Cheniere Energy, the top U.S. liquefied natural gas producer and exporter, received $370 million from the IRS in early 2026. Shipping experts, tax specialists, and a U.S. senator argue the company should not have received this payout.
The amount, detailed in Cheniere’s latest annual financial report, represents alternative fuel tax credits from 2018 to 2024 claimed for using LNG to power its tankers.
“In our efforts to reduce emissions from shipping operations, we primarily use our LNG as fuel, replacing diesel and heavy oils with higher emissions,” the company stated in its report.
Experts are puzzled by Cheniere’s categorization of LNG as an alternative fuel, as LNG vessels are designed to run on LNG that “boils off” from their holds. Without using the boil-off gas, it would require venting, flaring, or re-liquefying.
“It’s not an alternative fuel,” said Kirsten Sinclair Rosselot, an environmental analyst. Rosselot led a 2023 study on LNG vessel fuel use and emissions. “It’s the fuel they’ve always used.”
The alternative fuel excise tax credit, established in 2005, encouraged using fuels besides gasoline and diesel but set no emissions standards. The credit, which ended in 2024, applied to LNG in “motor vehicles or motorboats.”
Federal regulations define a motorboat as a vessel under 65 feet long, whereas LNG tankers are about 1,000 feet long.
“How is a tanker a motorboat?” asked William Henck, a former IRS attorney. “The IRS essentially gave away over $300 million without sufficient reason.” Cheniere and the IRS declined to comment.
Henck suspects IRS approval from the U.S. Congressional Joint Committee on Taxation was required, though staff did not comment.
U.S. Sen. Jeff Merkley criticized the refund as an example of President Donald Trump rewarding fossil fuel companies that funded his re-election.
Merkley stated it continued “a pattern of pay-to-play donations leading to favorable treatment by the Administration.”
Cheniere’s CEO, Jack Fusco, attended a 2024 meeting at Mar-a-Lago where Trump urged oil executives to donate $1 billion to his campaign, first reported by the Washington Post. Fusco later donated nearly $500,000 to Trump-related entities, as per FEC data.
On the same day Cheniere reported the tax refund, Merkley released a report estimating fossil fuel companies would gain $3.5 billion annually from a Republican-backed bill.
“This is another instance of rewarding billionaires at Americans’ expense,” Merkley said of the refund.
Lukas Shankar-Ross from Friends of the Earth viewed the credit claim as a “dubious reading of tax law.”
“The Mar-a-Lago quid pro quo strikes again,” Ross commented.
The White House did not comment. Inside Climate News estimated the tax credit might exceed $140 million if Cheniere claimed credits for fuel used on return voyages.
Ross expressed concern that other LNG companies might file similar claims or push for the tax credit’s reinstatement.
“Others might also want a share now,” Ross warned. “There’s a risk of reviving this tax credit.”
Original Story at insideclimatenews.org