Daily on Energy: Latest on Biden’s oil and gas leasing pause

The hearing comes after the Interior Department’s Bureau of Land Management announced last week it is canceling oil and gas leases on public lands during the second quarter of this year — extending into the summer — as the agency continues to review the future of the fossil fuel leasing program.

Here are a few of our top takeaways from the hearing:

*Biden administration downplays immediate effects: A top Interior Department official said the “math and facts” demonstrate that U.S. companies continue to develop oil and gas on federal lands during the pause on new leasing and that states and the federal government are not losing significant amounts of revenue.

“We do not anticipate a significant effect on income to states and the Treasury in the near future during this current pause,” said Nada Culver, deputy director of policy and programs for Interior’s Bureau of Land Management, which oversees the leasing program.

Culver added: “Right now, we don’t see a slowdown in development in our country.”

Culver emphasized the “vast majority” of revenue distributed to states comes from royalty payments paid by companies producing oil and gas on existing leases, for which permits to drill continue to be issued.

The Bureau of Land Management has approved more than 500 new permits to drill on existing leases since January, Culver said. In total, oil and gas companies possess 7,900 permits ready for development, with an additional 5,599 permits submitted to the bureau for consideration. About 13.9 million acres of federal land under lease for oil and gas drilling have not been developed yet, she added.

*Manchin tips his hand: Energy Committee chairman Joe Manchin of West Virginia, the most closely watched Democrat, suggested he favors reform of future oil and gas leasing rather than a permanent shutdown. During his opening remarks, Manchin said he favors “balanced” use of public lands, including increasing development of renewables, a Biden administration goal that “makes all the sense in the world.” He said he supports Interior’s intent to review “what reforms might be appropriate” to oil and gas leasing, and underscored his opposition to “elimination” of fossil fuels from the energy mix.

*Fossil fuel state Republicans oppose reforms too: But Senate Republicans, especially committee ranking member John Barrasso of Wyoming, signaled they won’t be compliant if the Biden administration pursues reforms to raise costs and impose stricter regulation on oil and gas development on public lands and waters

“Oil and gas leasing isn’t broken, but it is harmed by existing regulations that discourage investment in federal lands,” Barrasso said, arguing current policies already encourage producers to favor state and private lands.

House and Senate lawmakers — including Republican Sen. Chuck Grassley of Iowa — have recently introduced a suite of legislation to raise royalty rates, increase public input into the leasing process, require cleanup and remediation of abandoned wells, and crack down on methane emissions from oil and gas.

The royalty rates that companies pay to the government to drill on public onshore lands haven’t been raised since the 1920s, while minimum bid requirements set at $2 an acre have not been lifted in decades. But fossil fuel state Republicans seem unlikely to go along, despite arguments from fiscal conservatives that taxpayers deserve a fairer return.

*Interior’s review is truly indefinite: Culver did not tip her hand regarding when the review might end, angering Republicans who fear the pause is having a “chilling effect” on development and that it might go on forever.

“Right now, we are conducting the review,” Culver said in response to a question from Sen. John Hoeven, Republican of North Dakota. “I don’t have a specific time to give you.”

In other words, stay tuned.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [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.

HUGE POTENTIAL BENEFITS OF REDUCING METHANE EMISSIONS: Rapid action to reduce methane emissions could slow the world’s rate of warming by as much as 30%, according to a report published this morning in the journal Environmental Research Letters.

Using existing technologies, companies could reduce methane emissions in half by 2030, the new research found, which was authored by Ilissa Ocko, senior climate scientist at Environmental Defense Fund.

The study’s projections encompass emissions cuts from all of methane’s sources, including leaks during oil and gas development and pipeline delivery, and from landfills and cows.

Half of the reductions this decade could come at no additional cost, with around 80% of those no-cost actions available to the oil and gas industry.

BP’S STRONG EARNINGS REPORT A BULLISH SIGN FOR RECOVERY: Rebounding oil prices and “exceptional” natural gas trading enabled BP to boost its profit and return 60% of surplus cash to shareholders, the European energy giant said in its first quarter earnings report today.

BP reported a $2.6 billion profit and pledged to buy back $500 million of shares in the second quarter, a boon to investors after the company slashed its dividend payment in half last year during the height of the pandemic.

