Exxon Mobil Corp. is lobbying the Biden administration to allow hydrogen made from natural gas to qualify for some of the most lucrative subsidies available in the President Joe Biden’s signature climate law, pushing for billions of dollars in tax credits intended to help phase out fossil fuels.
The company is targeting “key decision makers” in Washington including Democratic lawmakers, US Treasury Department officials and think tanks, according to an internal memo seen by Bloomberg. Exxon is stepping up efforts to ensure that what it dubs as low-carbon natural gas is “properly recognized“ by the Biden administration, the memo said.
Exxon Chief Executive Officer Darren Woods met last week with White House senior clean energy adviser John Podesta to make the case himself, according to people familiar with the matter.
While the subsidies are intended to promote an alternative to fossil fuels, Exxon argues it can produce hydrogen from natural gas without releasing significant amounts of carbon dioxide. The company says the result is a fuel that’s as safe for the climate as hydrogen that’s made from water and renewable energy and, hence, should qualify for the law’s top tax credit.
If Exxon’s efforts are successful, it will likely open the door for fossil-fuel companies to win billions of dollars in subsidies and become dominant players in hydrogen, which some analysts say is crucial for decarbonizing heavy industries, trucking and other sectors. That worries environmentalists who are skeptical hydrogen from natural gas can ever be emission-free and say promoting it will ultimately spur more fossil-fuel production, undermining the tax credit’s original goals.
“We are going to end up spewing billions of dollars of subsidies to extremely carbon-polluting projects,” said Rachel Fakhry, a policy director at the Natural Resources Defense Council.
Matt Furman, Exxon’s vice president of public and government affairs, said in an interview that the company is confident it can make hydrogen clean enough to qualify for the top-tier subsidy, saying its findings are backed by government officials who ran the modeling.
“Their view is the model would say that hydrogen we can produce has lower carbon emissions and therefore would qualify for a higher tax incentive,” Furman said.
A Treasury Department spokeswoman said the agency is “focused on ensuring this incentive advances the goals of increasing energy security and combatting climate change.” An administration official said Podesta’s meeting with Woods is evidence the White House is willing to meet with all stakeholders.
If Exxon wins the approval, the company would be getting tax credits intended to help fight climate change after coming under criticism for sowing doubt about the climate crisis. The company is also among those named in California’s landmark lawsuit accusing Big Oil of deceiving the public about climate change. Exxon has consistently rejected the assertion that it downplayed climate risks.
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