Daily on Energy: Renewables may get help from Trump, but only half of what they want

The Treasury Department, in a letter Thursday to Senate Finance Committee Chairman Chuck Grassley, said it “plans to modify” so-called safe harbor deadlines for wind and solar tax credits “in the near future.” The brief letter didn’t provide any timeline or details, but the move could give renewable energy companies the cushion they need to still qualify for federal tax credits.

For weeks, wind and solar energy groups have lobbied Congress and asked the Treasury Department for help, as they’ve faced supply chain disruptions, travel restrictions, and other challenges from the pandemic that have delayed projects. They’ve repeatedly asked for two targeted tweaks to the tax credits — an extension of the safe harbor deadlines and a direct pay option — that the groups say will ensure companies don’t lose out on tax credits that start to phase down in the next couple years.

The renewable energy sector responded positively to the signs Treasury could finally move on the first of those requests.

The politics get trickier, though: The prospects of aid to the wind and solar industries initially gummed up negotiations over the CARES Act. Many Republican lawmakers accused Democrats of trying to force the Green New Deal into virus recovery legislation, saying they were putting a progressive wish list over the health and livelihoods of people struggling from the virus.

Not every Republican took this view. Energy Committee Chairman Lisa Murkowski and Majority Whip John Thune joined Grassley and three Democrats on a letter last month urging the Treasury Department to extend the safe harbor deadlines. The “modest adjustment” would “help preserve tens of thousands of jobs and billions of dollars in investments,” the senators wrote.

But even though Treasury is moving on that request, the other one, allowing direct pay, can’t be accomplished without Congress. That direct pay option, which would allow developers to claim the tax credits as cash payments, is critical for project financing, as the tax equity markets renewables rely upon are struggling amid the economic downturn.

Other Republicans from fossil fuel states, including Senate Environment Committee Chairman John Barrasso, are saying they won’t accept aid to the renewable energy sector as part of an economic recovery package — or at least not without equivalent relief for carbon capture and fossil fuels.

Election year politics also don’t help: “I would expect every member of Congress to be hypersensitive to the needs of their districts and their constituents,” said Heather Reams, the executive director of Citizens for Responsible Energy Solutions. “If your primary energy source is solar, you’re going to be pretty dogmatic about solar. If your energy primarily is coal, you’re going to be really dogmatic about that, too.”

Reams, though, is hoping to remind Republicans of the value of clean energy.

“There are so many competing interests, there’s got to be some kind of compromise,” she told Abby. “What we want to see is clean energy as a part of that compromise.”

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.

THE ‘GREAT SHUT-IN’ OF 14 MILLION BARRELS OF OIL PER DAY: There will be 14 million barrels per day of crude oil production cut or shut-in worldwide in the second quarter of this year, research group IHS Markit projected Friday.

The group calls the cut — which rises to 17 million barrels per day including other petroleum liquid products— the largest in the history of the oil industry.

The “great shut-in” is a response to a lower level of demand underway due to the coronavirus halting travel, along with storage constraints. Some cuts, like from the OPEC+ agreement, are government mandated, but others are market-driven.

IHS Markit expects oil demand in the second quarter to be 22 million barrels per day less than a year ago.

CAN SENATORS STRIKE A DEAL ON COOLANTS? If they don’t, U.S. chemical makers and appliance manufacturers are warning they’d face stranded investments and jobs moving overseas.

Companies like Chemours and Carrier, as well as trade groups representing the sector, raised the concerns during a monthlong virtual public hearing on a bill to phase down hydrofluorocarbons, or HFCs, refrigerant chemicals that are potent greenhouse gases.

The bill, from Louisiana Republican Sen. John Kennedy and Delaware Democratic Sen. Tom Carper, already boasts support from a third of the Senate, split evenly between parties. But it’s also hit some major opposition, including from Barrasso.

Industry supporters of the bill — including the Air-Conditioning, Heating, and Refrigeration Institute and the U.S. Chamber of Commerce — are hopeful a compromise can emerge in the next couple months. It isn’t clear, though, whether Barrasso, Carper, and other senators are ready to come back to the negotiating table just yet.

More in Abby’s story published this morning.

BONUS ON HVAC: AHRI is seeking the State Department’s help in getting Mexico to classify air-conditioning, heating, and refrigeration equipment manufacturing as an “essential” business that must remain open. “Simply put, the continued inability of some of our member companies to manufacture products in their Mexican factories will very soon severely impact our ability to supply these essential products to the American market, putting American lives and health at risk,” AHRI president Stephen Yurek wrote Secretary of State Mike Pompeo in a letter this week.

CORN-STATE SENATORS ASK TRUMP TO PROTECT RFS: Requests from oil-state governors to waive biofuel blending requirements under the Renewable Fuel Standard are “unjustified and clearly do not satisfy the rigorous requirements necessary for EPA consideration,” two dozen senators wrote President Trump in a letter Thursday.

The EPA can only waive the biofuels requirements in instances of “severe harm” to the economy or environment caused directly by the RFS, a bar that hasn’t been cleared, the bipartisan group of senators wrote. Waiving the RFS would hurt ethanol producers and rural communities already suffering from the coronavirus pandemic, said the letter, led by Iowa Republican Joni Ernst and Minnesota Democrat Tina Smith. The letter noted nearly 50% of the ethanol industry’s production capacity remains idled.

