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THE NEW TREASURY GUIDANCE: The Treasury Department issued new guidance yesterday saying it will oppose funding most fossil fuel projects through multilateral development banks.
But the policy contains vague loopholes regarding natural gas that underscores how the Biden administration has struggled to formulate a consistent position on the role of the cleaner fossil fuel as part of its climate agenda.
The result is that the administration’s stance has enabled both industry and environmentalists to interpret the guidance as harmful to their interests.
These are my concessions: Collin Rees, senior campaigner with Oil Change U.S., said the administration’s refusal to oppose public finance for all fossil fuels is “deeply concerning” and warned “even one penny” of public money going to natural gas projects is “unacceptable in the midst of our climate emergency.”
The guidance from Treasury, the largest shareholder in major development banks such as World Bank and African Development Bank, contains an explicit opposition to coal projects, with “narrow” support for natural gas. The U.S. won’t support any natural gas exploration, but would back some downstream natural gas facilities in poor countries when “there is no economically and technically feasible clean energy alternative” and if energy security would be improved.
Those concessions are likely nods to the role shipping U.S. liquified natural gas abroad can play in replacing dirtier coal in growing developing countries, especially in Asia.
The U.S. will also continue to support financing for carbon capture and methane abatement projects, as long as they don’t extend the useful life of existing fossil fuel plants.
Rees told me the administration’s exceptions to backing gas in some cases is “relatively predictable, but a big missed opportunity.” He said the U.S. guidance is less ambitious than similar United Kingdom and European Investment Bank policies, and fails to put the Biden administration in a leadership position ahead of the big UN climate talks in Glasgow in October.
Industry not happy either: Charlie Riedl, executive director at the Center for Liquified Natural Gas, does not see the policy as overly accommodating to natural gas exports.
“The window has narrowed significantly,” he told me, arguing the rules “will create additional requirements that could slow or potentially even stop the use of U.S. produced natural gas.”
But Riedl acknowledged the Treasury does seem to recognize the value of natural gas for countries “looking to lift citizens out of energy poverty,” a development he called “encouraging.”
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INTERIOR TO RESTART OIL AND GAS LEASING…SKEPTICALLY: The Biden administration is appealing a ruling from a Louisiana-based federal judge blocking its indefinite pause on oil and natural gas leasing in federal lands and waters.
The Department of Justice is appealing the decision to the United States Court of Appeals for the Fifth Circuit, the Interior Department said in a statement early last night.
The agency also said that, during the appeals process, it would comply with the preliminary nationwide injunction against its leasing pause granted in June to more than a dozen oil and gas producing states.
Tea leaf reading: While that’s a blow to environmentalists who want the government to stop selling drilling rights altogether, Interior signaled it will take a restrictive approach to fossil fuel leasing — and that it will demand big changes.
Interior said it would continue leasing in a way that takes into account the “deficiencies” within the government’s oil and gas leasing program.
In its statement, Interior criticized how the agency has historically granted oil and gas leases by “failing to adequately” consider climate change impacts or reflect the social costs of greenhouse gas emissions in setting royalty rates that producers pay to the government. Interior also stressed its interest in ensuring public lands are available for multiple uses and providing a fair return to taxpayers from energy development.
What’s missing: The Biden administration did not provide an update on the timing of an “interim” leasing report that was supposed to come out in early summer — in which it is expected to propose reforms — or offer any definitive schedule for holding lease sales.
DEMOCRATS SIGNAL LEASING REFORMS: Rep. Raul Grijalva of Arizona, chairman of the House Natural Resources Committee, said he’s disappointed Interior will resume fossil fuel lease sales but pledged to use the forthcoming budget reconciliation process to impose reforms.
Grijalva pointed to a collection of measures his committee has already passed this year that would implement many of the reforms he will seek in reconciliation.
These include raising royalty rates, establishing fees on emissions from public lands and waters, reforming oil and gas bonding standards, and increasing federal fees for participating in fossil fuel lease sales.
