Daily on Energy: Big Business and GOP split on Paris climate agreement

In the earliest of days, businesses, including oil companies, are sending signals of moderation and compromise. The Chamber of Commerce and American Petroleum Institute issued statements yesterday supporting Biden’s decision to re-enter the Paris Agreement, a shift of position for both. While many individual companies, such as ExxonMobil, called on former President Donald Trump to stay in Paris, the lobby groups were quiet when he rejected it.

“There is no question industry has shifted in the last few years. Had Trump won, I am not sure they would have issued these statements,” a former Trump administration energy and environmental official told Josh.

Republicans for the most part are in the same place as they were four years ago, decrying the U.S. involvement in the Paris Agreement as undermining American sovereignty and giving a free pass for China to pollute.

Several senators led by Steve Daines of Montana plan to introduce a resolution calling on Biden to submit the Paris Agreement to the Senate for ratification.

Under the Paris Agreement, all of the nations of the world voluntarily set their own nonbinding targets for reducing carbon emissions.

House Republicans also have legislation in the works related to the Paris Agreement, Josh has learned.

Sen. Ted Cruz of Texas accused Biden of being “more interested in the views of the citizens of Paris than in the jobs of the citizens of Pittsburgh.” The agreement happened to be negotiated in Paris but is not about its people.

Sen. Kevin Cramer of North Dakota, a Trump ally who urged him to stay in the agreement, is again a rare exception, arguing that “abandoning our leadership on the world stage only benefits our competitors.”

Going in different directions: Business groups and Republicans did both criticize Biden’s decision to kill the Keystone XL pipeline, but their similarities in posturing stop there. The Chamber and API both have shifted their stances on methane regulations and carbon pricing to get a more favorable negotiating position as Biden charts an aggressive course on climate.

Republicans, meanwhile, are adopting a defensive posture opposing most regulations, carbon taxes, and international climate agreements.

The split in approach comes as congressional Republicans are facing a reckoning from Big Business over their role in supporting Trump’s effort to overturn the election results.

The former Trump official downplayed the possibility that the disagreements on the Paris Agreement and climate demonstrate a larger rupture in the relationship, but he noted the motivations of businesses and politicians are different.

“As always, there is a lag between where industry is and Republicans on the Hill,” the official said. “It takes time for them to catch up. Industry will change its position fairly easily based on what’s in their commercial interest. Politicians don’t want to be accused of flip-flopping on an issue.”

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WHAT COMES NEXT ON PARIS: Under the terms of the pact, Biden needs to wait another 30 days for the U.S. to be officially back in.

Climate activists are expecting to see Biden submit to the Paris Agreement an updated target on reducing emissions out to 2030 ahead of the next U.N. climate conference in Glasgow, United Kingdom, in November 2021.

That process could take time: Environmental groups close to the Biden administration say he’d have to set a goal of reducing emissions 45% to 50% below 2005 levels by 2030 in order to stay on track for net-zero emissions by 2050.

“A significant part of Paris is not just signing a piece of paper but submitting and following through with an emissions target,” said Nat Keohane, senior vice president at the Environmental Defense Fund. “That target needs to be ambitious and credible if reentering Paris is going to be anything more than symbolic.”

API CEDES MORE GROUND ON METHANE REGULATIONS: The American Petroleum Institute is expanding on its newfound support for methane regulations and is now willing to support direct regulation from new and existing sources, Josh reports this morning.

It’s a big shift for API, which supported Trump’s rollback of methane rules, and especially opposed regulating existing sources because it would trigger controls for a much larger number of oil and gas operations.

“We think given where the industry is at this time and the continued importance of reducing methane, it was critical we update this position as the administration changes,” API CEO Mike Sommers told Josh.

Caveats apply: Sommers made clear API would condition its support for methane regulations pursued by the Biden administration based on whether it “follows the law.”

API sued the Obama administration over its methane rules, arguing it violated the Clean Air Act by failing to determine whether methane contributes significantly to air pollution that causes climate change.

