Daily on Energy, presented by API: Eight oil majors commit to more detailed emissions reporting

As part of broader “energy transition” principles released today, the oil majors promised to begin disclosing the risks their companies face from climate change and carbon policy consistent with recommendations from the Task Force on Climate-related Financial Disclosures, the global benchmark for such disclosures.

The companies also pledged to develop a consistent framework by which they’ll measure and report the carbon intensity of their products and how they are reducing emissions. The move follows criticism from investors and environmentalists that the oil companies aren’t all speaking the same language when unveiling targets to become net-zero businesses.

Out of the eight oil majors, just one is a U.S. company, Texas-based Occidental Petroleum. Nearly all of the companies, which include BP, Shell, Total, and Equinor, have set targets to go net-zero by 2050.

“Meeting the challenge of tackling climate change requires unprecedented collaboration between energy companies, governments, investors and other stakeholders,” the oil CEOs said in a joint statement. “The principles will act as a framework for actions leading energy companies are taking together, as well as a platform for collaborating with wider stakeholders.”

Why investors push for transparency: Investors have been ramping up pressure on oil companies to disclose more of their emissions, take stronger action to reduce emissions, and use their political power to lobby for policies to curb climate change. Disclosure has become especially important as big banks and asset managers begin to set their own climate targets and reassess where they’re investing.

Both JP Morgan and Morgan Stanley have recently announced climate goals, JP Morgan to align its financing with the Paris Agreement and Morgan Stanley to strive for net-zero financed emissions by 2050.

Earlier this month, the New York State Pension Fund, valued at roughly $226 billion, announced it would move its portfolio to net-zero greenhouse gas emissions by 2040. That could include divesting from oil and gas and other fossil fuel companies if they don’t meet climate investment metrics the fund is establishing.

The proof is in the pudding: Environmentalists are welcoming the oil companies’ work to standardize reporting, but say they must go further than simply supporting the Paris Agreement and transitioning to cleaner energy.

“Companies must also disclose transition plans with targets, timelines, and incentives commensurate with Paris goals, while advocating for supportive public policies and establishing safeguards so not a single dollar goes to climate obstruction,” said Ben Ratner, a senior director with the Environmental Defense Fund.

The oil companies did, as part of their principles, pledge to report on their trade group memberships and how they align with the companies’ climate positions, but they didn’t go so far as to say they’d lobby those trade groups to change course (or leave them if they don’t).

“The test of these new principles will be how companies put them into practice with tangible actions in the years ahead, including growing the ranks of participants and getting their trade associations on board,” Ratner said.

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A GLIMPSE OF THE NEW LOOK FERC: We got a taste of the dynamics of the new-look FERC at its first meeting today with newly confirmed Democrat Allison Clements. Republican Mark Christie, also freshly confirmed, won’t join FERC until January as he finishes up his job at the Virginia State Corporation Commission.

Clements chose not to vote at the virtual meeting, citing a lack of time she had to review the agenda items since being sworn in this month. But she provided a window into her approach, giving an opening statement touting FERC’s history of “proactive” regulation and declaring that the commission must take into account climate change.

“FERC’S obligation to ensure just and reasonable rates and avoid unfair discrimination have not changed,” Clements said. But, “these factors also include the grave threat of climate change and actions by all levels of the government, corporations and individuals to address that threat.”

Meanwhile, Chatterjee flexes: Recently demoted chairman Neil Chatterjee, a Republican, demonstrated his newfound stature as a swing vote, blocking an attempt by his replacement, James Danly, to pass a “show cause” order that would have required California’s grid operator to overhaul its tariff, or pricing regime, in response to blackouts this summer.

In a rare move, Danly brought the order to a vote despite lacking the votes to approve it. Chatterjee and Democrat Richard Glick rejected it.

CAISO, lacking sufficient energy load, resorted to imposing rolling blackouts this summer during a record heat wave, intensifying a debate on California’s rapid shift to renewables.

