Go Back
photo author

Michael Davies

Founder & Data Scientist Green Econometrics
Subscribe

Pipeline Operators Say They’ll Make Clean Energy Investments if the Government Continues Offering Tax Credits

Nothing sparks action like a bit of skin in the game. ‘Show me the money’ is a phrase that pays, and in the ESG world, tax credits are a great way to generate clean energy investments. 2022’s Inflation Reduction Act (IRA) expands tax credits for industrial projects that capture, reuse or permanently store carbon dioxide. Federal funding is, of course, attractive support to major players in the energy industry whose business models are built on fossil fuel energy exporting. Legislation like the IRA is sure to bolster clean energy investments, which were already on a record pace in 2022 when decarbonizing energy investments topped $1.1 trillion.

Energy pipeline operator Kinder Morgan didn’t need an invitation to the dance to recognize the upside of the IRA’s expanded tax credits. The company recently made public calls acknowledging the importance of federal funding, and specifically tax credits, as a “key policy tool for promoting investment in clean energy projects.” In addition, Kinder Morgan executives urge more municipalities and states to adopt tax credits to encourage citizens to invest in clean energy projects.

The IRA is doing just that. Under the Act, credits for carbon sequestration projects increased from $50 per ton to $85 per ton, which will help speed the development targets for CCS projects tied to these credits. The law also provides $60 per ton for carbon used for enhanced oil recovery, used in Kinder Morgan’s oil business.

Michael Davies, an energy industry analyst and economist with Green Econometrics, believes the timing couldn’t be more spot-on for policy that encourages (and funds) clean energy investments.

Michael’s Thoughts

“We have an issue in this country with rising energy prices, scarcity of resources, and continued interest in carbon reduction.

The ESG focused on the environmental and social governance led by investors to provide a roadmap to net zero carbon has particular interest in the environmental side. We have three key pillars here, people, the planet, and profits, that we have to have in unison. With tax credits going into investments in clean and renewable energy, money helps facilitate this type of an action. And you know, Kinder Morgan coming out, one of the largest infrastructure players in energy, helping to call out the need for more of this investment is crucial because it shows that the fossil fuel side of the business, which is going to be here for a continuous period as we transition to cleaner and acceptable fuels, it does not need to be disrupted. We need that to keep energy prices at least stable.

Energy prices are exacerbated by the war in Ukraine and reduced production from OPEC-led nations. And this term is causing us to feel some pain at the pump when it comes to any disruption in supply. Therefore, we need to balance investment into clean energy while providing resilience in the use of fossil fuels in the current time being. That is to help, you know, keep our lights on. Electric energy, predominantly produced by fossil fuels, will be required, particularly as we transition to electric vehicles.

We have increasing demand from data centers and cloud computing for the use of electricity, and therefore it’s imperative to keep the supply channels open. And this is all predicated on the ability for a stable, healthy environment, so using tax credits to help investment into clean and renewable energies is probably the way to go.”

Fields with ( * ) are required

To submit a comment, please provide your name and email or sign in at MarketScale.com

200

Recent Posts

Nuclear Energy Will Need to Play a “Considerable Role” In Decarbonization to Make Up For Wind & Solar’s Deficiencies Nuclear Energy Will Need to Play a “Considerable Role” In Decarbonization to Make Up For Wind & Solar’s Deficiencies Articles - May 11, 2023

As our world becomes more digitally interconnected, the demand for electricity continues to surge, fueled by sectors as diverse as electric vehicles, data centers, and artificial intelligence. The increasing need for a reliable and renewable energy source is a pressing matter, and nuclear energy is stepping up as a formidable contender, despite its historical controversies.

Denver and Hertz: Why a New Public-Private Partnerships Can Expand the Growth of EVs Denver and Hertz: Why a New Public-Private Partnerships Can Expand the Growth of EVs Articles - Jan 26, 2023

EVs, or electric vehicles, are just as common today as gas-powered vehicles. But the benefits of EVs have skyrocketed the use of them in every aspect of the auto industry, and these advantages are responsible for their expanding growth.

Importance of Renewable Energy Gets a Bump Heading Into 2023 According to The International Energy Agency Importance of Renewable Energy Gets a Bump Heading Into 2023 According to The International Energy Agency Articles - Dec 15, 2022

The International Energy Agency increased their renewable energy forecast for 2023 by 30% as we head into the new year.According to IEA, "This massive expected increase is 30% higher than the amount of growth that was forecast just a year ago, highlighting how quickly governments have thrown additional policy weight behind renewables".

Register to MarketScale.com for Michael Davies episodes, events, and more.


Already have an account?