Ben Ratner, senior director with the Environmental Defense Fund+Business, told Josh the answer to that question is obvious and said using that position as grounds to oppose a Biden administration rule would be a cop out.

UTILITIES ALSO BACK METHANE REGULATIONS: The Edison Electric Institute, the large trade group representing utilities, said last night that it too supports federal regulation of methane from new and existing sources throughout the natural gas supply chain.

“Strong and cost-effective federal regulations on methane emissions across the value chain are essential to ensuring the continued availability of natural gas as a 24/7 on-demand energy source,” EEI President Tom Kuhn said in a statement.

This is also a shift in position for EEI, which previously did not proactively endorse methane regulations, even if it did not actively campaign against them as API did.

The switch demonstrates that EEI members believe combating methane is important not just for producers of natural gas, but also users of it.

THE WORK AHEAD FOR BIDEN’S TEAM: Biden took aim at more than 100 Trump environmental deregulatory actions in a climate executive order yesterday, but it could be months, or even years, before they are dismantled.

The only real immediate effect Biden’s executive order has is setting priorities for federal agencies. His team will still have to slog through the lengthy regulatory process.

And if the Biden team wants to set stricter standards, for instance for greenhouse gas emissions from cars, oil and gas production, and power plants, it could take even longer.

Nonetheless, the Biden administration is in a much more advantageous position than its predecessor. Biden’s agency transition teams were packed with veterans of the federal government who know the regulatory process inside and out, and he’s installing a similar roster as his initial appointees to federal agencies (see more on that below).

Some of Biden’s backers, though, say the administration should undertake careful reviews of Trump actions, even if it takes more time.

“This is one of the cases where it’s better to be right than fast,” Collin O’Mara, president and CEO of the National Wildlife Federation, told Abby.

More in Abby’s story posted this morning.

FROZEN IN TIME: As expected, Biden’s chief of staff Ron Klain issued a regulatory freeze memo last night that pauses all pending rules to allow the incoming Biden team to review them.

Several last-minute Trump administration environment and energy actions are caught up by the memo, including an EPA rule that would exempt industries such as oil and gas, petroleum refineries, and heavy industry from greenhouse gas standards. Another regulation put on pause is an action from the Office of the Comptroller of the Currency seeking to prevent big U.S. banks from dropping fossil fuel companies.

Both of those rules had been finalized, but hadn’t yet taken effect. Under Klain’s memo, the actions will be halted for 60 days, and Biden’s team can immediately begin reconsidering them.

THAT WAS QUICK: Biden has elevated Democrat Richard Glick to be FERC chairman.

Glick, a sitting FERC commissioner, tweeted about his promotion this morning, promising to to “make significant progress on the transition to a clean energy future.” Glick, replacing Republican James Danly, who remains on the commission, will enable Democrats to set the agenda at FERC despite being in the minority by a 3-2 margin.

He’ll likely look to move to require FERC to do more stringent evaluations of greenhouse gas emissions when reviewing pipelines and LNG export terminals, an agenda item that likely swing vote Neil Chatterjee, a Republican, has said he is interested in compromising on.

FERC could proceed on finalizing an initiative started by Chatterjee to encourage power grid operators to incorporate state carbon pricing policies into their markets. Glick will also likely aim to facilitate state policies to subsidize clean energy sources, after Republicans led by Chatterjee tried to combat those programs through its controversial Minimum Offer Price Rule for PJM, the largest wholesale power market.

GRANHOLM CONFIRMATION HEARING ON TAP: The Senate Energy and Natural Resources Committee has scheduled a confirmation hearing for Jennifer Granholm to lead the Department of Energy for Wednesday, January 27.

Granholm is expected to have an easy path to confirmation and has received compliments from the committee’s incoming chairman, Democratic Joe Manchin, and even Trump’s Energy secretary, Dan Brouillette.

WHO’S LEADING BIDEN’S AGENCIES IN THE INTERIM: Biden announced his administration’s slate of acting agency heads late yesterday, installing veteran federal staff at the top of the EPA, the Energy Department, and the Interior Department until Biden’s nominees are confirmed.

