WASHINGTON, DC – National Ocean Industries Association (NOIA) President Erik Milito issued the following statement after President Biden signed into law the Inflation Reduction Act:
“The Inflation Reduction Act puts in place a framework for continued development of U.S. offshore oil and gas, mechanisms to advance offshore wind, and incentives to spur offshore carbon sequestration innovation. No legislation is perfect, but the IRA’s offshore energy provisions will enable continued investment in US energy projects by an industry that is already solving, scaling, and deploying low carbon energy solutions. We applaud the leadership of Senator Manchin and his team for shepherding this legislation from concept through enactment. We hope Congress can build on this by passing a bipartisan, common-sense package of permitting reforms to fully realize our energy potential. NOIA stands ready to work to deliver on those efforts as well.”
The Inflation Reduction Act includes several NOIA priorities that would strengthen the outlook for the American offshore energy industry, including:
Offshore oil and gas:
- Lease Sale 257 is reinstated and high bidders must get their lease;
- A new royalty minimum offshore of 16.66%, with a maximum of 18.75%; and
- Lease sales 258, 259, and 261 must be held. Lease Sale 258 would occur no later than December 31, 2022, Lease Sale 259 would occur by March 31, 2023, and Lease Sale 261 by September 30, 2023.
- The offshore wind leasing moratorium in the Southeastern US and Eastern Gulf of Mexico is lifted;
- There is an increase in staffing money for BOEM and NOAA;
- Extension of Production Tax Credits (PTC) for offshore wind;
- New tax credits for offshore wind vessels; and
- OCSLA is amended to allow for wind lease sales offshore US territories.
Carbon capture and storage:
- Increases the federal 45Q tax credit to $85/ton if wage/apprenticeship requirements are met and construction commences before January 1, 2033; and
- Direct pay is available for the first five years after the project is placed in service. There is no direct pay for final seven years except for nonprofits and co-ops, which can receive all 12 years.
Offshore lease sales—offshore wind and offshore oil and gas:
- In order to issue an offshore wind lease, an oil and gas sale of 60 million acres (roughly an area-wide Gulf of Mexico lease sale) must have been held in the prior year. This tie-in runs for 10 years.