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TRUMP’S VISION FOR LNG EXPORT DOMINANCE UNDER THREAT: The Trump administration is facing threats to its ambition to flood the world with cheap natural gas as a key component of its energy dominance agenda. And some of the damage is self-inflicted.

Slow approvals: Most immediately, the U.S. has a shortage of facilities along the coasts to export liquefied natural gas, or LNG — the chilled, liquid form to which gas must be converted for shipment in giant tanker vessels across the sea.

The U.S. has two major LNG export facilities in operation today, with another four set to enter service by the end of 2019. Four others have earned regulatory approval, and their developers are making final investment decisions on whether to build their planned facilities based on whether they can secure contracts for the gas they hope to provide.

But more than a dozen other facilities are awaiting permit approval from the Federal Energy Regulatory Commission (FERC), a backlog that the panel is struggling to meet because of a manpower shortage and other issues. In fact, it’s been three years since FERC approved a new LNG export terminal.

‘May miss the moment’: “There are things we need to do in the near term now, working with industry and Congress, to move projects faster, or we will just miss this U.S. energy moment,” FERC Commissioner Neil Chatterjee, a Republican, told Josh. “This is a big opportunity for the country, not just economically but geopolitically. My concern is if we don’t pick up the pace, we may miss the moment.”

Trade war disruption: In the longer run, President Trump’s trade war with China is threatening to discourage the world’s fastest growing LNG market from signing long-term contracts with American developers, experts say.

For now, U.S. LNG isn’t among the more than 500 U.S. products against which China has imposed retaliatory tariffs in response to the Trump administration’s tariffs against $50 billion in Chinese goods. And it might never happen, because China needs cheap gas to wean off its heavy use of coal that damages the country’s air quality.

But because buyers of LNG demand long-term contracts, in the 20 year range, China could be reluctant to commit to the U.S. with trade tension uncertainty.

“I am not saying China will impose tariffs on U.S. LNG,” said Alex Munson, who studies American LNG for the research consultancy Wood MacKenzie. “That is not in China’s interest. It would make their life harder. What it means is it could make Chinese companies think twice about signing onto long-term contracts because there is a risk that politics will dislocate the supply under those contracts.”

Read more in this week’s Washington Examiner magazine.

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TRUMP VOWS MORE PLANTS FROM EU TO IMPORT LNG, BUT IS THAT POSSIBLE?: President Trump said on Monday that he is working with the European Union to to build up to 11 plants to import LNG from the U.S.

Promoting a deal: “[W]e are already talking to the European Union about building anywhere from 9 to 11 ports, which they will pay for, so that we can ship our LNG over to various parts of Europe,” Trump said at a White House press conference with Italy’s prime minister.

Trump made the comment after he said last week that he had reached a deal with European Commission President Jean-Claude Juncker that will lead to Europe buying more LNG from the U.S. to diversify its energy supplies.

Plenty of capacity: But experts doubt that Europe will stray from its current plan to build a small number of new ports to add to its already large amount of capacity.

There are 28 regasification terminals in Europe meant to receive LNG, according to a 2017 survey by consultants at King & Spalding. Two new LNG terminals are under construction in Spain.

“In 2017, Spain’s LNG terminals accounted for the highest regasification capacity in Europe (6 operational terminals with a total combined capacity of 61.9 bcm/ year, and a further terminal in hibernation with a capacity of 7 bcm/year), followed by the UK (3 operational terminals with a total combined capacity of 42.7 bcm/year) and France (4 operational terminals with a total combined capacity of 34.65 bcm/year),” according to the report issued this year.

Thierry Bros, senior fellow at the Oxford Institute for Energy Studies, told the Washington Post that the current crop of import plants in Europe are running at only about a quarter of their capacity.

Market matters: In addition, experts say that European companies would still be responsive to market forces when deciding where to purchase gas. And Russian gas supplied by pipeline is still the cheapest option for now.

“We are ready to invest in infrastructure, new terminals, which could welcome imports of LNG from the United States and elsewhere, but mainly from the United States, if the conditions were right and price is competitive,” Juncker said during remarks last week at the Center for Strategic and International Studies.

TRUMP ADMINISTRATION TO ANNOUNCE NEW CYBER SECURITY HUB: Homeland Security Secretary Kirstjen Nielsen will announce Tuesday the creation of a new office within the department tasked with thwarting cyberattacks from foreign adversaries on America’s critical infrastructure, including banks, energy, and other industries, a DHS official has confirmed to the Washington Examiner.

