By Myles McCormick, Justin Jacobs and Amanda Chu
Welcome back to Energy Source.
Britain’s BP this week became the latest supermajor to report a banner set of earnings. On Tuesday the company unveiled its highest annual profits since 2013.
That prompted fresh calls for a windfall tax on energy companies reaping the rewards of high oil and gas prices. But BP boss Bernard Looney hit back, insisting such a move would eat into funds earmarked for low-carbon projects. “I don’t think a windfall tax is going to incentivise people to invest in the thing that we need right now,” he told the Financial Times.
Another fossil fuel group expected to post solid earnings is Peabody, the world’s biggest coal producer, which reports this morning. The coal industry has benefited from a resurgence in demand despite global efforts to shift away from the dirtiest energy source. Check out ft.com for details.
On to today’s newsletter: US petrol prices have surged to fresh highs in recent weeks — adding to Joe Biden’s inflationary woes. But after unleashing strategic reserves on to the market in November, the president’s further options to tame prices are limited. Justin Jacobs reports on the (lack of) levers at the administration’s disposal.
And we round up the latest on the situation in Ukraine, with Japan pledging to divert supplies of liquefied natural gas to Europe to ease the continent’s fears of an energy crisis.
Data Drill charts the potential impact of Biden’s push for a raft of new clean energy tax credits, which a new report finds would be one of the most cost-effective ways to slash US emissions.
As ever, thanks for reading.
Clean electricity tax credits are one of the least expensive ways to reduce emissions, says a new report from Rhodium Group and the Energy Policy Institute at the University of Chicago.
The report found that the benefits of the clean energy tax credits in the Build Back Better legislation, which is currently stalled in the US Senate, would exceed costs by as much as $1.5tn.
Compared with existing climate policies, BBB’s tax incentives are less expensive and cover the entire electricity sector while existing policies only cover small parts of the economy. They would reduce carbon emissions at a cost of $33-$50 per ton, according to the report.
The legislation could slash power sector emissions by 13-22 per cent by 2050. The power sector is the second-largest source of emissions, making up 25 per cent of US greenhouse gas emissions, according to the EPA. (Amanda Chu)