to 1 July 2025, if the bill does not become law before 2 December. It will now be debated in parliament and needs to pass both houses, the Senate and the House of Representatives, before receiving royal assent. Its approval will support more investment in renewable energy as well as help companies and investors manage climate risks, the government said. Companies are currently not required to report their scope 3 emissions under Australia's National Greenhouse and Energy Reporting Act, which is used to measure and report GHG emissions and energy production and consumption. Scope 3 can include emissions within supply chains that occur inside or outside Australia, such as emissions from the combustion of Australian coal or LNG exported to other countries. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan’s Renova starts Miyagi biomass power plant


28/03/24
News
28/03/24

Japan’s Renova starts Miyagi biomass power plant

Tokyo, 28 March (Argus) — Japanese renewable power developer Renova started commercial operations today at its 75MW Ishinomaki Hibarino biomass-fired power plant in northeast Japan's Miyagi prefecture. The power plant is designed to consume an undisclosed volume of wood pellets and palm kernel shells (PKS) to generate around 530 GWh/yr of electricity. Renova originally targeted to start up the power plant in May 2023 but postponed the start-up multiple times. Renova has been forced to delay the start-up schedules at several of its power plants. It previously targeted to begin commercial operations of the 75MW Omaezaki biomass power plant this month but postponed it to July, as the final adjustment of boiler and turbine units is taking longer than expected. It delayed the launch of the 74.8MW Tokushima Tsuda biomass power plant in September before it began commercial operations in December 2023 . Japan imported 1mn t of wood pellets during January-February, up by 14pc from the same period in 2023, according to the finance ministry. PKS purchases fell by 24pc to 466,186t. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more