Both True readers know that the oil and gas industry is on a train with a one-way ticket to climate town. Our train has picked up momentum, which I have covered recently in “Your Financial Institutions” and “What in the World to Do About Scope 3?”. Unsurprisingly, now there’s more!
In this Both True, you’ll learn how new federal funding is intensifying this momentum and increasing expectations for climate action from your company. With these growing expectations come new opportunities for you — and new risks.
Both of these things are true:
- Recent federal action on climate has created a sense of inevitable climate momentum.
- Oil and gas leaders will need to chart the opportunities and risks of these changing expectations to ensure they participate fully and effectively in the decarbonization ahead.
The recently signed Inflation and Reduction Act (IRA) is a historic investment in climate and energy policy. It has been marketed as a “game changer” and a “turning point” for its $369 billion investment in climate and energy policies.
Among other things, it includes an increase in the 45Q tax credit and a new tax credit for clean hydrogen. As a result of compromises made to pass the IRA, there are ongoing negotiations on a permitting reform bill, aimed at streamlining the permitting process for several types of energy projects. (Yeah!)
Both the Bipartisan Infrastructure Law and the IRA provide funding, incentives, and other provisions aimed at accelerating the energy transition, while giving states increased authority over how that transition will look.
Seize the day
While some celebrate these achievements and others claim these bills do not go far enough, the roadmap for decarbonizing the U.S energy system is taking shape.
Game-changing leaders know that this roadmap increases expectations that their companies decarbonize their operations. Fortunately, it also creates many more opportunities to do so:
- From aspiration to action. With significant investments from the federal government to help companies participate, all eyes will be on you to take your decarbonization roadmap to the next level and show action by disclosing your next steps. I will dive further into this in my new book, out this fall — Real Decarbonization.
- Jurisdictional Jenga. States now have a huge part to play in allocating funding and approving low-carbon projects. However, the patchwork of rules in different jurisdictions, combined with upcoming regulations from the U.S. Environmental Protection Agency (EPA) and Securities and Exchange Commission (SEC), means that the rules of the road won’t be the same in every state where a company operates. You’ll need to develop your Jenga-block strategy proactively. Planning early to navigate multiple jurisdictions will help avoid a setback.
- Environmental justice. It is now expected you will have an environmental justice plan attached to your decarbonization plans. It is never too early to start thinking about your EJ engagement strategy.
- Unexpected opposition. Expect that your decarbonization projects will require as much or more stakeholder engagement as conventional investments. As I’ve covered in “Will CCS Have a Seat at the Decarbonization Table?” and “Is Hydrogen’s Promise Threatened?,” no project will get a free pass.
Today policymakers and community members expect action — and they expect to be a part of building your plans. Adamantine is helping companies craft their comprehensive decarbonization strategy by anticipating what’s next — reach out to learn more.
Thanks to Kayla Dolan for her work in creating this Both True. Was this email forwarded to you? You can subscribe here.