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WHY SOME HOUSE REPUBLICANS VOTED AGAINST THE SOLAR CRA: Eight House Republicans stayed back Friday as their 221 colleagues, including a dozen Democrats, voted to cancel the administration’s temporary moratorium on Asian solar imports.
Who they are: Reps. Thomas Massie, John Curtis, Mariannette Miller-Meeks, and a host of New Yorkers: Marc Molanaro, Mike Lawler, Nick LaLota, Andrew Garbarino, Anthony D’Esposito.
The thinking: Republicans have crafted thwarting President Joe Biden, his climate agenda, and China into an early theme of this new Congress, and the resolution provided members an opportunity to take it to Biden and to China with the same vote.
For the Democratic “yeas,” the vote was about protecting domestic manufacturers, while most of the conference voted no on the grounds that canceling the moratorium would slow climate change mitigation efforts and throw solar businesses into disarray by moving up the timeline for tariffs to be imposed, including retroactively, after the Commerce Department found cells and modules to be circumventing existing duties on Chinese products.
That small handful of Republicans agreed.
Molinaro said he broke with the party because the measure “would kneecap our advances in domestic solar energy and eliminate jobs in Upstate New York.”
Staff members for two of the other GOP nay votes said their bosses worry that axing the tariff “bridge” Biden imposed via his solar emergency would raise energy costs.
One stressed in particular that harm would be done to importing U.S. companies, who were bringing in products they didn’t know were going to be found in violation of U.S. trade law and could be put on the hook for duty payments through no fault of their own.
What they’re facing: Recent estimates suggest that U.S.-manufactured cell and module products can only meet around a third of domestic demand.
Cell and module imports from Cambodia, Thailand, Vietnam, and Malaysia, the four countries subject to Commerce’s investigation, constituted some 80% of total imports as of last year, according to the Solar Energy Industries Association.
Commerce found four companies to be circumventing duties on PRC-origin solar products, including Trina Solar and Canadian Solar (Both are SEIA members.) The trade group estimated that importers could end up owing $1 billion in retroactive duties and warned it threatened 30,000 jobs this year.
The department has yet to finalize its determination and set tariff rates. It’s planning to do so this month.
Companies found to be circumventing will be subject to duties based on the current duties for their Chinese suppliers, Commerce said in December.
Products made by companies that can’t demonstrate that they are separate from the government of China could face a max tariff rate of 254%, according to the department, although rates for products from companies that can demonstrate separation from the CCP are expected to be significantly lower.
Most of those rates, as of December, were set below 35%, per Commerce.
Notable yes votes on Friday: Rep. Ro Khanna. He was the only Democrat from California to vote in favor of the GOP-led solar resolution. Auxin Solar Inc., the solar manufacturer that brought the anticircumvention petition at the heart of Biden’s tariff bridge, is located in San Jose, which is covered partially by Khanna’s district.
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.
COURT UPHOLDS GULF LEASE SALE REINSTATED BY THE IRA: The D.C. Circuit Court of Appeals upheld Lease Sale 257 on Friday, a tough loss for environmental groups that had previously won a legal challenge against the oil and gas lease sale.
The court was weighing a challenge from environmental groups, led by Friends of the Earth, attempting to block the leases that Interior and the Bureau of Ocean Energy Management awarded in September by order of the Inflation Reduction Act.
The IRA’s directions to BOEM made the case moot, a panel of the court ruled.
The background: The litigation has been live for more than a year and was tracking in environmental groups’ favor until Democrats passed the Inflation Reduction Act with its language facilitating more oil and gas leasing.
257 was the first (and up until December, the only) new offshore oil and gas lease sale the Biden administration carried out back in November 2021, but FOE got it blocked months later. Judge Rudolph Contreras, an Obama nominee, tossed the lease sale’s record of decision.
The American Petroleum Institute appealed the decision, and the case remained in court when Congress passed the IRA, directing BOEM to reinstate the lease sale within 30 days. The bureau reinstated the lease sale in September.
The court’s order said the challenged agency action, the record of decision, is “no longer the basis for the issuance of the leases.” Instead, the IRA is the basis.
“Even if we agreed with the environmental groups that the sale failed to comply with the National Environmental Policy Act, the result will be the same: The highest bidders will receive their leases” because of the IRA, the order said.
More fight ahead: Environmental challengers have campaigned hard against additional oil and gas leasing in the Outer Continental Shelf, and the Biden administration, acting under the banner of Biden campaign pledges to crack down on and even end new development, had given allied groups some key victories:
- It canceled three offshore lease sales (although they were later revived, like 257, by the IRA)
- And it has floated the possibility of including zero new lease sales in its next belated five-year program (although it also floated a max of 11 new sales)
But the IRA reversed much of what was, for green interest groups, positive momentum on reigning in new leasing of federal lands. The Bureau of Land Management has teed up onshore lease sales in several states to be carried out later this month.
EPA MAY DELAY RFS’S PROPOSED E-RIN PROGRAM: REPORT: EPA may delay finalization of the electric vehicle-supporting eRIN program it proposed to create in December, or attempt to separate it from the broader RFS, out of concern that legal challenges against eRIN generation could disrupt the administration’s larger 2023-2025 blending proposal, Reuters reported this morning.
We noted last week some of the objections to the proposed eRIN program that have been raised by Republicans and some in the refining industry.
