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SIGNIFICANT PROVISION IN BIDEN ORDER: As the dust settled on President Biden’s climate day, the administration slipped in a potentially important provision, one that would ripple beyond U.S. borders, to the text of his expansive executive order. The order calls for the federal government to plan for ending U.S. financing of fossil fuels overseas, which activists are reading to mean not just withholding coal funding, as the Obama administration did, but also oil and gas.
The order tasks the departments of State, Energy, and Treasury to work with U.S. development finance and export credit agencies in “identifying steps through which the United States can promote ending international financing of carbon-intensive fossil fuel-based energy while simultaneously advancing sustainable development and a green recovery.”
How far that goes may hinge on how the agencies define “carbon intensive,” but researchers at ClearView said Biden very well could instruct the U.S. Development Finance Corporation (DFC) to end backing for overseas LNG infrastructure, which would threaten the oil and gas industry’s ability to sell gas as a clean alternative to coal in developing countries.
Another institution, the Ex-Im Bank, just this month, finalized its first ever U.S. LNG export project authorization, providing $50 million to Freeport LNG, a Houston-based company.
The American Petroleum Institute is taking note of the threat.
“When the Export-Import bank helps build out LNG facilities in countries that currently get their power from coal, that is environmental progress,” Mike Sommers, CEO of API said during an energy industry forum this morning. “Shouldn’t it be a top priority of the United States to help them cut their emissions profile through LNG?”
MORE ON THE ORDER BELOW…
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MORE ON THE EXECUTIVE ORDER…
Oil and gas financing under new scrutiny: Liberal climate activists, however, say cutting off U.S. finance for all fossil fuels would add to growing momentum for stopping public funding of oil and gas, coming on the heels of recent commitments from the United Kingdom and the European Investment Bank.
The U.S. ranked third out of all G-20 countries in overseas finance of oil and gas in 2019, providing $6.8 billion in funding for projects, according to a database kept by Oil Change International.
David Livingston, a senior analyst with the Eurasia Group, however, said the U.S. “actually engages in relatively little overseas public finance for fossil fuels,” coming to around $1 billion or less annually over the last few years. China, by comparison has averaged around $25 billion of overseas public finance for fossil projects annually over the past several years, he said.
“So it’s a good first step by the US to signal leadership and shine a light on this topic, but the US cannot bend the arc of international public energy sector finance on its own,” Livingston told Josh.
Collin Rees, a senior campaigner with Oil Change U.S., said Livingston is right that U.S. funding of fossil fuels was in the range of $1 billion per year before 2019, but he said the numbers were artificially low because Ex-Im lacked a quorum and was non-operational.
“There are extremely material amounts of money (tens of billions per year) supporting fossil through the non-Chinese-centric [international financial institutions],” he said.
Justin Guay, director of global climate strategy at the Sunrise Project, told Josh that most of the U.S. overseas finance flows to oil and gas, not coal.
“When you are talking about coal, China is the villain. They are the driver of the last wave of coal expansion. When you shift to oil and gas, the No. 1 villain is the United States,” Guay said. “Oil and gas is the challenge for the Biden administration. The million dollar question is — what are the details of that plan?”
How far does Biden go? Guay said his biggest question is whether the administration truly cuts off overseas funding for natural gas, especially for projects in Asia, where gas is seen as a cleaner alternative to coal.
The Obama administration State Department promoted exports of natural gas for that reason, and the Trump administration took it to another level. Biden’s administration is stacked with Obama-era veterans.
“The question is have the politics shifted enough to where they’ve recognized how different the world is today,” Guay said.
BIDEN PRESSURED TO DELIVER ON JOBS: Biden’s top climate officials on Wednesday sought to assure that their actions targeting fossil fuel production in order to combat climate change won’t lead to a massive displacement of jobs.
“What President Biden wants to do is make sure those folks have better choices, that they have alternatives,” Biden’s international climate envoy John Kerry said of fossil fuel workers. “They can be the people who go to work to build the solar panels, making them here at home.”
Gina McCarthy, Biden’s national climate adviser, was more nuanced with her promises, suggesting the replacement of fossil fuels jobs with “millions” of clean energy jobs won’t be one-to-one and will take time to realize.
“We’re not going to ask people to go from the middle of Ohio or Pennsylvania and ship out to the coast to have solar jobs,” she said.
The White House as part of Biden’s climate executive order is establishing an interagency working group headed by climate coordinator McCarthy and National Economic Council Director Brian Deese that will help fossil fuel communities. The group has to submit a report to Biden within 60 days on how to “revitalize” fossil fuel communities.
Manchin wants answers: Democrat Sen. Joe Manchin of West Virginia, the incoming chairman of the Energy Committee who Biden needs to keep in good graces, said that he intends “to hold the Administration to this while ensuring that the burden of any acceleration in already changing markets is not unduly placed on these communities that powered our nation to greatness.”
Jennifer Granholm, Biden’s Energy secretary nominee, assured Manchin that DOE will prioritize directing its clean energy technology spending in states that have lost fossil fuel jobs.
