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SEN. WHITEHOUSE DISHES ON CARBON PRICING FOR OUR NEW PODCAST: A new fee on carbon emissions is “highly likely” to be included in Democrats’ climate and social spending package and the Biden administration is coming around to understand the “serious mistake” they made in not touting carbon pricing as part of its Build Back Better Agenda.
Those are the words of Sen. Sheldon Whitehouse of Rhode Island, perhaps the biggest carbon pricing proponent in Congress, who spoke to me for the inaugural episode of a new podcast I am releasing this afternoon with my co-host, former FERC Chairman Neil Chatterjee.
In the podcast, called Plugged In, Neil and I talk to policymakers, CEOs, and activists across the ideological spectrum about the most pressing energy and environmental issues.
Our first guest is Whitehouse, a climate hawk who is central to reconciliation negotiations in the Senate as a member of the Finance and Environment and Public Works Committees with jurisdiction over key energy and environment policies.
In a nearly half-hour conversation last week, Whitehouse spoke about his advocacy efforts to convince the Biden administration to support Democrats’ including a carbon tax in their sprawling reconciliation package.
“There has been conventional wisdom about this that has been wrong and people who weren’t close to the Senate didn’t understand what was going on, and that included some folks in the White House even,” Whitehouse told us of carbon pricing doubters.
To ensure a carbon price doesn’t violate President Joe Biden‘s pledge to not raise taxes on people making less than $400,000 a year, Whitehouse said he’s pitched the administration on exempting gasoline from the tax.
He presented administration officials a study from Resources for the Future showing emissions reductions for a carbon tax with and without an exemption for gasoline are relatively similar (basically because people would be unlikely anyway to stop driving their gasoline-powered vehicles or switch to EVs just because of a slight increase in gas prices caused by a carbon tax).
“It turns out by taking unleaded gas out you lose very little on the emissions side and may gain a great deal of public acceptance,” Whitehouse told me in a separate follow-up interview after we stopped recording.
Whitehouse said Democrats should strive to pass the most robust climate policies possible, including carbon pricing, before the U.N. climate conference in Glasgow starting Oct. 31 for Biden to have credibility.
The U.S. would look like “jerks and putzes” if it fails to pass climate legislation, he said.
To hear more from Whitehouse, listen to the debut episode of Plugged In, which will drop later this afternoon and can be downloaded here.
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BIDEN STARTS TO REVERSE TRUMP’S NEPA OVERHAUL: The Biden administration has started unwinding Trump-era changes to federal agency permitting reviews under the bedrock National Environmental Policy Act, or NEPA.
The Council on Environmental Quality issued a “phase 1” proposed rule this morning that would once again tell agencies to consider the indirect and cumulative impacts (i.e. climate change) of permitting decisions, not just direct impacts.
CEQ’s rule would also undo a Trump administration change allowing agencies to consider fewer alternatives for the proposed path of a project so that options considered are “technically and economically feasible.”
The Biden administration’s proposal would give agencies the flexibility to analyze “common sense alternatives” and evaluate the “purpose and need” of a proposed project, such as a pipeline or highway, based on a variety of factors, including potential environmental harms.
“Patching these holes in the environmental review process will help reduce conflict and litigation and help clear up some of the uncertainty that the previous administration’s rule caused,” said CEQ chairman Brenda Mallory.
Stakes for climate and clean energy: Democrats and environmental groups criticized the Trump administration’s changes to NEPA, arguing they undercut agencies’ abilities to consider a project’s emissions and contribution to climate change —enabling easier buildout of fossil fuel infrastructure. They also said the Trump reforms shut out input from the people whose health and livelihoods would be most affected by projects.
Business groups and Republicans, however, said the Trump administration’s reforms — the first major update to NEPA in more than 40 years — were designed to speed the building of all types of new infrastructure, and reversing the rules would slow the process of adding more clean energy to the grid.
CEQ said it plans to propose a set of broader “phase 2” changes to NEPA regulations in the coming months.