Trump is getting caught in the middle again: The pandemic has stoked the flames of the RFS fight, reignited by a federal appeals court decision in January that sharply restricted the EPA’s ability to grant waivers exempting small refiners from the biofuels requirements. The EPA chose not to appeal the decision, but it also hasn’t said how it will implement it.

Oil refiners say the letter from corn state lawmakers actually proves why the EPA should grant the governors’ waiver requests. “The letter concedes that 46 percent of capacity has been idled during the current crisis,” the Fueling American Jobs Coalition, which includes oil refiners and labor unions, said in a statement. If the biofuels requirements are still held steady, “the RFS will simply be converted into an import mandate,” the coalition added.

FOSSIL FUELS ‘DO NOT DESERVE’ BAILOUT, WARREN SAYS: “The use of taxpayer money to create an additional facility that would allow non-creditworthy oil companies exclusive access to funds is both unjustified and unnecessary,” Sen. Elizabeth Warren wrote Treasury Secretary Steven Mnuchin in a recent letter. That’s especially true because the Trump administration has resisted calls to fund clean energy in federal recovery efforts, she added, calling for Mnuchin to “immediately halt or reverse any actions” to help fossil fuel companies.

Warren’s letter comes as she joined dozens of Democrats this week to introduce a bill that would block fossil fuel companies from accessing the pandemic relief programs, including the Main Street loan program. That bill would also unravel several other Trump administration attempts to aid the oil and gas industry, including by capping the Strategic Petroleum Reserve and blocking new fossil fuel leases on federal lands during the pandemic.

DEMOCRATIC ATTORNEYS GENERAL TO FERC…NO PIPELINE OR LNG APPROVALS DURING PANDEMIC: Eleven Democratic attorneys general urged FERC on Thursday to halt approvals of fossil fuel infrastructure projects during the course of the pandemic.

The Democrats, led by Brian Frosh of Maryland, argue the pandemic prevents landowners, environmental groups, and other stakeholders from organizing against projects like pipelines and LNG terminals.

FERC Chairman Neil Chatterjee, a Republican, indicated Friday he has no intention of stopping the commission’s normal approval process. Chatterjee tweeted support for a letter to him written by Republican House members urging FERC to ignore calls for moratoriums on approvals of pipelines and LNG terminals.

DOE QUIETLY MOVES TO STREAMLINE LNG REVIEWS: The Energy Department recently proposed a rule that would expand the use of “categorical exclusions” in its review of LNG import and export applications, subjecting facilities to less rigorous environmental analysis.

The research group ClearView noted the proposed changes Thursday, which DOE published May 1 in the Federal Register without issuing a press release.

ClearView posited that the change would be significant, making it harder for opponents of LNG exports to argue that the environmental effects outweigh the economic benefits. But it may have a limited short-term effect given it could be subject to reversal by a Democratic administration via the Congressional Review Act, given the late timing of the proposed rule, which still has to be finalized.

While FERC certifies LNG projects, DOE is responsible for issuing a final export license.

Only the Jordan Cove LNG project is currently pending at the DOE after it was approved by FERC in March.

OFFSHORE OIL INDUSTRY WANTS MORE TESTING: The National Ocean Industries Association and Louisiana Mid-Continent Oil & Gas Association asked federal and state government officials Friday to provide more COVID-19 test kits and equipment for its workers.

The offshore energy industry employs 25,000 workers, who work closely with others in confined facilities and infrastructure.

“Only the widespread testing of workers can provide companies the information and assurance that COVID-19 is being fully prevented,” NOIA President Erik Milito warned in a statement.

As of today, NOIA has counted 53 confirmed cases of coronavirus among offshore workers, spokesman Justin Williams told Josh, 11 of them within the last two weeks.

CRES EXPANDS ITS POLICY TEAM: Chris Mathey is joining Citizens for Responsible Energy Solutions as vice president of government relations, the conservative climate and clean energy group announced Thursday. Mathey comes from the Renewable Energy Buyers Alliance, where he served as senior director of innovation, and he previously worked at WGL Energy Systems, Constellation, and Exelon.

CRES also recently hired Rebecca Lorenzen as policy manager and promoted Charles Hernick to vice president of policy and advocacy. Lorenzen joins CRES after nine years working for the Mexican federal government on national security issues.

MORE CONSERVATIVE GROUP MOVERS AND SHAKERS: Alex Bozmoski, managing director and co-founder of republicEn.org, is leaving the group to become vice president for programs at DEPLOY/US, a nonprofit that seeks to “amplify” right-of-center leadership on climate change.

Clean energy group ClearPath announced Friday it hired Emily Johnson as a communications and external affairs associate. She joins ClearPath from Madigan Jones, where she was a research associate focused in financial services and international trade.

The Rundown

Los Angeles Times How to stop a climate vote? Threaten a ‘no social distancing’ protest

Bloomberg Oil bust forces college grads to rethink a well-paid career path

S&P Global DOE official: US to be ‘long on electricity,’ adds coal closures may accelerate

Reuters Green hydrogen’s time has come, say advocates eying post-pandemic world

West Central Tribune North Dakota’s largest coal-fired power plant will shut down in 2022 unless new buyer can be found

Calendar

MONDAY | MAY 11

The Senate is in session. The House hopes to return soon.