Chatterjee said he “remains concerned we can face more reliability concerns in California,” but argued the “fastest and most effective way” to help is for FERC to collaborate with the state, rather than order changes.

Facing rejection, Danly agreed to a proposal by Glick to host a technical conference on the California blackouts.

The rest of the agenda: FERC, on the backs of Danly and Chatterjee, voted to allow the developers of the Mountain Valley Pipeline to do construction near a 25-mile area that includes going through the Jefferson National Forest in Virginia.

Several of the permits for the Mountain Valley pipeline, a 303-mile project that would carry natural gas from West Virginia through to Virginia, are under legal scrutiny and the developers are still awaiting new permits from the Interior Department.

Glick dissented on the decision, arguing FERC should not allow construction to continue until the developers resolve all outstanding issues associated with the permits.

BIDEN PICKS BRENDA MALLORY FOR CEQ CHAIR: President-elect Joe Biden is adding another leader of his climate team, choosing Brenda Mallory to lead the White House Council on Environmental Quality, Josh has confirmed.

The council, or CEQ, generally coordinates environmental policy throughout the government, and oversees implementation of the National Environmental Policy Act during assessments of permits and infrastructure projects. But it’s expected to also expand its focus to prod agencies to consider the effects of policies and projects on marginalized and low-income people.

Mallory, who would be the first black CEQ chair — which is a Senate confirmed position — is also expected to undo the Trump administration’s rewriting of NEPA regulations and to require infrastructure projects be reviewed for their cumulative greenhouses gas emissions under the law.

“She knows NEPA inside and out,” Christy Goldfuss, who was CEQ chair under President Obama and worked with Mallory, told Josh. “She will build great relationships with environmental justice communities. She will be great.”

Mallory was general counsel of the CEQ in the Obama administration and worked 15 years at the EPA, where she rose to acting general counsel. She’s currently director of regulatory policy at the Southern Environmental Law Center.

PELOSI’S NOD TO HAALAND FOR INTERIOR SECRETARY: House Speaker Nancy Pelosi yesterday gave her approval for Biden to select Rep. Deb Haaland of New Mexico as his Interior secretary, after speculation swirled that Democratic leaders preferred he nominate someone else for fear of shrinking their thin majority.

Pelosi, in a statement, said Haaland is “one of the best members” in the House who would be an “excellent choice” for Interior secretary. Rep. Steny Hoyer, the majority leader, also endorsed Haaland, a favorite of liberals who would be the first Native American Cabinet secretary.

“I think she would be very historic and very appropriate,” Hoyer told reporters.

Haaland’s loss would only be temporary: She would become the third House Democrat to leave Congress for the Biden administration, and her departure would temporarily shrink the perilously slim Democratic majority by yet another vote.

Democrats will have to deal with the three empty seats until special elections are scheduled and held, which could take months.

Until then, Democrats would have only a few seats to spare for any vote that lacked GOP support.

BERNHARDT HAS THE CORONAVIRUS: Interior Secretary David Bernhardt has tested positive for the coronavirus, according to multiple reports. He was tested for the virus before President Trump’s cabinet meeting yesterday, which he did not attend. Bernhardt is currently asymptomatic, his spokesman said.

GETTING TO 50% RENEWABLES: A new report yesterday from the recently formed American Clean Power Association and Wood Mackenzie finds aggressive action from the executive branch and Congress, especially focused on building out electric transmission, can support the U.S. reaching a 50% renewable energy grid in the next 10 years.

Reaching that level of renewable energy would inject more than $1 trillion of capital investment into the U.S. economy, supporting nearly one million jobs in the renewables industry and cutting carbon emissions by more than 60%, the report also finds.

Biden could do a lot to boost renewables without Congress: The report finds administrative actions, including setting renewable energy targets on federal lands, speeding up permitting for projects, and expanding electric transmission, could boost renewables from 19% today to 37%. To reach 50% by 2030, though, Congress would need to help accelerate deployment of clean energy, speed the retirement of coal power, boost energy storage, and modernize the grid.

