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WHAT MAKES THE CUT: This week might finally be the one in which we learn what climate provisions survive Democrats’ reconciliation package.
We should get a better sense of the policy demands from centrists Sens. Joe Manchin and Kyrsten Sinema, who hold the keys to what makes it into a final social and climate spending bill negotiated between the two chambers.
The urgency is heightened this week as House Speaker Nancy Pelosi has scheduled a Thursday vote on the $1 trillion bipartisan infrastructure bill. In order to win support of skeptical progressives, Democratic leaders are reportedly working on finalizing a “framework” for the reconciliation bill to demonstrate progress is being made.
At a high level, Sinema seems more amenable than Manchin to aggressive climate measures. In rare public comments last week, she cited the threat of drought and wildfire to her home state, Arizona.
Here are the few outstanding issues we are watching to see where Manchin and Sinema land.
*CEPP: House Democrats’ version of the clean electricity performance program essentially rules out rewarding utilities for switching from coal to natural gas. It’s safe to say Manchin will see that approach as punitive to his home state, West Virginia. But even if Democrats agree to treat natural gas more leniently, is there any version of a program he’d support that penalizes utilities who aren’t transitioning to clean energy fast enough? And are we sure it will pass muster with the complex budget rules of reconciliation? Also, last time we checked, Arizona is also a big user of natural gas.
*Carbon pricing: Manchin has been especially vocal against carbon pricing in the past, but Democratic leaders are reportedly pitching Sinema on adding a modest carbon fee as an alternative revenue source to overcome her opposition to corporate and income tax increases.
Lobbyists following the negotiations aren’t giving the idea much credence because of the Manchin obstacle. Also, don’t forget, Pelosi only has a three-vote margin among Democrats in the House, where several centrists from Texas have warned against including taxes and fees targeting the oil and gas industry.
“I don’t see any way a carbon tax gets enacted right now considering where the negotiations are and the fact that the bill needs to gain moderate support, not additional progressive support,” Shane Skelton, a senior vice president of Boundary Stone Partners, told me.
*Methane fee: This seems like the safest bet to win support of centrists, including Manchin. Despite aggressive lobbying against the fee from the oil and gas industry, Manchin has always said companies need to better crack down on methane in order to prove credibility as a competitive clean energy option.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
PELOSI’S LATEST INFRASTRUCTURE PLAN: In a letter to colleagues yesterday, Pelosi said that debate will start on the infrastructure bill on the House floor later today and it will receive a final vote on Thursday. But she did not schedule a vote on the reconciliation bill, as negotiations with the Senate continue.
Part of the reason to vote on the infrastructure bill before this week is up that it includes funding and re-authorization for highway programs that expire at the end of the month.
To appease House moderates, Pelosi previously negotiated a Monday, Sep. 27 deadline to bring up the infrastructure bill.
House moderates appear okay with the new timing of the infrastructure vote. But progressives are still signaling that they will vote for infrastructure only after voting on the reconciliation bill.
LIBERALS GROUPS SAY HOLD UP: More than 150 liberal environmental groups and unions sent a letter to Pelosi and Democratic members of Congress Friday reiterating their demand for members to not vote for the bipartisan infrastructure bill until the reconciliation package is passed and sent to President Joe Biden‘s desk.
Signers of the letter include the Sierra Club, Evergreen Action, Sunrise Movement, Center for American Progress, Oil Change U.S., United Farm Workers, and more.
AND TARGET CENTRISTS: Climate Power and the League of Conservation Voters announced a $4 million ad campaign this morning focused on key House districts represented by centrists, calling on them to support aggressive climate provisions in reconciliation.
“Experts warn the window is closing to avert the worst effects of the climate crisis, and the Build Back Better Act is our best opportunity to take transformative action,” the groups said in a statement.
TV ads will air in the districts of Reps. Stephanie Murphy of Florida, Josh Harder of California, Kathleen Rice of New York, and Scott Peters of California, and digital ads are running in the districts of Reps. Sharice Davids of Kansas, Haley Stevens of Michigan, Angie Craig of Minnesota, and Steven Horsford of Nevada.
The new ad buy is in addition to $20 million the LCV and Climate Power already spent over the summer.
CHINA’S COAL PROBLEMS AT HOME: China’s decision last week to stop building coal plants overseas suggests Beijing is not ready to grapple with curbing its appetite at home, as I reported for a story posted over the weekend.
