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Revolving Tax Credits, ‘Environmental Justice’ Grants Included in $369 Billion Inflation Reduction Act

Extension of renewable energy tax credits, “environmental justice” block grants, and electricity deductions fill the “Building Back Better” energy section of the US Senate.

The original $2.2 trillion bill faltered when Senator Joe Manchin (D-Va) refused to provide his support, leaving it without votes to pass by a simple majority. But last week, Manchin announced a new deal Scheme The bill includes $370 billion under the “energy and climate” umbrella.

Senate Majority Leader Chuck Schumer (D-NY) expects a vote this week, after which the two houses will have to reconcile on the convention committee. The bill is part of the budget reconciliation process, and its language will be replaced by what the House passed last November.

The broader sticking point in the previous edition of Mansion was the heavy-duty energy division, which specifically benefited renewable energy companies at a significant expense of coal — a huge Mansion industry. Despite the administration’s commitment to the benefits of “cleaner” energy sources, a position at odds with the coal industry, Manchin retracted his opposition and threw his support behind this newer version.

The Biden administration’s goal in this department is to reduce the country’s emissions by 40 percent compared to 2005 levels — driven in large part by the power of natural gas. Replace Coal, the United States already 20 percent less Those levels for 2005 – and zero emissions status by 2050.

To achieve their goal that is already halfway to completion before any bill is passed, Biden and the Democratic Congress aim to “decarbonize the economy” through a combination of subsidies in the form of credits or tax grants, and incentivize strategies considered “cleaner” by the administration and its allies. .

Among the items with particularly prevalent implications for Texas is the renewal of the $30 billion production tax credit for 10 years — a federal subsidy that pays wind and solar generators between $18 and $24 for every megawatt-hour generated.

In 2019, electricity generated by wind averaged about $26. With no fuel cost, the wind generator tax credit allows electricity to be produced at close to $0 or negative prices. Opponents of relying on renewable energy object to the tax credit “distortion” of the Texas electricity market, which has alienated the development of thermal generation.

And due to flow From the new generation of renewables in Texas, the state’s electricity grid is becoming increasingly reliant on intermittent power sources. This is a problem due to the tendency of winds to fall during times of peak demand.

The bill also provides for an advanced nuclear production tax credit, at $30 for every megawatt-hour produced.

The $30 billion comes in addition to a $10 billion extension of the investment tax credit that supports capital expenditures for renewable energy generators.

An additional amount of money is available for renewable generators that supply electricity to “low-income and minorities” under the bill’s “environmental justice” program.

$60 billion higher will be allocated to companies involved in manufacturing renewable energy infrastructure.

Another portion of the money will go toward electric vehicle tax credits, providing a $7,500 tax credit for those who buy a new electric vehicle and $4,000 for used purchases. Texas Department of Transportation Estimates One million electric cars will be on the road by 2028.

The proposed legislation also allocates $1.5 billion to oil and gas companies that reduce their methane emissions and sets fees for companies that do not meet the department’s reduction criteria.

Environmental Protection Agency last year Designation To methane emissions law penalizing operators.

Oil and gas companies have already taken steps to reduce their methane production, with burn intensity — a measure of how much methane is burned per barrel of oil produced — decrease by 64 percent from 2011 to 2018. In Texas, they also tried to outpace the power of public relations by creating Texas Methane and Burning Alliance. According to the coalition, the intensity of burning decreased by only 67% from June 2019 to June 2020.

Part of this statistic is that oil and gas production has fallen dramatically due to pandemic travel, but even before that, notable reductions were already in place.

One of the concessions Biden offered to Mansion was reopening drilling leases on federal land, which he did Stop On his first day in office, but he has been suspended in court ever since, specifically in the Gulf of Mexico and Alaska.

Regarding drilling in the Gulf, there is a clause in the bill that prohibits approval of offshore wind generation unless accompanied by a recent drilling lease. This sentence lasts 10 years.

Another $27 billion will be allocated to support the development of emissions-reduction technologies such as carbon capture, a process by which emitted carbon dioxide is recovered and reused.

Given Texas’ prolific energy industry – its dominant oil and gas industry and a thriving renewable footprint – a federal bill full of subsidies and rules will dramatically affect the direction of the state’s energy sector.

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