MANCHIN SAYS $1.5 TRILLION IS THE NUMBER: Sen. Joe Manchin of West Virginia dug in Wednesday on the $1.5 trillion topline number for Democrats’ climate and social spending package, a day after suggesting he wouldn’t rule out a measure costing between $1.9 trillion and $2.2 trillion, which is the range Biden recommended to House Democrats in a closed-door session last week.
“Let me make it very clear, there’s been a lot of speculation about what number on reconciliation,” Manchin told reporters at the Capitol. “My number’s been 1.5. I’ve been very clear.”
Manchin and Kyrsten Sinema of Arizona are forcing the party to shrink the cost and scope of the massive spending package.
Broad support for keeping climate in bill: Centrist Democrats in the House, meanwhile, are signaling they want to keep strong climate measures in place as Democratic leaders negotiate policy areas to cut.
Rep. Josh Gottheimer of New Jersey, co-chair of the Problem Solvers Caucus, issued a statement yesterday stressing the importance that “strong climate protections aren’t victims of these cuts” as the reconciliation bill is trimmed.
“There’s no appetite to cut climate across the Democratic party,” Jamal Raad, executive director of Evergreen Action, observed in a tweet.
EIA’S REALITY CHECK ON CURRENT EMISSIONS TRAJECTORY: Without significant policy changes or technological breakthroughs, global energy consumption and carbon emissions will increase through 2050 as a result of population and economic growth, the Energy Information Administration projects in its annual International Energy Outlook released this morning.
Renewables will be the primary source for new electricity generation because of falling costs and favorable policies, but the addition of more solar and wind won’t necessarily translate to displacing incumbent fossil fuels.
Indeed, EIA expects natural gas and coal to remain on the system to help meet load and support grid reliability.
And oil and gas production will continue to grow, mainly to support increasing energy consumption in developing Asian economies.
Electricity generation is expected to almost double in the developing countries between 2020 and 2050.
The same trend holds in transportation: There will be significant growth in electric vehicle sales through 2050, causing the gasoline-powered fleet to peak in 2023 for countries that are members of the Organization for Economic Cooperation and Development and in 2038 globally.
Despite that increase in EV sales, the continued growth in energy consumption means emissions will continue to rise.
What it means: EIA’s analysis does not take into account emissions pledges made by countries as part of the Paris Agreement that haven’t codified actual policies to meet them (looking at you, U.S.).
It does consider carbon reduction policies on the books, like Canada’s carbon tax and the European Union’s cap-and-trade system.
It’s highly unlikely regulations and laws across the world will stay stagnant as governments look to translate their emissions reduction pledges into policy, but the EIA projections underscore the clean energy transition won’t happen on its own.
OIL DEMAND BOUNCES BACK: U.S. oil demand rose last week, bouncing back from a decline the week before, the EIA said in its Weekly Petroleum Status report.
Oil demand increased to 21.53 million barrels per day last week from 20.39 million barrels p/d the week prior.
Consumption of motor gasoline, jet fuel, and diesel rose across the board.
EU COUNTRIES CALL FOR PROBE INTO GAS PRICE SURGE: Five European countries led by France and Spain issued a joint statement yesterday on surging energy prices, asking for probe into the natural gas market to understand why current gas contracts have been insufficient to meet demand.
The countries, which also include Greece, the Czech Republic, and Romania, push for the EU to create a “toolkit to coordinate national responses to immediately react to dramatic price surges,” as well as common guidelines on gas storage, and reforms to the wholesale electricity market.
They seek to diversify the EU’s energy supply and reduce dependency on gas imports “as fast as possible” and strive to ensure a “more” predictable carbon price. Costs for permits to emit carbon as part of Europe’s emissions trading system are at record levels.
The Rundown
Bloomberg Coal crisis leaves India with few options to avoid power crunch
Reuters Russia is boosting gas supply to Europe including via Ukraine, Putin says
S&P Global EU leaders to discuss strategic gas reserve at October summit: von der Leyen
Bloomberg China tells gas importers to bear high cost to fix energy crisis
New York Times Climate change is devastating coral reefs worldwide, major report says
Calendar
WEDNESDAY | OCT. 6
2:30 p.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine the status and management of drought in the western United States.