“This is the most important question, honestly, because we know that this transition is happening,” Granholm said in her confirmation hearing yesterday.
BIDEN’S CLIMATE CHIEFS SAY MARKETS WILL PRESERVE BIDEN POLICIES: “I think we can achieve things in the course of the next four years that will move the marketplace, the private sector, global finance, innovation, and research that in fact no one, no political person in the future, will be able to undo what the planet is going to be organizing over these next months and years,” Kerry told reporters in the White House briefing yesterday.
Kerry was answering a question about how the U.S. can regain credibility with other nations that its climate commitments won’t just erode if a new political administration takes power.
We expect it’s a question Kerry, the former secretary of State who helped negotiate the Paris Agreement, thinks about a lot. McCarthy, too, watched her legacy as EPA administrator get torn apart by the Trump administration over the last four years.
Kerry and McCarthy, though, say the landscape in the private sector has shifted, and they expect markets to move so much toward clean energy in the next few years it will be impossible for a future politician to turn back.
“All of a sudden, the question won’t be whether the private sector is going to buy into it,” McCarthy said. “The private sector is going to drive it.”
KERRY FACES PRESSURE ON CHINA: Kerry said yesterday it’s urgent that the U.S. find a way to “compartmentalize” climate change issues as it deals with China to move forward in curbing global greenhouse gas emissions, even as the U.S. faces tensions with the country on other issues.
“We have serious differences with China on some very, very important issues, and I am as mindful of that as anybody having served as secretary of State and in the Senate,” Kerry said, listing tensions over theft of intellectual property and access to markets. He stressed that Biden is “very clear” about the need to address those other issues with China.
“Those issues will never be traded for anything that has to do with climate. That’s not going to happen,” he added. “But the climate is a critical standalone issue that we have to deal on.”
We expect Kerry will continue to face tough questions on this, especially given Biden’s order yesterday elevated climate change to a priority in his administration’s national security and diplomacy agenda.
BREAKING THIS MORNING…GM’S BIG MOVE: General Motors said it will strive to make every vehicle it sells zero-emissions by 2035, a significant step that likely means the U.S. auto giant will transition from selling gas-powered cars.
“For General Motors, our most significant carbon impact comes from tailpipe emissions of the vehicles that we sell — in our case, it’s 75 percent,” said CEO Mary Barra in a LinkedIn post today. “That is why it is so important that we accelerate toward a future in which every vehicle we sell is a zero-emissions vehicle.”
Barra didn’t explicitly say the automaker will stop selling gas-powered vehicles, but she said the company worked with the Environmental Defense Fund “to develop a shared vision of an all-electric future and an aspiration to eliminate tailpipe emissions from new light-duty vehicles by 2035.”
Read more of the details in Abby’s story here.
GRANHOLM’S OLIVE BRANCH TO GOP ON LNG AND CRITICAL MINERALS: During yesterday’s craziness, we missed a couple things in Granholm’s hearing to be Energy secretary, in which she sought to assure Republicans that fossil fuels through carbon management techniques would play a role in Biden’s net-zero emissions goal.
She also committed to follow federal law as it relates to approving applications for exporting LNG providing clarity in an area where Biden was murky during the campaign.
“The Natural Gas Act of 1938 dictates the requirements and the considerations, and I would certainly abide by that act, including issues related to whether something is in the public interest, what the economics are, what the geopolitical concerns are,” Granholm said in response to a question from GOP Sen. Mike Lee on how climate considerations would factor into DOE’s analysis.
Granholm added in some cases, such as small-scale LNG exports to Caribbean islands, approvals could even provide a net climate benefit compared to other dirtier fuels.
She did indicate, though, that the administration, likely through FERC which works with DOE in approving LNG projects, would apply stricter greenhouse gas reviews.
“I would also want to work with the natural gas providers to see if we could continue to reduce greenhouse gas emissions at the point of production,” she added.
Critical minerals key climate goals: Granholm also promised Republicans she shares their interest in boosting domestic mining for critical minerals that could be crucial to developing more batteries, wind turbines, and solar panels. The issue is tricky for Democrats and environmentalists, who want to expand clean energy development but generally oppose new mining.
“These minerals can be mined in a responsible way in a way that respects the environment,” Granholm said. “We don’t want to be under the thumb of China or other countries that corner the market on minerals.” She added she is “enthusiastically supportive” of DOE’s role in critical minerals “for both jobs and energy security and supply chain security in the United States.”
API BREAKS HARD FROM BIDEN: That kumbaya between the oil and gas lobby and Biden didn’t last long.
“President Biden’s energy policy actions have completely undercut his message of unity and his mandate for economic recovery,” Sommers, the CEO of the American Petroleum Institute, said this morning during the United States Energy Association’s State of the Energy Industry Forum. “Now is not the time to give up on American oil and gas.”
API and other industry groups such as the Chamber of Commerce had sought to offer Biden an olive branch in his opening days by flipping to support direct regulation of methane.
