Cheniere Energy Inc announced that it had secured a $370 million tax credit from the IRS for burning liquefied natural gas in its large tankers. The credit, originally designed to subsidize alternative fuels for motor vehicles or motorboats, could provide a significant boost to the company's expansion plans.

Context

The credit originates from a 2005 law signed by former President George W. Bush to support alternative fuels derived from biomass, coal and natural gas. While the law does not define the size of a motorboat, federal regulations limit motorboats to less than 65 feet (20 m) long—tiny compared with LNG tankers that can measure about three football fields.

Key Data

Cheniere's claim has drawn scrutiny. Former IRS lawyer William Henck noted that the company had taken a very aggressive position on the credit and questioned whether a tanker qualifies as a motorboat. Environmental nonprofit Friends of the Earth deputy director Lukas Shankar-Ross described the claim as a "new kind of fabulous and incredulous interpretation of the tax code that has been rubber-stamped by an IRS whose independence is increasingly in question."

In addition to the tax break, Cheniere Energy Inc has invested $50 billion over the past decade to grow its two export facilities in Texas and Louisiana. The company aims to double output to 100 million tons per annum by the mid-2030s, having exported its first LNG cargo from the lower 48 states 10 years ago.

Outlook

The tax credit positions Cheniere Energy Inc to accelerate its expansion and strengthen its role in the global LNG market. Cheniere, whose CEO Jack Fusco donated to President Donald Trump's 2024 campaign, declined to comment.