BP’s strong earnings report and share buyback pledge shows that energy majors are confident about the economic recovery as oil prices and demand have rebounded after travel shutdowns sapped consumption of fuels.

CHINA DRAWS CLEARER LINE ON COAL…SORT OF: China is claiming coal will play a less-dominant role in its future energy mix without detailing a specific end date for using the dirtiest fossil fuel.

“In the past, it (coal) was the main source of power. In the future it will play the role of providing flexibility for the power grid,” said Li Gao, the director general of the Department of Climate Change in China’s Environment Ministry, in comments today reported by the Associated Press.

“And now we still need a certain amount of coal … but we will not develop coal on a wide-scale basis, that’s very clear and that’s strictly regulated,” Li added.

The comments expound upon remarks from China’s President Xi Jinping at President Joe Biden’s climate summit in which he for the first time publicly acknowledged the world’s top coal user plans to phase down its consumption of the fuel later this decade. Xi pledged China will “strictly limit” its increase in coal consumption over the first half of this decade and “phase it down” over the 2026-2030 period.

But China is still building new coal plants and last year was the only G-20 country to increase its coal-fired power generation.

CALIFORNIA LOVE: The Biden administration is taking a first step toward allowing California to set greenhouse gas emissions limits for cars and SUVs stricter than federal regulations after former President Donald Trump revoked that authority.

The EPA announced yesterday it is reconsidering the Trump administration’s decision to withdraw California’s authority. It is taking public comment on the proposed change in policy until July 6.

EPA’s proposal, along with a similar recent move by the Transportation Department, could pave the way for a broader deal between the federal government and California to create one set of fuel economy standards since the Biden administration also wants to impose strict requirements as it looks to spur development of EVs.

Automakers that oppose the Trump revocation of the California waiver, including some that switched sides after Biden won the election, are craving a deal because of the prospect of a long legal battle that could lead to two different car markets in the U.S.

KERRY FACES GOP CALLS TO RESIGN: Climate envoy John Kerry is facing calls from Republicans to step down from his position for allegedly discussing Israeli military operations with Iran’s foreign minister Mohammad Javad Zarif, the Washington Examiner’s Kaelan Deese reports.

“John Kerry does all kinds of things that I can’t stand. But this is the one that broke the camel’s back,” said Alaska Sen. Dan Sullivan.

Sullivan criticized Kerry’s job performance during a speech on the Senate floor yesterday, accusing him of “arrogantly killing American jobs … in the name of climate goals.”

Several GOP lawmakers knocked Kerry after Sullivan spoke.

Kerry’s defense: Sen. Lindsey Graham, a South Carolina Republican, spoke out in an apparent defense of Kerry, expressing caution about Zarif’s reliability.

“I like John Kerry, but that would not be helpful, and it would be very problematic if it were true. But let’s wait and see how authentic this is,” Graham said.

Sen. Sheldon Whitehouse, Democrat of Rhode Island, in a tweet this morning accused Republicans of “coming after John Kerry because he will help lead the world to a post-fossil-fuel future, and the polluting fossil fuel industry can’t abide that.”

Kerry, who served as Obama’s secretary of state between 2013 and 2017 and was instrumental in putting together the nuclear deal with Iran, denied tipping off Zarif about operations, tweeting last night: “I can tell you that this story and these allegations are unequivocally false. This never happened – either when I was Secretary of State or since.”

PUSH FOR 80% CLEAN GRID BY 2030 MATERIALIZES: New research from Energy Innovation finds reaching an 80% carbon-free power sector by 2030 is achievable without increasing electricity costs or jeopardizing the reliability of the grid.

Energy Innovation envisions a grid in 2030 that is 60% wind, solar, and batteries. Another 20% of power is provided by zero-carbon nuclear and hydropower, with the remaining 20% natural gas (a level that is 30% lower than today’s gas generation).

In addition, all existing coal power would retire by 2030 and no new fossil fuel plants, including natural gas, would be built, the report says. Meanwhile, Energy Innovation finds 950 gigawatts of new wind and solar and more than 225 GW of battery storage capacity would need to be built between now and 2030.

The report from Energy Innovation comes as the Biden administration is beginning to push an 80% by 2030 goal as an interim target to help achieve Biden’s plans for 100% carbon-free power by 2035. More than a dozen utilities recently lent support for the 80% target.

