How the Inflation Reduction Act could impact Houston
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The Inflation Reduction Act is incentivizing energy companies to be greener, and Houston could be the center of the transition.
The big picture: Houston is the "energy capital of the world." The city's economic fate is not completely dependent on oil and gas anymore, thanks to industry diversification, but if Houston wants to keep that title and reap the economic benefits of it, it has to lean into sustainability and clean energy.
State of play: The IRA is essentially a big payday for clean energy. The $370 billion of funding represents the largest federal effort to decarbonize the U.S. economy.
- Texas' clean energy sector is expected to be one of the largest beneficiaries, receiving $66.5 billion in investment over the next eight years through an expansion of wind, solar and other sources of clean energy, according to White House estimates.
What they're saying: Many local energy companies already had interest in carbon capture, but the IRA can accelerate the work, said Amy Chronis, Deloitte's oil, gas and chemicals leader.
- "We're going through a lot of projects that were on the fence due to the economics and these enhancements could be enough to push projects forward," Chronis said.
The other side: The IRA, which imposes higher royalty rates and methane emission fines, is not helping oil and gas companies that want the status quo to remain the same, and some industry leaders fear a decline in development.
Yes, but: Many local energy companies that have a stake in the transition see the positive implications and support the IRA, the Houston Business Journal reports.
- "This is very good for our industry," Vicki Hollub, president and CEO of Occidental Petroleum, said during an investor call.
The bottom line: It will take years for Houston to see the impact. But if oil and gas companies leverage the incentives, such as carbon sequestration and hydrogen tax credits, it could help the local economy and job market long term.
Go deeper: How the Inflation Reduction Act might help the Texas power grid.