Daily on Energy: US LNG could face pressure from EU’s new methane plans

The European Commission today released a strategy to reduce emissions of methane, the most potent greenhouse gas, to help the bloc meet its goal of cutting overall emissions 55% by 2030 and to net-zero by 2050.

As part of the plan, the EU challenges its international trade partners to reduce methane emissions too, vowing to explore the feasibility of imposing an import standard on the level of methane from gas sent to Europe. The commission says it will support the establishment of a “international methane observatory” to compile data on countries’ methane emissions to help buyers of fuels make “informed choices.”

Because Europe imports so much oil and gas, it has “leverage” for force changes on exporting countries, the report says.

US could encounter a competitive disadvantage: This could matter for the U.S., where the Trump administration has sought to diminish Russian influence in Europe by exporting LNG to countries such as Germany and Lithuania. At the same time, it has removed direct regulation of methane from oil and gas operations, which analysts say could make U.S. LNG less competitive globally if Europe moves forward with imposing methane emissions standards on imports.

It’s unclear how Joe Biden would approach LNG exports as part of his aggressive climate goals, but he has vowed to quickly restore direct regulation of methane.

“It’s hard for the U.S. to present itself as competitive supplier of low-[emitting] fuel if basic regulatory standards are not in place,” Mark Brownstein, senior vice president of Environmental Defense Fund (EDF), told Josh. “Reducing methane from oil and gas is rapidly becoming a global imperative. And the U.S. ignores it at its peril.”

How clean is U.S. gas? To be sure, U.S. LNG is already much cleaner than gas delivered by pipeline from Russia, where there are suspicions that companies leak methane at a higher rate than publicly disclosed. The oil and gas industry, meanwhile, touts U.S. LNG as a great option for countries looking to wean off dirtier coal.

Poppy Kalesi, EDF’s director of global energy who focuses on European gas markets, noted during a panel event yesterday she still anticipates eastern and southern EU countries reliant on coal to seek out natural gas as a “bridge fuel” over the next few years.

The American Petroleum Institute released a study this summer finding U.S. exports of LNG to major consuming countries Germany, China, and India result in lifecycle greenhouse gas emissions reductions of 48% to 54% compared to if those nations used coal to produce electricity.

But Brownstein is skeptical of data of U.S. producers, which rely on engineering estimates rather than precise monitoring and measurement in the field (EDF is working on developing monitoring and detection technologies that companies can use).

“I don’t think anyone can rush to claim the trophy quite yet of having the cleanest natural gas,” Brownstein said.

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GLOBAL OIL RECOVERY REMAINS ‘FRAGILE’: The near-term outlook for global oil demand recovering “remains fragile” because of weak economies and new government restrictions in response to the pandemic, the International Energy Agency projected in its monthly oil market report today.

While we wrote yesterday about IEA’s expectations for oil demand returning to regular levels, and not peaking, through this decade, the global energy body still sees immediate trouble for producers.

It expects oil demand to end the year at 91.7 million barrels per day, unchanged from its last forecast, which is 8.4 million b/pd less than 2019.

Oil consumption will approach but not reach normal levels in 2021, coming in at 97.2 million b/pd.

Red flags ahead: IEA also suggests supply could come back too quickly ahead of demand.

Efforts of OPEC+ to hold back production have “shown some success” helping prices break $40 per barrel. But Libya, which is not party to the agreement, is increasing output after a ceasefire in the civil war there.

Libya is expected to raise production from 300,000 b/pd to 700,000 b/pd by December. That has raised questions of whether OPEC+ could look to renege on its plan to ease its supply restrictions in January as planned.

For what it’s worth, Russia, one of the major power-brokers with Saudi Arabia, is rejecting that possibility for now.

ENERGY DEPARTMENT BETS ON BREAKTHROUGH IN SMALL NUCLEAR: The Energy Department announced Tuesday it is providing $160 million to two U.S. companies building smaller advanced nuclear reactors that can be operational this decade.

The DOE is awarding an initial round of funding through its first-of-a-kind Advanced Reactor Demonstration Program to TerraPower and GE Hitachi for its Natrium project, along with X-energy.

Each recipient will receive $80 million as part of cost-share agreements between the government and industry that aim for the companies to build two reactors that can be operational within seven years. The DOE plans to invest a total of $3.2 billion over seven years for demonstration projects, subject to the availability of future appropriations.

What it means: The announcement is a significant step toward proving that small nuclear reactors, an emissions-free technology of a type that has never been deployed, can play a role in decarbonizing the grid.

“This is an opportunity to really see accelerated deployment of advanced reactor technology,” Brett Rampal, nuclear team manager at the Clean Air Task Force, told Josh.

The winners have unique approaches: Washington-based TerraPower, a nuclear technology firm co-founded by mega-billionaire Bill Gates, is collaborating with GE Hitachi to build 345 megawatt advanced reactors that can store excess energy in tanks of molten salt, to help supplement renewables. The plants would be cooled by liquid sodium.

X-energy, based in Maryland, is building high-temperature gas-cooled 80 megawatt reactors that can provide flexible electricity as well as heat for industrial applications.

Energy Secretary Dan Brouillette said both projects could be sited in Washington state.

AMY CONEY BARRETT ON CLIMATE… ‘I’M NOT A SCIENTIST’: Barrett, in an exchange with Sen. John Kennedy during her confirmation hearing late Tuesday, demurred on giving an opinion on climate change.

