Daily on Energy: Russian reconnaissance versus warfare

Asked yesterday whether Russian cyberattacks were already underway, White House National Security Adviser Jake Sullivan sought to distinguish the administration’s view of “preparatory work” — in which hackers breach a system for purposes of intelligence collection, or as a precursor for a future attack — versus the actual “disruptive, destructive type of attack” seen in last year’s ransomware attacks on Colonial Pipeline and JBS foods.

“It’s really the latter thing that we have not yet seen,” and which would likely trigger a more robust response from the U.S. and its allies,” Sullivan said.

An attack on critical infrastructure would likely touch off an escalation: The 16 areas of critical infrastructure are overseen by DHS’s cyber agency, CISA, and include areas of energy, water, financial services, health care, defense, and transportation, among others. After traveling to Geneva in June last summer for his first bilateral meeting with Putin, President Joe Biden said he explicitly listed the 16 areas of critical infrastructure as “off limits, period” to cyberattacks.

Asked what the U.S. would do if Russia violated that designation, Biden said: “I pointed out to him we have significant cyber capabilities.”

The U.S. and its NATO allies have agreed that cyberattacks can be considered a military act, which could justify retaliation by the alliance under Article 5.

CISA director Jen Easterly told industry executives and state and local leaders in a call yesterday that the so-called “preparatory activity” by Russia is “not about espionage, it’s probably very likely about disruptive or destructive [cyber] activity,” CNN reports.

What Russia is already reportedly doing to the energy sector: The FBI issued an advisory to the U.S. energy sector earlier this month warning about “network scanning activity” being conducted from Russian IP addresses believed to be associated with previous hacks. It added that any activity from these IP addresses “likely indicates early stages of reconnaissance, scanning networks for vulnerabilities for use in potential future intrusions.”

The FBI advisory warned that Russian hackers have scanned at least five energy companies for vulnerabilities and told businesses to “examine current network traffic for these IP addresses and conduct follow-on investigations if observed.”

Last week, Energy Secretary Jennifer Granholm implored energy executives to “prepare to the highest possible level” for a Russian attack.

Russia has targeted the grid before: Russian hackers infiltrated the U.S. electric grid as recently as 2017, a breach that gave hackers key insight into operations at power plants, nuclear generators, and water facilities.

That’s especially important since hackers that can access U.S. critical infrastructure pose a “national security threat, an economic prosperity threat, a public health and a safety threat,” Michael Daniel, president and CEO of the Cyber Threat Alliance, who also served as the White House cyber coordinator under President Barack Obama, told Breanne ahead of last year’s Biden-Putin summit. 

A joint FBI and DHS report released in wake of the 2017 breach said that Russian hackers had collected sensitive data — including passwords, logins, and information about U.S. energy supply — laying the groundwork for future attacks.

“What Russia has done is prepare the battlefield without pulling the trigger,” Robert Silvers, former assistant secretary for cyber policy at DHS, told CBS News.

“The grid is a sprawling target,” former FERC chairman Jon Wellinghoff said on “60 Minutes” late last month. The three major interconnections, he said, are supplanted by some 55,000 substations across the country, which house transformers that convert raw electricity to higher or lower voltages.

It wasn’t until his time at FERC, Wellinghoff said, that he realized just how vulnerable the grid system was — both to physical and online attacks.

“It was actually very shocking to us [that] there’s very few number of substations you need to take out in the entire United States to knock out the entire grid,” he said, later placing the number at “less than 20.”

What Russia did to Ukraine: In 2015, Russian hackers used Ukraine as a testing ground for a sustained, years-long cyberattack. The country was roiled by blackouts that hit indiscriminately and without warning, leaving hundreds of thousands of people without power for hours at a time.

In 2016, then-Ukrainian president Petro Poroshenko said that e. He pointed the finger directly at the Kremlin, which he said “have unleashed a cyberwar against our country.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). 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.

WHITE HOUSE PREVIEWS BIDEN BRUSSELS TREK: Sullivan said yesterday to expect Biden to announce new “joint action on enhancing European energy security and reducing Europe’s dependence on Russian gas” tomorrow in Brussels, where he’s strategizing with EU officials about the Russia-Ukraine war.

Continental economies have avoided committing to bans of Russian energy in the immediate term, as doing so would likely foment a recession, but their leaders have been out in the world trying to find alternatives.

German Vice Chancellor Robert Habeck was in Qatar over the weekend trying to squeeze more LNG out of the top-three producer, and he said he got firm commitments on short-term supplies, Euractiv reported.

“The good news is that this will be provided,” Habeck said. “Now the companies have to make these contracts for it.”

We’re not placing bets, but: The announcement could involve the Biden administration putting U.S. LNG forward as a Russian dependence-reducing mechanism for EU allies.

