Manchin climate deal is both a big win and a deal with the devil
Keep in mind that the scales of the current U.S. tax system are significantly tilted in favor of fossil fuel companies, which collect approximately $20 billion per year in state and federal grants. “In-kind” support for the industry – through diplomatic pressure abroad, for example – has only accelerated since Russia invaded Ukraine and the State Department redoubled its role as a global seller of US fossil fuels. And businesses don’t need much support right now. ExxonMobil and Chevron announced record profits last quarter. Just five major private US and European oil companies are expected to have raised $60 billion during this period. Much of this revenue comes from soaring prices that are driving cost-of-living crises around the world and helping to stoke fears of a global recession. Central banks are eyeing aggressive interest rate hikes to curb inflation as policymakers balk at the possibility of directly tackling high energy prices with price stabilization policies.
Fossil fuels and renewables have benefited from the “everything economy” of the past few decades, where rock-bottom interest rates and cheap credit have left investors looking for shiny new places to park their cash. excess. But while fossil fuel companies are reaping the rewards of reliable subsidies while continuing to sell the lifeblood of global capitalism, renewable energy companies in the United States are often unable to collect even the intermittent subsidies that were ostensibly theirs. available. It’s thanks to the Rube Goldberg-esque structure of existing clean energy incentives, which siphon off billions of dollars from Wall Street middlemen. Fortunately, the IRA remedy tax credits by introducing a direct payment option. Some of the largest clean energy developers in the United States remain under foreign control, such as Danish state-backed company Ørsted.
All of this leaves U.S.-based solar and wind companies in a predicament. somewhat precarious situation as rates rise and warnings circulate of a possible recession, with precious little time to regain lost ground. Fossil fuels are on a firmer footing to enter the uncertainty ahead, with plenty of cash on hand and bipartisan support to boost production. Those already talk about a great game on their commitment to a vaguely timed energy transition – such as European supermajors Shell and BP – could be the main beneficiaries of the IRA’s fossil fuel and clean energy incentives.