“Our goal is to enact this into law,” Ali Zaidi, deputy White House climate adviser, told Reuters of the 80% target. “There are multiple pathways to get meaningful progress in the power sector.”

Energy Innovation suggests that reaching 80% carbon-free power by 2030 could contribute significantly to reaching Biden’s new pledge as part of the Paris climate agreement to cut U.S. emissions in half by that year. The firm finds an 80% carbon-free power sector, plus a transition to 100% electric passenger car sales by 2030, would curb emissions by 42%.

US MUST MOVE FASTER TO CURB EMISSIONS, RMI SAYS: The U.S. should reduce emissions even more quickly than a 50% cut by 2030 to account for its large contribution to historic global emissions and greater ability to pay for efforts to curb emissions, RMI says in a new report this morning.

RMI argues the U.S. must curb emissions by 57% below 2005 levels by 2030 and reach net-zero closer to 2040. That is more ambitious than the targets set by the Biden administration, including the 50% to 52% reduction target by 2030 unveiled at Biden’s climate summit last week.

RMI also outlines individual sector-level emissions targets, including a goal for the power sector to reach 85% carbon-free power by 2030 and the transportation sector to reduce emissions 45% by 2030, compared to 2005 levels.

To reach those targets, RMI finds the U.S. must begin rapidly adding renewable energy and phasing out fossil fuels, adding at least 100 GW of new wind and solar each year in the late 2020s and retiring most coal generation by 2025.

CITIGROUP DECLINED 11 COAL-RELATED TRANSACTIONS IN 2020: The decision to decline the transaction opportunities came as Citigroup began implementing policies set last year and early this year to reduce its exposure to thermal coal mining and coal-fired power, the bank said in a report on its environmental, social, and governance (ESG) commitments yesterday.

Citigroup pledged in 2020 to reduce its exposure to companies with a quarter of their revenue coming from thermal coal mining, with a goal to cut exposure in half by the end of 2025 and down to zero by the end of 2030.

The bank added policies related to coal-fired power earlier this year, including requirements for clients with coal-fired power to, by the end of this year, publicly report greenhouse gas emissions and engage with the bank on plans to move away from coal. After this year, Citigroup will limit its financing of coal-fired power plants and begin declining new clients with coal-fired power.

The commitments on coal come as Citigroup has also pledged to achieve net-zero financed emissions by 2050.

RECYCLING COULD CURB NEED FOR MORE MINING TO SUPPORT CLEAN ENERGY: Increasing recycling of critical materials used in electric vehicle batteries and renewable energy could remove some of the need to scale up mining to meet minerals demand that is expected to grow significantly to support clean energy development, according to a new report this morning from Earthworks.

The report finds increasing recycling rates could cut the demand for lithium by 25%, for cobalt and nickel by 35%, and for copper by 55%, compared to projected total demand in 2040.

Currently, the recycling rates for many of these minerals is fairly low. Lithium, for example, has a rate of recycling of less than 1%, while copper has a recycling rate of 45%. Cobalt and nickel have the highest recycling rates of the four minerals Earthworks examined, reaching global recycling rates of more than 60%. Earthworks notes, however, that it is technologically possible to reach recovery rates of more than 90% for all four metals.

The Rundown

New York Times Pandemic lockdowns cut pollution, slowing snowmelt in South Asia

Wall Street Journal Tesla posts record earnings at start of turbulent year

Reuters White House pushing for 80% clean U.S. power grid by 2030

Bloomberg Law Biden administration again pressed on Dakota Access pipeline

Calendar

TUESDAY | APRIL 27

2:30 p.m. 406 Dirksen. The Senate Environment and Public Works Committee’s Subcommittee on Clean Air, Climate, and Nuclear Safety will hold a legislative hearing on S.283, National Climate Bank Act.

WEDNESDAY | APRIL 28

10 a.m. 301 Russell. The Senate Environment and Public Works will hold a hearing on the EPA’s fiscal year 2022 budget request.

THURSDAY | APRIL 29

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing is to consider the nomination of Tommy Beaudreau to be deputy secretary of the Interior.

11 a.m. The House Energy and Commerce Committee’s Subcommittee on Environment and Climate Change will hold a remote hearing on the EPA’s fiscal year 2022 budget request.