Growing U.S. market share for gas in Europe is integral to the case which the oil and gas industry has been making on its own behalf, and the administration has made moves to that end.

Biden’s Energy Department last week issued orders enabling LNG producer Cheniere export additional volumes of product from two Gulf Coast facilities, and it authorized exports to any country with which the U.S. has no existing free trade agreement: i.e. all of Europe.

MINERAL CONSTRAINTS COULD PLAGUE ENERGY TRANSITION: Reaching national and global net-zero targets will require exponential growth of renewable energy and other technologies, and CRES Forum is warning that policymakers underestimate the constraints to mineral markets on which those key technologies rely.

A new analysis from the forum, the policy arm of conservative energy group Citizens for Responsible Energy Solutions, notes an estimate that 75% of all mined lithium will be used for electric vehicles by 2025 but that EVs only make up 1% of the global light-duty vehicle fleet and are expected to account for only 7% of transportation by 2030.

“In other words, to meet the proposed emission targets, more lithium will be required than is expected to be produced, and it is unclear if the production increases at the required scale are feasible,” the paper says.

The authors note a handful of studies assessing limits to securing various mineral supplies, including cobalt and nickel. While they vary in their findings, all of them estimate that the quantities of cobalt needed to shift the globe to net-zero exceed global reserves by at least 100%. One of the studies cobalt demand under a global net-zero scenario to exceed reserves by 423%.

It’s the same story with lithium, nickel, and zinc, too, according to the studies.

“We’re not really considering the potential scarcity issues that we encounter from [net-zero],” Phil Rossetti, a co-author of the paper, told Jeremy.

“We look at EVs or renewables, and we say, ‘The prices are coming down, and ‘this is a good thing — it’s going to lead to bigger global adoption.’ But if the input costs to those resources start to rise, due to scarcity of critical minerals, it could put a big damper on a global clean energy transition,” he said.

The solution, to the extent that there is one, is setting policies to improve recycling of these minerals, as well as to encourage more mineral production and innovation of technologies that are less mineral intensive.

“The mineral constraints might make this a much slower transition than people are hoping, and it could make it a much costlier transition than people are hoping,” Rossetti said. “The solution to that is finding more resources to essentially improve the availability and address scarcity concerns for minerals.”

ENBRIDGE FIXING AQUIFER DAMAGED DURING LINE 3 BUILD: Canadian energy firm Enbridge Inc. mistakenly punctured groundwater aquifers in three northern-central Minnesota counties during the construction of its Line 3 pipeline replacement project, causing discharge of hundreds of millions of gallons of water, more than had previously been revealed by the state’s Department of Natural Resources.

Details were revealed in a finalized investigation into the breaches released by DNR on Monday. The sites of the breaches were in counties of Clearwater, Hubbard, and St. Louis, and were discovered at different times last summer and fall.

In mid-February, DNR approved a corrective action plan for the largest and still outstanding breach near Fond Du Lac, which let out more than 200 million gallons.

Enbridge spokesman Michael Barnes shared a statement saying the company is working on improving its procedures to avoid such incidents from occurring again and said its crews have repaired two of the sites in conjunction with associated action plans.

It has already agreed to pay more than $3.32 million for the first of the breaches in Clearwater County, and additional penalties are in order for the others, according to DNR.

Elsewhere, Enbridge is engaged in a legal fight with Democratic leaders in Michigan to keep its Line 5 pipeline alive, which carries crude oil and other hydrocarbon liquids through the state.

Michigan Attorney General Dana Nessel said recently the environmental threats associated with the pipeline are larger than ever before and downplayed whether shutting down portions running through the state would affect energy prices.

MCMORRIS RODGERS REQUESTS E&C RENDEZVOUS WITH GRANHOLM: Energy and Commerce Ranking Member Cathy McMorris Rodgers is asking Granholm to appear alongside oil executives who oblige the committee’s request to testify next month to price gouging allegations.

Chairman Frank Pallone last week requested the testimonies of top dogs at Shell, Chevron, and the like to talk over Democrats’ charges that the industry is taking advantage of high oil prices at the consumer’s expense.

McMorris Rodgers asked Granholm to supplement the hearing’s slate of witnesses and testify to “what the Biden-Harris administration will do to reverse its anti-American energy agenda to help address rising gas prices.”

The Rundown

New York Times A Soviet-era pipeline, opposed by President Ronald Reagan but supported by companies, set up today’s oil dependency on Russia

AP Amid protests, Europe limited in curbing high energy prices

E&E News Supreme Court nuclear fight at odds with ‘Cancer Moonshot’

Calendar

THURSDAY | MARCH 24

10:00 a.m. FERC gathers for its March open meeting.