Oil giants reportedly support some provisions of the IRA: Don't abandon low-carbon investments!
According to people familiar with the matter, oil giants Exxon Mobil (XOM.US), Phillips 66 (PSX.US) and Occidental Petroleum (OXY.US) do not want Donald Trump and his allies to cut provisions in President Joe Biden's Inflation Reduction Act (IRA) that are favorable to the oil industry. The companies appreciate some of the benefits of the IRA, especially incentives for low-carbon energy projects that often require significant investments.
Exxon Mobil, Phillips 66 and Occidental Petroleum, among other oil giants, appreciate some of the benefits of the IRA, especially incentives for low-carbon energy projects. These projects often require significant investments, and the tax credits in the IRA help these companies invest in technologies such as carbon capture and hydrogen.
Occidental Petroleum CEO Vicki Hollub told Trump at a fundraising event in May that the tax credits in the IRA helped the company invest in carbon capture technology.
Exxon Mobil has committed to invest $15 billion to cut carbon emissions through new investments and told the Trump team that it wants to keep some of the assets in the IRA.
Phillips 66 executives also told Trump's allies in Congress that the tax credits in the law were important for their business.
Oil lobby groups may welcome the cancellation of some aspects of the IRA, especially tax credits for renewable energy and electric vehicles.
However, Trump has not explicitly said which funds he will cut and which savings he will make. Although he has been critical of electric vehicle charging infrastructure and tax credits for electric vehicles, and has promised to rescind any unused appropriations before a possible return to the White House and "immediately pause" new spending and appropriations.
Meanwhile, the cost of carbon capture and the production of sustainable aviation fuels are both very high, and the production scale of these technologies is far from enough to lower the cost. Transition investments are large and risky, so even oil giants prefer to share the risk with the government that is driving the transition. However, once completed, these investments cannot be easily withdrawn to prevent the White House from welcoming a new president who opposes the transition.
In summary, despite Trump's promise to rescind any unused appropriations before a possible return to the White House and "immediately pause" new spending and appropriations, oil giants still support at least some parts of the IRA and have good reasons to do so. Their challenge is to ensure that their investments in low-carbon technologies and sustainability are protected and supported in the face of possible changes in government policy.