Saving the planet can make Big Oil richer
Energy secretary is optimistic about clean energy.
Two things seem to have really stood out to U.S. Energy Secretary Jennifer Granholm when she visited Houston recently for CERAWeek. One: Memorial Park, with its running trails and singing bullfrogs. Two: Big Oil executives who seemed pleasantly surprised when she explained that the clean energy incentives included in the Inflation Reduction Act are stackable.
For a wind or solar project that’s in a disadvantaged area, uses domestic content and apprenticeships for installation, she said a company could qualify for up to a 70 percent tax credit.
And is she finding that companies are receptive to those carrots?
“I’m finding that they’re not aware of it,” she responded.
She told the editorial board when she visited last week that she used her time in Houston, in part, to inform industry about such programs that can make saving the planet a lucrative investment.
“The incentives for clean energy are irresistible,” she told us. “And for a company, any company, that is looking at their bottom line as a profitable business to not take advantage of this moment? You know, their shareholders might raise their eyebrows and say ‘why aren’t we?’ ”
We hope she’s right.
Big Oil is already going after federal incentives for technologies that reduce greenhouse gas emissions without eliminating fossil fuels. Three proposals from Texas, including two from Houston, have been selected by the Department of Energy to compete for part of the $7 billion available for developing clean hydrogen, including the kind made using natural gas and carbon sequestration. Granholm kept tight-lipped about the fate of those proposals saying the process is “hermetically sealed” and based on expert review, not political influence.
Exxon has announced carbon capture projects in Texas and Louisiana that will benefit from federal subsidies. In his meeting with us, Chevron CEO Mike Wirth acknowledged that Inflation Reduction Act subsidies are central to the economics behind their planned carbon capture plant in East Texas, though he said a final investment decision depends on an accelerated permitting process for deep injection wells.
Complaints about permitting were a refrain at CERAWeek. ConocoPhillips CEO Ryan Lance said it is “procedurally impossible” to fully take advantage of federal subsidies for clean energy because of how long it takes to permit projects.
Granholm said that passing the permitting reform proposed by Sen. Joe Manchin is key to moving both fossil fuel and alternative energy projects forward, and that President Joe Biden remains supportive of getting that done. She stressed that “you can permit something in a much shorter period of time, and still consistently support the goals of protecting the environment.”
Outside of CERAWeek, however, environmental protesters were criticizing permits for liquefied natural gas export facilities, arguing that they contribute to climate change, raise the domestic price of fuel, jeopardize fence-line communities and may end up supplying U.S. adversaries with energy.
Granholm argues that “the world is in a war environment” and the U.S. needs to help allies by exporting oil and gas. “It’s difficult to imagine a successful transition to clean without first addressing energy security,” she said, “because there will be a backlash if people can’t turn on the lights and they blame it on a transition that happens before there’s enough energy to make that transition successful.” She also held up the Biden administration’s efforts to work with industry to reduce methane leaks and, through the Justice40 Initiative, to make sure fenceline communities are the first to benefit from the economic opportunities of the transition.
Corporations aren’t the only beneficiaries. The incentives for average consumers are generous, too, particularly for low-income families that can have weatherization, solar panels installed and a number of other earth-friendly upgrades “without paying a dime,” Granholm said. A 30 percent tax credit is available to homeowners, no matter their income, for solar panels on their roofs. Up to $3,200 in credits are available for heat pumps.
What keeps Granholm up at night? Her answer may seem abstract to many Americans but for Texans who experienced Winter Storm Uri and are afraid of another grid failure, it’s visceral. She wants to make sure we have “ample, clean, dispatchable” power. That means nuclear reactors large and small, utility-scale batteries, hydroelectric technology that harnesses waves, and geothermal energy that is built using the subsurface expertise of the oil and gas industry.
The discussions that the editorial board had with Granholm and other leaders attending CERAWeek revealed how dramatically the economics of energy have changed in two short years. At the state and national level, the question is not whether an energy transition is underway or whether corporations can profit by saving the planet. The questions are about how fast it can be done while keeping supplies affordable and secure.