The National Risk Management Center will be rolled out to chief executives from top private sector companies and several Cabinet officials, including Vice President Mike Pence, at a government summit on cybersecurity in lower Manhattan.

What it does: Following some skepticism over the White House’s level of concern over election security, the move is meant to show that the Trump administration is taking outside cyberthreats on infrastructure seriously, and that it is moving to protect non-government entities.

The office will oversee all cross-sector risk management activities and serve as the first point of contact for companies who have been attacked and need to alert the government.

NRMC’s first point of business is identifying “what is truly critical” to protect, developing methods for both sectors to guard them, and then creating a specific approach to how threats are handled.

Russian threat: The creation of the center comes after DHS last week said Russian hackers gained access to the U.S. electrical grid last year.

SENATE EPA-INTERIOR SPENDING BILL UP NEXT: The Senate will take one step closer to passing the Environmental Protection Agency and Interior fiscal 2019 budgets on Tuesday.

The Senate schedule has a preliminary cloture vote schedule for the “minibus” comprehensive spending bill, which included the EPA and Department of Interior spending bill.

Minibus or bust: It is called a “minibus” because it is a smaller version of an omnibus bill. The GOP leadership’s strategy has been to pass smaller bill packages to ensure ease in getting the fiscal 2019 budget through before the fall campaign season.

Amid administration complaints: The White House has complained that Congress is budgeting much more for the EPA than what Trump requested.

House version: The House version of the bill was approved earlier in the month, which faced complaints from the administration for its high spending, although it did include a rider blocking all funding for implementation of the Obama-era Waters of the U.S. rule.

Flood insurance also up: The Senate is also expected to vote to adopt a 4-year extension of federal flood insurance after torrential storms have caused major flooding in various parts of country. The vote will begin at 12:15 p.m.

COURT HEARS FIRST CASE ON EPA’S OIL REFINERY WAIVERS: The EPA’s decision to lett 48 refiners off the hook when it comes to the nation’s biofuel mandate is getting hashed out in the court for the first time.

The biodiesel industry began laying out its arguments against the agency in briefs to a federal appeals court in Washington it began filing on Friday.

The National Biodiesel Board briefed the D.C. Circuit Court of Appeals on its January lawsuit objecting to EPA’s methodology for establishing the 2018 Renewable Fuel Standards, the group said Monday. The court briefing process is the step before oral arguments in the case.

Three axes to grind: The industry group’s opening brief argues that EPA failed to account for all the small refinery waivers it had granted in calculating how much biodiesel should be blended in the nation’s fuel supply. The industry wants EPA to make up for the missing gallons of biofuel by increasing the overall annual percentage standard.

Breaking the law: “EPA unlawfully has failed to account for all small-refinery exemptions it awards, violating its duty to promulgate percentage standards that ‘ensure’ all aggregate volumes are met. Unaccounted for small-refinery exemptions reduce aggregate volumes, and EPA’s approach creates a new, de facto waiver authority contrary to Congress’s design,” according to the brief.

Arbitrary action: Second on the list of complaints is that EPA “acted arbitrarily” when it set the 2018 biofuel volume standard below what it found to be “reasonably attainable.” That means its projections for how much refiners must blend was much lower than what was projected to be produced. Third, the lawsuit argues that the agency set the biodiesel volume for next year based on “impermissible considerations.”

The ethanol industry and farm groups have a larger lawsuit over the waiver also pending in the D.C. Circuit Court.

STATE DEPARTMENT SAYS NEW KEYSTONE XL PIPELINE ROUTE IS OK FOR THE ENVIRONMENT: The State Department said on Monday that a revised path for the long-contested Keystone XL pipeline would have no significant impact to the environment.

Instead, the new route approved by Nebraska regulators would at most have a “moderate” impact on three of the eight environmental measures the State Department reviewed, including temporary injuries to wetlands and vegetation.

The 300-page draft environmental assessment projected minor effects on three other categories, and a negligible impact on one. The State Department will open a 30-day public comment period for the environmental review before finalizing it.

Long road: The review’s publication is the latest development in a decade-long fight over the Keystone XL oil pipeline.

Nebraska regulators approved an in-state permit for Keystone XL in November, the last major regulatory hurdle facing the project, but they rejected developer TransCanada’s preferred route, approving an alternative that would move the pipeline further east.