But the oil and gas industry seems caught off guard by the pace and intensity of Biden’s moves to restrict fossil fuel leasing on federal lands and reject oil infrastructure. We’d point out that Biden did campaign on this stuff, but maybe businesses thought he’d wait to have his agency leadership in place.
ON THAT NOTE…BIDEN SUED: The Westeran Energy Alliance, which has sought no such olive branch with Biden, wasted no time yesterday in hitting his administration with a lawsuit over the oil and gas leasing pause.
Kathleen Sgamma, president of the Alliance, which represents producers on federal lands, described Biden’s action as a “ban,” despite his administration describing the order as a temporary moratorium on leasing while the administration reviews how to better balance oil and gas with developing renewables.
The legal question: ClearView notes Biden seems to be on safe legal ground by focusing just on pausing leasing, and not permitting. The Mineral Leasing Act, the group, says, requires the Interior Department’s Bureau of Land Management to sell fossil fuel leases on a quarterly basis, but another statute, the Federal Land Policy and Management Act, allows for the withdrawal of public lands from energy leasing in emergency situations.
REPUBLICANS DEMAND OVERSIGHT: Sen. Cynthia Lummis, a freshman Republican from Wyoming, introduced legislation today that would prohibit the president from blocking energy or mineral leasing and permitting on federal lands and waters without Congressional approval.
“Through the POWER Act, Congress would reiterate that federal lands should serve not the whims of a radical progressive minority, but the needs of all Americans,” Lummis said, noting that Western states such as Wyoming that depend on federal oil and gas royalty revenues are already reeling from the pandemic.
Co-sponsors, all Republicans, represent a quarter of the Senate, including John Barrasso, the incoming top GOP member of the Senate Energy Committee, Tom Cotton, Bill Cassidy, Ted Cruz, Kevin Cramer, Steve Daines, and more.
GOP Rep. Yvette Herrell of New Mexico, the top-producing state of oil and gas on federal lands, will introduce matching legislation in the House and will be joined by Leader Kevin McCarthy, Whip Steve Scalise, and Bruce Westerman, the top Republican on the Natural Resources Committee.
IT JUST GOT EASIER FOR BIDEN TO UNDO TRUMP EPA SCIENCE RULE: A federal district court judge ruled late yesterday that the Trump EPA unlawfully rushed its science transparency rule to take effect immediately, a ruling that will help the Biden team undo the rulemaking.
Judge Brian Morris, a federal district court judge in Montana, pushed back the effective date of the Trump EPA rule to Feb. 5, meaning the rule now falls squarely in the crosshairs of a day-one Biden White House memo freezing Trump-era rules that hadn’t yet taken effect. The Environmental Defense Fund, which led the lawsuit, said the ruling would allow the Biden EPA to pause the science rule until the courts finish considering legal challenges against it.
The Trump EPA had argued its rule, which restricts the types of science the EPA can consider in policy making, could take immediate effect both because it was a procedural rule and it needed to be urgently implemented. Morris, in his ruling, rejected both claims.
Another boost for the Biden team: Morris didn’t explicitly say the Trump EPA’s rule is unlawful, but he got pretty close. His determination that the science rule is a “substantive” rule and not procedural “casts into significant doubt whether EPA retains any legal basis” to issue the final rule, Morris wrote in his ruling.
BIDEN PAUSES TRUMP RULE ON BIG BANKS’ ‘FAIR ACCESS’: The Biden administration is putting on hold a Trump-era rule aiming to keep big U.S. banks from dropping fossil fuel companies, in a sign it will seek to reverse course.
The Office of the Comptroller of the Currency had finalized the rule, which would bar big banks from restricting specific industries from their lending or other financial services, in the last week of the Trump administration. The rule, however, hadn’t yet been published in the Federal Register (a step that essentially codifies the regulation), allowing the Biden team to quickly pause and reconsider the regulation.
EPA STAFFS UP: The Biden administration announced a slate of new EPA appointments yesterday that includes an alum of Vice President Kamala Harris’ campaign and an ally of Biden’s nominee for EPA administrator Michael Regan.
One notable hire is Avi Garbow, who served as the EPA’s top lawyer during the Obama administration’s second term. He’ll join the EPA as a senior counselor to the administrator after working as Patagonia’s environmental advocate.
Mark your calendars: The Senate Environment and Public Works Committee has scheduled Regan’s confirmation hearing for Wednesday. We’re expecting he’ll get tough questions from committee Republicans about the EPA’s agenda to regulate greenhouse gas emissions, especially after this week’s sweeping executive order.
The Rundown
Bloomberg Biden issues dozens of oil drilling permits in first few days
Roll Call Whitehouse’s ‘wake up’ gets put to sleep after 9-year run
New York Times ‘Energy’ is its name. But what can the DOE actually do on climate?
Bloomberg Saudi Arabia aims to become next Germany of renewable energy
Calendar
THURSDAY | JAN. 28
1 p.m. The House Energy and Commerce Committee holds a virtual organizational meeting.
WEDNESDAY | FEB. 3
2 p.m. The Senate Environment and Public Works Committee holds a hearing on the nomination of Michael Regan to be the EPA administrator.
