The Biden Administration has released a broad outline of its infrastructure plan, which could cost more than $2 trillion. Within the plan are provisions affecting the energy industry as a whole and the energy services and technology sector specifically, including:
- $50 billion investment in the National Science Foundation with a focus on semi-conductors and advanced energy technologies
- $35 billion investment in technology breakthroughs addressing climate change. This includes $15 billion in demonstration projects for climate research and development priorities, including utility-scale energy storage, carbon capture and storage, hydrogen, advanced nuclear, rare earth element separation, floating offshore wind, biofuel/bioproducts, quantum computing and electric vehicles.
- $30 billion in additional funding for research and development that spurs innovation and job creation
- $16 billion to plug abandoned oil and gas wells and reclaim mines
- Investments in decarbonization through 10 facilities that capture carbon for large steel, cement and chemical production facilities
- Support for large-scale sequestration efforts
- Reforming and expanding the Section 45Q tax credit
How is the Bill Funded?
The Biden Administration says the plan includes upfront investments totaling about $2.3 trillion over eight years. The tax components pay for the outlay over a 15-year period.
Several tax provisions would directly affect Council Member Companies such as:
- Raising the corporate rate to 28%
- Increasing the global intangible low-taxed income to 21%
- Eliminating foreign derived intangible income
- Eliminating “fossil fuel subsidies”
- Penalizing companies that move operations out of the country
The Council will host roundtables and information sessions on how the tax changes could affect the energy technology and services sector. We’re urging the administration and Congress to consider ways to pay for infrastructure other than tax hikes.
How Would the Plan Be Enacted?
President Biden’s proposal is not intended to be final and needs to go through Congress. While Republicans are interested in infrastructure, paying for it through increased taxes is a nonstarter for many. Some Democrats have indicated the plan does not go far enough. Sen. Joe Manchin (D-WV) has said he thinks the proposed 28% corporate tax rate is too high and has targeted 25%. Discussions will be ongoing.
Although the White House plans for bipartisan negotiations, legislators may need to use the budget reconciliation process to get it through the Senate on a party-line vote.
Concerns for Our Sector
Details of the plan are still vague, as legislative text has not been introduced. The Council has concerns that federal mandates could prevent many of our companies from participating in research and development investment funding, and other spending.
For example, the Council is urging lawmakers to use existing state programs to remediate orphan wells rather than creating a new federal program. The Council is also working with lawmakers to draft the measure so all American energy companies are able to compete for research and development opportunities to accelerate development of new energy technologies.
For more information or to get involved with the Council’s advocacy work, contact SVP Government Affairs and Counsel Tim Tarpley.