Leading the EPA is Jane Nishida, who has worked in the EPA’s Office of International and Tribal Affairs since 2011, most recently as its acting head. Prior to joining the EPA, she worked at the World Bank and served as Maryland’s top environment official.

David Huizenga will lead the Energy Department until Granholm is confirmed. Huizenga has worked at the Energy Department for more than three decades, most recently as associate principal deputy administrator of the National Nuclear Safety Administrator, a semi-autonomous arm of the Energy Department.

And at the top of Interior, Biden is installing the department’s top ethics official, Scott de la Vega, who joined the agency in 2018 and was responsible for reshaping its ethics office in the wake of former Trump Interior Secretary Ryan Zinke’s tenure.

DOE AND INTERIOR FILL OUT SENIOR STAFF: The Departments of Energy and Interior also revealed senior political appointees for each agency.

Among the hires are Tarak Shah, who will be DOE chief of staff after working in the agency in the Obama administration. The department also named Shalanda Baker as deputy director for Energy Justice, a new position.

Interior named Jennifer Van der Heide chief of staff to Deb Haaland, Biden’s nominee for secretary. She was the chief of staff for Haaland when she was in Congress.

Another interesting hire is Marissa Knodel, a former legislative counsel at Earthjustice, as a senior adviser at the Bureau of Ocean Energy Management, which oversees offshore drilling. At Earth Justice, Knodel campaigned to stop new oil and gas development on public lands and waters, which Haaland is expected to pursue at the Interior Department.

KEYSTONE CANCELATION’S EFFECT ON CANADIAN OIL ‘MUTED’: Western Canadian oil production might not be hugely affected by Biden’s cancelation of the Keystone XL pipeline in the near- to mid-term, in part because the region has other pipeline capacity slated to come online in the next few years with fewer political risks, according to note from Rystad Energy.

Other pipelines are slated to offer more than 950,000 barrels per day of incremental export capacity before 2025, noted Thomas Liles, Rystad’s vice president for North American shale.

“The truth is, KXL never quite escaped the shadow of uncertainty in the eyes of many producers,” Liles wrote. “Canadian oil sands producers have become accustomed to bad news over the past six years—be it global price routs, demand destruction, or local infrastructure constraints—and have adjusted the scale and pace of upstream development accordingly.”

UNIONS BLAST BIDEN’S KEYSTONE DECISION: We mentioned earlier this week how Biden’s rejection of Keystone XL would test the durability of his support from unions who represent fossil fuel trades.

The first returns are not looking good.

North America’s Building Trades Unions, which came around to endorse Biden late in the campaign, said today it is “deeply disappointed in the decision.”

“Environmental ideologues have now prevailed, and over a thousand union men and women have been terminated from employment on the project,” said NABTU’s president Sean McGarvey, referring to the decision by developer TC Energy to cut jobs.

ALWAYS THERE WHEN YOU CALL: Biden will make his first call to a foreign leader Friday, speaking with Canada’s Prime Minister Justin Trudeau.

The two leaders will discuss Biden’s rejection of the Keystone XL pipeline, White House press secretary Jen Psaki said during her first press briefing yesterday. Canada lobbied Biden to support the pipeline.

WATCH THIS SPACE: Sen. Chuck Schumer, in his first speech as the chamber’s Majority Leader, indicated he will prioritize sweeping climate change legislation.

“And make no mistake: this Senate will forcefully, relentlessly, and urgently address the greatest threat to this country and to our planet – climate change,” Schumer said during his remarks yesterday.

We’ll be watching to see just how aggressive Schumer plans to be, whether he can bring centrist members of his party on board, and how he uses his newfound leverage as Majority Leader to pressure Republicans on climate change.

The Rundown

Bloomberg Saudi Aramco omits carbon data for up to half its real climate toll

Reuters China doubles new renewable capacity in 2020; still builds thermal plants

Politico Democrats poised to rebuff McConnell’s filibuster demands

Calendar

THURSDAY | JAN. 21

All day. The Atlantic Council holds the third day of its Global Energy Forum.