On Sunday, the Senate unanimously approved the Inflation Reduction Act, a bill to address climate change through monetary policy. The largest U.S. oil companies had reported record profits and increased share buybacks less than two weeks earlier. Since burning oil and gas accounts for a disproportionate share of the world’s greenhouse gas (GHG) emissions, one might assume that this legislation would require oil and gas producers to invest some of their record profits into mitigating GHG emissions. You’d be completely wrong to assume that.
The bill is a historic first step in the right direction because it creates financial incentives and tax credits for investments in clean energy and makes more money available to back carbon capture and storage, a strategy favored by the oil industry.
However, the bill does not mandate that oil companies take any action to reduce carbon dioxide emissions. There is no provision in the bill for producers to be held responsible for their work.
With the new law in place, oil and gas producers no longer have to worry about reducing their carbon dioxide emissions unless they want to (and they will). In fact, every year for the next decade, the Interior Department will be obligated by the bill to make available for lease millions of acres for oil and gas exploration. This is exactly how things are done, so don’t be surprised.
However, the oil industry is not enjoying the same benefits elsewhere. The Canadian government has set a limit on greenhouse gas emissions from the oil and gas industry, mandating a 42% cut from 2019 levels by 2030. Across the Atlantic, the government of the United Kingdom took a tough stance toward the excessive profits of the oil industry. A windfall profits tax on oil and gas producers in the British North Sea was passed by the House of Commons, and it is projected to bring in around $6 billion USD in tax revenues in the first year.
The United States government, meanwhile, has taken a step backward by promising to allow oil drilling in even more areas of the Gulf of Mexico and offshore Alaska. The cost of reducing emissions is transferred from oil companies’ shareholders to the general public through a tax credit for voluntary action.
The United States has not always given the oil industry the pass it currently enjoys. Fifty years ago, city dwellers began to worry about the effects of pollution from gasoline-powered vehicles. The government took swift action, mandating that oil companies begin manufacturing unleaded gasoline. As a result, the producers had to pay for both the start-up and ongoing expenses, without receiving any kind of subsidy from the government. As a result of its importance to the public’s health and safety, the production of lead-free gasoline became an unavoidable cost of doing business.
About 25 years ago, efforts to reduce pollution were expanded, and producers of gasoline and diesel were ordered to begin filtering out sulfur. The industry spent billions of dollars again to ensure they could deliver what was needed. Thanks to these expenditures, air quality has vastly improved over the past half-century, despite a tripling in vehicle miles traveled.
Just what altered itself, exactly? If oil companies were responsible for cleaning up their pollution in the past, why aren’t they today? The cynical response is, alas, the most plausible justification: Careful cultivation of relationships with government officials, regulators, and influential think tanks has allowed the oil industry to effectively silence the debate over who should be held accountable for emissions. Instead, the size of a potential tax credit to entice the industry to consider joining the fight against climate change is the only topic of discussion.
It is long past due that our government at all levels start prioritizing the safety of its citizens over the profits of oil companies. There should be consequences for corporations that fail to address the safety of their products, and the government should not be expected to foot the bill. You get the government you deserve, as the adage goes. We should have better. Make sure that we fully understand it.
Hugh Helferty, Ph.D., oversaw significant ExxonMobil research and engineering operations. Now, he serves as president and co-founder of Producer Accountability for Carbon Emissions (PACE), a non-profit organization working to combat climate change by pressuring fossil fuel producers to account for all emissions attributable to their operations.
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