WATER SHORTAGE DECLARED ON COLORADO RIVER: For the first time, the federal government has declared a water shortage at Lake Mead, triggering water allocation cuts to seven Western states along the Colorado River.
Lake Mead, one of the river’s main reservoirs, has suffered low water levels thanks to a megadrought over the last two decades.
But the reservoir is now at record low levels — projected to be at 34% of its capacity over the next 24 months — as the Southwest is mired in the worst drought of this century fueled by climate change.
“We are seeing the effects of climate change in the Colorado River basin through extended drought, extreme temperatures, expansive wildfires, and in some places, flooding and landslides,” Tanya Trujillo, the Interior Department’s assistant secretary for water and science, told reporters yesterday. “And now is the time to take action to respond to them.”
More to come? The water cuts will mostly affect Arizona farmers at the beginning, as the state will lose 18% of its share from the river. Nevada will see a 7% cut in its water, while Mexico will lose about 5% of the country’s allotment.
But larger cuts are likely in the future as climate change continues to reduce how much water flows into the Colorado River from rain and melting snow.
The mandatory cuts are part of a contingency plan approved in 2019 among the seven states that use Colorado River water: California, Nevada and Arizona in the lower basin, and New Mexico, Utah, Colorado and Wyoming in the upper basin.
MEANWHILE….CALIFORNIANS FACE OUTAGES: The state’s largest utility, PG&E, warned yesterday that 48,000 customers across 18 counties could lose power as operators shut down equipment to prevent wildfires.
PG&E cited strong winds, extreme drought conditions, and dry vegetation as creating conditions that could prompt power shut offs starting this evening and lasting through tomorrow afternoon.
The utility began using the proactive shutoffs during a wave of wildfires in recent years sparked by its equipment, including the deadliest in state history, the Camp Fire of 2018. PG&E’s latest warning is occurring as the Dixie Fire, the state’s second largest wildfire in history, is continuing to blaze across more than 569,000 acres as of yesterday.
BIDEN’S SOLAR SHOT: The Department of Energy is forecasting a bright future for solar power in the U.S., projecting the fastest growing energy source can provide 40% of the country’s power by 2035 and support up to 1,500,000 jobs if its policy priorities are implemented.
The White House this morning is promoting a new DOE issue brief detailing how the administration’s proposed solar investments in the bipartisan infrastructure deal and larger Democratic-only reconciliation package could catalyze the industry.
These include extending $300 billion in wind and solar tax credits, funding for new transmission and energy storage, creating a new Clean Energy Accelerator to leverage private capital for community solar projects, and Democrats’ proposed “clean electricity payment program” pushing utilities to move to 80% clean power by 2030.
DOE also referenced the need to boost domestic manufacturing of solar technologies, given “concerns about forced labor in the solar energy supply chain in China.”
TESLA AUTOPILOT UNDER PROBE: The U.S. government has opened an investigation into Tesla’s Autopilot system, citing incidents of collisions with parked emergency vehicles, the Washington Examiner’s Kaelan Deese reports.
The investigation by the National Highway Traffic Safety Administration will look into an estimated 765,000 Tesla Model Y, X, S, and 3 vehicles from 2014-2021 model years. NHTSA said the inquiry commenced after 11 crashes occurred, which resulted in one death and 17 injuries.
Tesla’s Autopilot is the driving assistance system that maintains vehicle speeds and lane alignment when it is activated. Still, drivers are responsible for identifying other obstacles and vehicles on the road.
The Rundown
Los Angeles Times They fought for clean air. They didn’t know they were part of a gas industry campaign
Washington Post Poor, unvaccinated countries fear getting to U.N. climate summit may be ‘almost insurmountable’
Bloomberg Investors get serious about nuclear fusion, energy’s eternal grail
Reuters EV startups hunt for low-cost roads to mass production
Wall Street Journal BHP to combine petroleum unit with Woodside, end dual listing in London
Calendar
WEDNESDAY | AUG. 18
The House and Senate are out on recess.