The $8 billion Keystone XL pipeline would send oil from Canada’s Alberta oil sands to Steele City, Neb., and then on to refineries along the Gulf Coast. But it has been challenged by environmental advocates worried about spills and climate change.

The Trump administration granted a cross-border permit in March, after the Obama administration rejected it, but the pipeline still needed approval by the five-member Nebraska Public Service Commission to be built in the state.

Decision moment: TransCanada has not officially made a decision on whether to commit to investing in the project, as it debates whether it’s still economically viable for the company after years of delays.

Energy Secretary Rick Perry, speaking Monday at the U.S. Chamber of Commerce, predicted Keystone XL would finally be built.

“It needs to be,” Perry said, noting a shortage of pipeline capacity in the Permian Basin, America’s most prolific oil and gas region.

AIRLINES FACING PERFECT STORM, STRUGGLE WITH HIGH FUEL PRICES: U.S. airlines are facing a pivotal moment as higher fuel prices combine with government policy proposals that threaten to undermine the industry’s profitability after years of struggle.

The rising fuel costs are forcing executives to consider raising fares to compensate, a move that may spark consumer backlash, even as Congress debates restrictions to extra fees for services such as checking baggage.

One airline’s story: Atlanta-based Delta Air Lines is among those working to mitigate the effect of what the International Air Transport Association said was a 51 percent increase in jet-fuel prices, which reached $95.50 per barrel at the start of July.

“We have seen early success in addressing the fuel cost increase and offset two-thirds of the impact in the June quarter,” Delta Chief Executive Officer Ed Bastian said in a statement this month. “With strong revenue momentum, an improving cost trajectory” and by trimming less-lucrative seating capacity from the fall schedule, “we have positioned Delta to return to margin expansion by year end,” he said.

Government weighs action: While the industry has been largely free of price controls since 1978, the fare increases that higher fuel prices are likely to cause raises the risk of government scrutiny as travelers rebel. That would compound the challenge from restrictions on a fee-based price model increasingly popular in the industry in recent years.

The rise of low-cost carriers like Southwest Airlines forced larger airlines like Delta and American to begin offering cheaper seats and charging extra fees for upgrading them or checking baggage. Some lawmakers are seeking to insert in a Federal Aviation Administration-funding measure a provision to cap the charges, while the industry says they’re necessary to keep flying affordable for a wide range of passengers.

Read more in this week’s Washington Examiner magazine.

PUERTO RICO POWER PROVIDER REACHES DEAL WITH BONDHOLDERS, MOVING CLOSER TO PRIVATIZATION: Investors in Puerto Rico’s state-run, bankrupt power utility reached a deal to restructure the energy provider’s debt, moving it closer to privatization.

The deal, reported by the Wall Street Journal, would reduce the $9 billion debt load owed by the Puerto Rico Electric Power Authority, or PREPA.

Terms of the deal: It provides a bondholder group, including Franklin Advisers Inc., BlueMountain Capital Management LLC and Knighthead Capital Management LLC, a chance to exit from a losing $3 billion combined investment that it made in PREPA. The partial settlement would be a step toward breaking up PREPA’s monopoly structure, the Journal said, and encouraging new investors to take over its power generation and distribution business.

“The restructuring of Prepa’s debt and obligations is critical to completing our vision for a consumer-centric energy sector with financially viable rates that promote economic development,” Puerto Rico Gov. Ricardo Rossello said in a statement.

99 problems: Critics say PREPA for years has been plagued by mismanagement, political interference, and corruption, which hampered its response to restoring power after Hurricane Maria destroyed Puerto Rico’s power grid in September.

CLEARPATH SUPER PAC SUPPORTING REELECTION OF TWO HOUSE REPUBLICANS: The super PAC of conservative clean energy group Clear Path Foundation announced Tuesday it is backing the reelection of two House Republicans.

ClearPath Action Fund is endorsing Reps. Tom Reed of New York and Erik Paulsen of Minnesota and will soon start running digital ads as part of six-figure effort backing their reelections.

Clean energy leaders: Both are members of House Ways and Means Committee. ClearPath said Reed and Paulsen have been key in supporting clean energy tax credits, and maintaining funding for the Energy Department’s energy innovation research program, ARPA-E.

“One way to help the U.S. lead in the global clean energy race is by ensuring our tax code incentivizes some of our cleanest and most reliable forms of baseload power,” ClearPath Action Fund Founder Jay Faison said. “Representatives Reed and Paulsen have been, and continue to be, leaders in this space.

RUNDOWN

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