“I’m certainly not a scientist,” she said. “I’ve read things about climate change. I would not say that I have firm views on it.”

Kennedy, during the exchange, was merely attempting to show Barrett had “thought about the world” but her personal views wouldn’t affect her judgments (He also asked if she’d thought about nuclear energy, which she said she hadn’t).

But Barrett’s response on climate, which mirrors what some Trump administration officials said of climate science during their own confirmation hearings, drew immediate and fierce backlash from environmentalists and Democratic lawmakers.

“You don’t have to be a scientist to trust scientists,” Sen. Tom Carper, the top Democrat on the Senate Environment Committee, said in a tweet Wednesday. “It’s never been more dangerous to have a climate denier with a lifetime SCOTUS seat.”

Barrett’s answer underscores climate activists’ fears: Barrett hasn’t personally said much about climate change previously, nor has she dealt with major climate cases during her time on the Seventh Circuit. But climate activists worry her views on how to interpret the law and agency authority would pose a threat to the federal government’s ability to take strong executive action on climate change in the future.

However, even if Barrett had said climate change is real and humans are contributing to it, it wouldn’t necessarily mean she’d be sympathetic to climate activists’ views. Justice Brett Kavanaugh, another conservative Trump appointee, takes a very narrow view of what the EPA can do to address climate change, despite him stating several times from the bench and in opinions that he agrees climate change is a concern.

READING MATERIAL…WARMEST SEPTEMBER EVER ON RECORD: This September saw the highest globally averaged temperature for the month on record, the National Oceanic and Atmospheric Administration said Wednesday. The seven hottest Septembers have happened in the last seven years.

BONUS FROM DAY 2 OF BARRETT’S HEARING: Sen. Joni Ernst, during her round of questioning, praised Barrett for a decision she helped decide on the Seventh Circuit on the Obama-era waters of the U.S. rule, which Ernst and many Republicans argue exceeded the EPA’s authority.

“The decision found that the federal government did not provide enough evidence to justify its decision to deem 13 acres of Illinois wetlands as a water of the U.S.,” Ernst said. “I’m very supportive of a less expansive definition of WOTUS and am encouraged by how you approached this decision.”

Ernst also made sure Barrett knew her views on the limits of EPA’s authority to exempt small oil refiners from Renewable Fuels Standard requirements. The Iowa senator praised the Tenth Circuit’s ruling earlier this year sharply restricting the EPA’s authority to issue such exemptions, and she noted oil refiners have appealed that decision to the Supreme Court.

On Tuesday, the Supreme Court deferred for now a decision on whether it will take up that appeal, instead allowing the refiners to submit more information under seal.

Ernst didn’t ask Barrett to weigh in on the RFS controversy, but she argued EPA “took the law Congress passed” and “twisted it and interpreted it for the benefit of oil producers and that harmed our Iowa farmers.” Barrett, in response to Ernst’s question about how the courts should interpret laws passed by Congress, said if an agency exceeds its statutory authority, “it is the role of the court to say that action is in conflict with the statute and therefore illegal.”

TRUMP GOES BIG ON ENVIRONMENT EXECUTIVE ORDERS: Trump signed two executive orders Tuesday to boost his administration’s environmental credentials as Democrats paint a stark contrast between Trump’s efforts to peel back environmental mandates and Biden’s robust climate change plans.

The first order puts some government muscle behind Trump’s pledge that the U.S. would join a global effort to plant, restore, and conserve 1 trillion trees over the next decade. That global initiative, spearheaded by the World Economic Forum, has its origins in fighting climate change, though Trump has avoided mention of the issue when touting his tree-planting commitment.

Trump’s order would set up an interagency council, with top members of the White House and 14 federal agencies, to track how many trees the U.S. plants, restores and conserves. The council will also identify regulatory barriers to tree-planting efforts.

The second order aims to better coordinate federal government efforts to manage and clean up U.S. water resources. The order establishes an interagency “subcabinet” on water-related issues and infrastructure, co-chaired by the Interior secretary and EPA administrator.

Trump is tasking the interagency group to identify, within 90 days, ways to consolidate federal government initiatives on managing water resources. The group will also issue recommendations within 120 days on ways to increase water supply and improve water quality and systems.

Election year politics: It’s worth noting that as Biden has gone big on climate change, Trump and his administration’s environment and energy officials have sought to differentiate their agenda by touting conservation and efforts to clean up air and water pollution. EPA Administrator Andrew Wheeler, for example, has frequently accused his Obama-era predecessors of spending too much time on climate change and neglecting other environmental concerns.

Environmentalists, however, argue Trump’s messaging is a facade, and they point to his administration’s efforts to weaken or eliminate many Obama-era climate, air, and water regulations.

MOVERS AND SHAKERS: Paula Glover will join the Alliance to Save Energy early next year as its new president, the group announced Tuesday. Glover currently serves as the president of the American Association of Blacks in Energy, and she has previously worked on government affairs, regulatory issues, and economic development at electric and natural gas distribution companies.

The Rundown

Washington Post Warming has killed half the coral on the Great Barrier Reef, study finds

Bloomberg ConocoPhillips in talks to buy Concho Resources in big shale bet

E&E News Dem bill would price carbon, set clean energy standard

Calendar

WEDNESDAY | OCT. 14

2 p.m. The House Natural Resource Committee’s Subcommittee on Energy and Mineral Resources hosts a virtual forum titled, “The Threat of Offshore Drilling and the Need for a Permanent Federal Ban.”