Friend or Foe?

This Week's Trend In Brief:

• Last week was “Energy Week” for House Republican lawmakers and amidst their focus on bills and resolutions to protect fossil fuel production and ease permitting standards were also measures to repeal key elements of President Joe Biden’s signature energy and climate law. 
   

• It was just the latest example of conservative opposition to climate spending in the Inflation Reduction Act, which could leave energy companies facing uncertainty for their project investments depending on the outcome in November. 
   

• While the U.S. House Republicans’ 2025 budget blueprint slashes those billions of dollars in climate spending, some conservative lawmakers and outside advocates argue the IRA’s clean tech investments are a conservative approach to addressing climate change and a boon to the economy. 
   

• The debate is a reminder of how industry can get caught between polarized political forces demanding either an end to all fossil fuels immediately or maximal oil and gas energy dominance, neither of which matches today’s scientific or economic reality for the industry.
   

• In the face of these legislative and campaign debates this year and beyond, companies cannot afford to wait and see how the situation plays out. Instead, energy companies and those that represent them must act early to ensure facts stay at the head of their policymaker engagement.  

Digging Deeper:

 
Last week’s House Republican “Energy Week” featured six energy-related bills and resolutions focused on securing “American energy dominance” and denouncing Biden’s environmental policies, including measures targeted the Inflation Reduction Act (IRA). Republicans voiced their opposition to “any potential tax on carbon emission,” which has garnered some bipartisan interest in the Senate, and considered legislation to repeal the greenhouse gas reduction fund and make it easier to curb legal challenges from environmental groups in an attempt to protect U.S. energy. Heading into “Energy Week,” Majority Leader Steve Scalise declared, “People know they are paying too much” because of the Biden Administration’s climate policies and announced House Republicans would “promote American energy to lower costs for families who recognize this.” Amidst their focus on bills and resolutions to protect fossil fuel production and ease permitting standards were also measures to repeal key elements of President Joe Biden’s signature energy and climate law.
 
Since its approval, Republicans have attempted to revoke billions of dollars in funding from various initiatives within the IRA. Last Summer, Republicans attempted to repeal programs in the IRA that boosted clean energy projects, clean electricity development, and electric vehicle development, with Republicans arguing the programs were “hundreds of billions of dollars in green special interest tax breaks to the wealthy and well connected.” Rep. Andy Harris (R-MD) contended it was “finally time to be responsible stewards of taxpayer dollars by rescinding these new government giveaways.” The U.S. House Republicans’ 2025 budget blueprint slashes billions in climate spending, and this proposal could gain momentum should the party reclaim both chambers of Congress and The White House this November.
 
However, some Republicans in and outside of Congress as well as industry representatives argue the IRA can unlock the energy industry rather than restrain it, and help guide energy developers to U.S. energy dominance. For example, ConservAmerica president Jeffrey Kupfer recently argued that “full, or even partial repeal of the energy provisions” in the IRA does not make sense for Congressional Republicans. Kupfer noted the legislation’s “market approach,” which Republicans have supported in the past, will “build up America’s energy security,” a goal shared by Republicans. According to Kupfer, Republicans “should focus on refining and improving the energy provisions, not on pulling them up by their roots.” Similarly, Edison Electric Institute (EEI) CEO Dan Brouillette, who served as Energy Secretary under President Trump, pledged to protect the IRA from GOP repeal attempts, arguing the law has “important programs both for the industry and economic development around the country.” His trade group estimated “the law could help boost spending on transmission by nearly $10 billion compared to last year” and has vowed to “be ‘very aggressive’ in defending ‘certain elements’ of the” IRA. The defense of the IRA comes at a time of heightened political tension as the 2024 election heats up, and it will be important for energy companies to separate candidates’ rhetoric from reality.
 
This ongoing debate is a reminder of how industry can get caught between polarized political forces demanding either an end to all fossil fuels immediately or maximal oil and gas energy dominance. On the left, professionalized climate activists who have little incentive to curtail their demands, even when the policy direction and project proposals favor their aims. On the right, energy developers are often met with skepticism about the impact renewable developments have on climate change, the environment, and the costs involved. However, the debate on the IRA and its programs reveals common ground can be found over certain policies and programs. As noted by ConservAmerica senior advisor Quill Robinson, the IRA’s purpose seems largely in line with the stated goals of both 2024 presidential candidates as it aims to “restore American manufacturing” and “reduce reliance on China,” which makes it “worthwhile to distinguish between rhetoric and actual policy proposals” from candidates.
 
In the face of these legislative and campaign debates this year and beyond, companies cannot afford to wait and see how the situation plays out but must act early to ensure facts stay at the head of their policymaker engagement. Companies hoping to advance the energy transition and those that represent them must understand this reality and devise a game plan to avoid becoming bogged down by the twin tides of progressivism and populism that insist simultaneously that they are not doing enough or have gone too far. At Delve, that game plan starts with understanding the full range of policymakers and stakeholders involved, what motivates them, how they will engage in the debate, and what sort of resources they can leverage. This in-depth risk analysis informs a monitoring program that helps clients anticipate what policymakers are likely to do next and ensure they stay three moves ahead. 
 

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.