It is much more important for China (the world’s biggest consumer and producer of coal and thus largest emitter of greenhouse gas emissions) to make a similar commitment domestically. If it doesn’t act to phase down coal use sooner than currently planned, analysts say the world stands little chance of fulfilling the most ambitious goal of the Paris climate change agreement of keeping global warming below 1.5 degrees Celsius.
“It’s an extremely tough target to meet without China addressing domestic coal consumption,” Jane Nakano, a senior fellow in the Energy Security & Climate Change Program at the Center for Strategic and International Studies, told me.
The numbers are grim: The U.S. and the European Union, two other top emitters, retired a record amount of coal-fired power plants in 2020, but the opposite is happening in China.
China commissioned 38.4 gigawatts of new plants last year, representing 76% of the world’s total new coal plant starts, holding back global progress, according to the Climate Action Tracker, an independent scientific analysis group.
That’s more coal than what was retired outside China last year (37.8 gigawatts).
Post-pandemic boom: China started its recovery from the coronavirus pandemic before other countries, leading a number of provinces to ramp up coal production and consumption in response to economic loss caused by the pandemic.
“This traditional pattern of increased investment in coal during times of economic stress is incompatible with a low carbon future — and especially with the 1.5-degree temperature goal,” Kelly Sims Gallagher, who directs the Climate Policy Lab at the Fletcher School at Tufts University, told me.
MEANWHILE…CHINA FACING POWER CRUNCH: Like Europe, China is also facing a power crunch of its own. But in China, the biggest shortage involves coal, not natural gas as is happening in Europe.
“China is in the grip of a power crunch as a shortage of coal supplies, toughening emissions standards and strong demand from manufacturers and industry have pushed coal prices to record highs and triggered widespread curbs on usage,” Reuters reports this morning.
The tight coal supplies are due mostly to a pickup in industrial activity as the economy recovered from the pandemic, analysts say.
PENNEAST PIPELINE CANCELED IN BLOW FOR OIL AND GAS INDUSTRY: The developers of the PennEast natural gas pipeline have canceled the project despite notching a big win at the Supreme Court this summer.
The $1 billion pipeline was still being held up by a lack of permits by New Jersey. “Following extensive evaluation and discussion,” the developers determined “further development” of the pipeline is “no longer supported,” they said in a statement this morning.
This is the second time a major natural gas pipeline was nixed just months after winning at the Supreme Court. The nation’s high court ruled 5-4 in June that the developers of PennEast could use federal eminent domain power to seize New Jersey land to build the project.
PennEast’s 116-mile pipeline would have transported as much as 1 billion cubic feet of natural gas per day from northern Pennsylvania to New Jersey.
Last year, utilities Dominion Energy and Duke Energy announced they would abandon construction of the $8 billion Atlantic Coast pipeline, which would have carried natural gas 600 miles from West Virginia to East Coast markets. The companies cited high costs and regulatory uncertainty, despite the Supreme Court enabling the pipeline to cross the Appalachian Trail.
INDO-PACIFIC CLIMATE COOPERATION: The leaders of the so-called Quad, a strategic alliance positioned to counter China, are vowing to pursue “enhanced actions” this decade to address climate change.
That’s according to a readout from the White House of Biden’s meeting he hosted on Friday with the heads of Australia, Japan, and India.
Areas of pledged cooperation include combatting methane emissions from natural gas, creating a green shipping network, launching a clean-hydrogen partnership to reduce costs, and providing technical assistance to small island developing states on climate resilience.
The Rundown
Bloomberg China’s power crisis moves from the factory floor to homes
Reuters China power crunch spreads, shutting factories and dimming growth outlook
Wall Street Journal Bitcoin miners eye nuclear power as environmental criticism mounts
Calendar
TUESDAY | SEP. 28
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to review the administration of laws under the jurisdiction of the Federal Energy Regulatory Commission.
WEDNESDAY | SEP. 29
10 a.m. SVC-217. The Senate Foreign Relations Committee will hold a closed hearing with Amos Hochstein, the State Department’s senior adviser for energy security, for an update on the Biden administration’s efforts “Regarding Energy Security Including Nord Stream 2.”
10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee will hold an oversight hearing on the Chemical Safety Board.