What about 100% clean by 2035? The groups’ report only modeled out to 2030, but Aaron Barr, a principal consultant with Wood Mackenzie, told reporters reaching 100% zero-carbon power by 2035 (the target Biden wants to establish) presents some challenges, such as a quick deployment timeline and grid reliability.

Even in the groups’ 50% renewable energy scenario, natural gas still plays a “fundamental role” in ensuring grid reliability, Barr said.

“That’s the biggest challenge. Taking all the gas offline to get to 100% clean and replacing all of that capacity with energy storage would be difficult,” he said, adding another open question is what happens to existing nuclear power plants, which provide a significant portion of the U.S. carbon-free power.

NEW BIPARTISAN BILL TO BOOST CO2 INFRASTRUCTURE: The measure — unveiled yesterday by Democratic Reps. Marc Veasey and Cheri Bustos and Republican Reps. David McKinley and Pete Stauber — would create a new loan program to support the buildout of pipelines to carry carbon dioxide from facilities where it is captured to where it can be stored underground.

The bill would also increase funding for the EPA program permitting underground storage wells for carbon dioxide, allow the federal government to share costs for commercial scale storage projects, and boost research for products and fuels using captured carbon.

Carbon capture advocates have long raised concerns that the U.S. isn’t building out enough carbon dioxide pipelines to support a larger scale carbon capture industry critical to meeting long-term climate targets. While Congress has increasingly sought to boost carbon capture technologies, lawmakers haven’t focused heavily on infrastructure yet.

The Carbon Capture Coalition, which has more than 80 members including fossil fuel companies, labor unions, and environmental groups, said the legislation could help create jobs. “Carbon capture, direct air capture and associated transport and storage infrastructure projects provide some of the most desirable clean energy, industrial and manufacturing jobs for American workers, and they consistently pay higher than average local wages,” said Brad Crabtree, the coalition’s director.

BUSINESSES CALL FOR RAMP-UP IN CLEAN ENERGY R&D: The American Energy Innovation Council, a group of 11 business leaders convened by the Bipartisan Policy Center, is calling on the federal government to quickly ramp up clean energy research and development, including by tripling investment in clean energy innovation to $25 billion per year.

The council — which includes the CEOs of major utilities like Southern Company and Dominion Energy, the chairman of Shell, and a top official at the AFL-CIO, among others — also recommends the government fund the Energy Department’s innovation hub known as ARPA-E at $1 billion each year and establish a challenge program to support large-scale pilot projects.

“We propose our new policy recommendations today with greater urgency than ever, as they are crucial to driving strong economic growth while preventing the worst outcomes of climate change,” said Norm Augustine, co-chair of the council and retired CEO of Lockheed Martin.

VOTERS BACK CLIMATE RISK DISCLOSURE: Nearly three-quarters of voters responding to a poll from the Environmental Defense Fund support requiring companies to disclose their financial risk to climate change. That includes 55% of Republicans and 69% of Independents.

Three quarters of young voters ages 18-34 (76%) say it should be a priority for the Biden administration to implement new requirements on climate risk disclosure.

A majority of voters also support requiring public companies to disclose the money they spend to influence climate policy, including 59% of Republicans and 70% of Independents.

The poll, conducted online, surveyed 1,994 registered voters this month.

LENDERS OUT OF STEP WITH MARITIME SHIPPING CLIMATE GOAL: Fifteen financial institutions that signed on to a 2019 framework, called the Poseidon Principles, released a first-time update yesterday on their effort to help meet the International Maritime Organization’s goal of reducing emissions from international shipping at least 50% from 2008 levels by 2050, and phasing them out this century.

Their update shows that only three of the banks’ ship finance portfolios are aligned with UN decarbonization targets.

The Rundown

New York Times Biden’s twin climate chiefs, McCarthy and Kerry, face a monumental task

Wall Street Journal SEC approves scaled-back disclosure rule for energy, mining companies

Reuters Climate change turns up the heat on ad industry

Calendar

THURSDAY | DEC. 17

Congress is working on an omnibus spending bill and pandemic response package