On the cusp of the Senate passing the landmark Inflation Reduction Act (IRA), let’s talk SCALE!
Renewables: The bill is expected to dramatically increase renewable energy capacity additions by 10x to ~130 GWs by 2031. Assuming $1/Watt of capex, this bill incentivizes ~$130b of investment in a single year ONLY in renewable generation infrastructure.
Oil & Gas: Interestingly, the oil and gas industry is expected to make windfall profits with little need for sympathetic and metaphorical “greasing”. If crude prices averaged $70 until 2030, the 16 largest National State-Owned Oil Companies (NOCs) would pocket $1.1trn more than if they averaged $50, the base case. Half that bounty would go to the Emirati, Kuwaiti, Qatari and Saudi NOCs.
Example project: Exxon’s new project, the Hebron-Ben Nevis oil field off the coast of Newfoundland will require $4b of capital expenditures and $3b of operating expenditures over it’s 30 year lifetime. Folks being hired today will spend their entire careers there. Over its 30 year lifetime, the oil field will produce 750m barrels of crude, which is less than 10 days of global demand.
Thanks to the wonderful analyses from: Jesse Jenkins, Chris Wedding, Wood Mackenzie, The Economist