The idea of eRIN generation has been floating around at least since the late Obama era, but EPA had yet to propose grafting EV manufacturers into the program to begin generating compliance credits until December.
GOP BILL ORDERS UP A STUDY OF ELECTRIC VEHICLE LIFECYCLE EMISSIONS: Republican senators announced new legislation Friday that would direct the comptroller general to consult the Department of Energy and EPA to study the “true carbon footprint” of electric vehicles and to research the effects to electrical grids of increasing the number of EVs on the road.
Sens. Rick Scott, Dan Sullivan, John Barrasso and a handful of others are calling it the DIRTY CAR EV Act — Directing Independent Research To Yield Carbon Assessment Regarding Electric Vehicles.
Objectors to the Biden administration’s EV strategy and the regulatory strategy underpinning it have frequently raised the lifecycle emissions associated with the vehicles, from the mining of minerals to the manufacture of battery products. There’s also the generation source of the electricity used to fuel the vehicle.
Analysis from the International Energy Agency updated last fall shows the manufacture of an average EV, in both its base case and high-GHG minerals case, contributes to slightly higher emissions upfront in the manufacture of the vehicle and its components, but an ICE vehicle’s emissions footprint is nearly twice that of a battery electric vehicle due to fuel combustion.
IRAN SEIZED TEXAS-BOUND OIL TANKER IN GULF OF OMAN: Iran seized a Texas-bound oil tanker in the Gulf of Oman last week, the U.S. Navy confirmed, marking the latest provocation in the Gulf waterways considered crucial to transporting global energy supplies.
Iranian state television aired footage Friday of its Navy commandos boarding the tanker by helicopter and taking control of the ship, the Washington Examiner’s Emily Jacobs reports. Ship tracking data identified the vessel as a crude tanker chartered by Chevron, which had last docked in Kuwait and was en route to Houston, Texas.
The US Navy’s 5th Fleet condemned Tehran’s actions, claiming that the incident marked the fifth commercial vessel to be seized by Iran in two years. Read more on the ship’s capture here.
OIL DROPS AMID FEARS OVER EXPECTED RATE HIKE AND SLOWER GROWTH: Oil prices fell today amid concern over weaker Chinese manufacturing data and fears that the U.S. Federal Reserve will hike up interest rates by another 25 basis points again this week—two factors that appeared to offset the 1.16 million bpd surprise OPEC+ production cuts, which took force beginning today.
Futures for international benchmark Brent crude fell by 1.8%, down to $78.86 per barrel, while futures for West Texas Intermediate dropped by a similar 1.9% down to $75.29 per barrel.
The drop comes as China’s manufacturing activity unexpectedly shrank in April, according to data from China’s National Bureau of Statistics—dropping to 49.2% for the month compared to 51.9% in March. That fell well below economists’ expectations and marked the first period of contraction since December, according to Reuters.
Together, these economic indicators appear to outweigh supply-demand concerns caused by the OPEC+ cuts.
“We believe the oil market will be in deficit through the remainder of the second quarter” following the OPEC+ cuts, Baden Moore, head of commodity and carbon strategy at National Australia Bank, told Reuters.
A WARNING FOR BIDEN… Meanwhile, President Joe Biden is approaching summer with fewer options to lower gas prices ahead of the driving season, due in large part to a depleted emergency reserve stockpile and an OPEC+ that seems more willing to ignore his wishes.
Last year’s 180-million-barrel SPR sale is unlikely to be repeated, as any new emergency drawdowns would be fraught with political risk. Last year’s drawdowns also raised questions about the structural integrity of the reserves, which can be stressed by repeated withdrawals.
OPEC+ has also shown it is more willing than ever to buck the Biden administration’s wishes on production. Democrats vowed to respond to last year’s production cuts, which they saw as a “betrayal,” but ultimately never did—possibly emboldening the group to further cut production by 1.16 million bpd in March.
“There is some truth to the saying that gas prices rise like a rocket and fall like a feather,” Andrew Gross, the spokesman for AAA, said in an interview, noting that gas prices are still reflecting some of the dwindling effects from the March OPEC+ announcement.
GERMANY REOPENS ITS MINES TO REDUCE CRITICAL MINERAL DEPENDENCY: Germany is moving to reopen many of its mines in an effort to reduce dependency on China and other countries for critical materials imports—and instead begin extracting them itself.
In the Black Forest, a German start-up is planning to reopen the Käfersteige mine, believed to contain Europe’s largest deposit of fluorspar, a crucial component of electric vehicles, while projects are also being planned to mine a lithium deposit on the German-Czech border in Saxony, and to extract lithium from thermal water in the country’s southwest.
Germany’s push to reopen its mines and launch new projects for rare earth materials comes as the EU seeks to reduce its dependence on outside energy imports—having learned its lesson quite painfully in wake of Russia’s invasion of Ukraine last year.
“We are already more reliant on China for certain metals than we were on Russia for gas,” Matthias Wachter, of German business lobby BDI, told the Financial Times. “And that’s a huge risk.”
The Rundown
Reuters As oil output peaks, US Gulf of Mexico makes room for carbon capture
Washington Post This power plant offers a peek of the future
E&E News Toxic water floods an Okla. town. Will FERC hold a dam liable?
Bloomberg The boring old box truck gets the Tesla treatment
