Why Is the Fossil Fuel Industry Praising the Inflation Reduction Act?

An unlikely star emerged this week at CERAWeek by S&P Global, the giant annual gathering of oil and gas executives in Houston: the Inflation Reduction Act. It’s the Biden administration’s pride and joy, the biggest piece of climate legislation ever passed in the United States. And believe it or not, fossil fuel CEOs see a lot to like about it.

Oil and gas executives on stage this week approvingly called the IRA a “game-changer” and “framework for capital for years.” The IRA does contain some money to be dispensed to drillers. But the industry’s celebration of the IRA seems to be more about what this piece of legislation, passed only via painful compromise, symbolizes: the end—for now—of the potential for the U.S. to pass climate policy that will penalize the fossil fuel industry.

It’s been alarming, in the past few days, to see the only climate policy Congress will pass for the forseeable future get a stamp of approval from the planet’s biggest polluters. BP America head David Lawler called the IRA “a key enabler for starting the transition.” On Tuesday, ExxonMobil CEO Darren Woods praised it as a model for what climate policy should look like—and chided Europe for daring to tax him a little more instead. For Woods and others, the “carrots” furnished by the IRA are preferable to the unacceptable “sticks” being deployed in Europe, i.e., modest taxes on windfall profits.

Woods’s company had a hand in shaping what the IRA ended up looking like. Reporting by the Greenpeace investigative outlet Unearthed revealed that Exxon lobbyists were in frequent touch with members of Congress as the IRA’s predecessors limped through the Capitol. Exxon lobbyist Keith McCoy claimed to have spoken weekly to West Virginia Joe Manchin—who incidentally addressed CERAWeek on Friday. (He also attended CERAWeek last year, when he notably referred to a roomful of oil and gas execs as “we,” seeming to count himself among them.) Manchin witholding his swing vote until the act was watered down was a key reason why the IRA appeals to Woods and his fellow executives, lacking even the dull teeth—like a program shifting utilities away from fossil fuels—included in earlier iterations of Build Back Better.