The "Inflation Reduction Act," which was originally known as "The Build Back Better Act," is now expected to be passed by the House and appears to have several benefits for the American offshore industry.
"The Inflation Reduction Act's adoption by the Senate marks a turning point in America's switch to renewable energy. Liz Burdock, president and CEO of the Business Network for Offshore Wind, said that this historic legislative package "sends a message to the world that the United States is serious about bolstering supply chain resiliency, increasing American energy security, and reaching our ambitious goal of deploying 30 gigawatts of offshore wind power by 2030." The $40 billion investment made by the bill in domestic shipbuilding and manufacture of clean energy is a significant down payment that will unleash the enormous potential of offshore wind and localize a supply chain on American shores, producing thousands of well-paying jobs.
Only after a deal between Senate Majority Leader Chuck Schumer of New York and Senator Joe Manchin of West Virginia, who brought back offshore oil and gas leasing and included funds for carbon capture research, did the bill pass.
Expect more information on all of this to surface in the upcoming weeks, but Erik Milito, president of the National Ocean Industries Association, praised the agreement and issued the following statement:
"Senator Manchin and Senate Majority Leader Chuck Schumer have struck an energy and climate accord based on reality: a package that supports American production of offshore oil and natural gas while promoting zero and low carbon energy. Although we are still looking over the language, it seems to give a real way forward that will advance offshore energy of all kinds for the benefit of our country. We salute Senator Manchin's initiative on a topic with significant national and international ramifications.
“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.”
CAPTURE OF CARBON... AND MORE
According to a thorough evaluation of the Inflation Reduction Act's possible effects by Princeton University's Zero Lab, during the course of the following 10 years, capital investments in new American energy supply infrastructure would total close to $3.5 trillion (2023-2032).
By 2030, investments totaling more than $20 billion will be made in fossil fuel power generating with carbon capture as well as CO2 transport and storage.
"Annual investment in hydrogen generation (including electrolysis and methane reforming with carbon capture) grows to $3 billion annually by 2030, triples levels under current policy, and rises to nearly $50 billion by 2035," according to the study.
The greatest impact of the Act is on investments in solar and wind power, which will nearly treble to $321 billion in 2030 from $177 billion under present policies.
Perhaps sooner than we realize, hydrogen-powered ships will transport trapped carbon to depleted offshore oil and gas installations.