Houston energy executives react positively to Inflation Reduction Act

The jury’s still out on whether the Inflation Reduction Act will live up to its name. But energy executives agree that the Democrats’ legislation, signed by President Joe Biden on Aug. 16, can transform the U.S. energy industry and move the country closer to decarbonizing. The Houston Business Journal gathered comments from executives in the Houston metro region — from clean energy pioneers to traditional oil and gas stalwarts — to learn more about how the IRA could impact their companies. In addition to major corporate tax reform provisions, the bill includes policies aimed at a wide array of energy technologies, including carbon capture, renewable fuels and green energy.

The IRA’s proponents said they think the bill will lower energy costs for Americans at the pump and at home, spur more domestic manufacturing of clean energy tech, and decarbonize sectors like power generation, transportation, buildings and agriculture. Detractors say it will increase inflation and reduce the country’s energy independence. Regardless, its $370 billion injection of funding represents the largest federal effort to decarbonize the U.S. economy. “The Inflation Reduction Act represents the largest U.S. climate-related investment in history,” said Greg Matlock, a Houston-based partner at Ernst & Young LLP. “It’s likely to usher in historic levels of investments across renewable energy and energy transition technologies and infrastructure.” Many Houston-area companies that responded to the HBJ are investing in carbon capture, utilization and storage to offset their greenhouse gas emissions, so increased tax credits for carbon sequestration were welcomed by oil and gas players. They’re also excited about hydrogen tax credits, which could play into Houston’s ambitions to be “the epicenter of a global clean hydrogen hub.” The extension of tax incentives for developing more wind and solar power generation, as well as more battery energy storage, should continue to propel the momentum of clean energy projects across the U.S. Oil and gas producers might feel a pinch from higher royalty rates on federal leases. But as Occidental Petroleum Corp. (NYSE: OXY) continues to pursue fossil fuels production and an ambitious new direct air capture business, CEO Vicki Hollub said the bill’s net effect on her company is positive. “This is very good for our industry,” Hollub said during a call with investors Aug. 3. “Lots of companies will benefit from this. It will provide jobs, and it will help the country meet the goals that the president has set out for emission reduction.”