Daily on Energy: The background on Barrasso versus Shah

In a letter sent out on Friday, GOP Sen. John Barrasso called for Teri Donaldson, the DOE’s inspector general, to investigate “systemic issues” within the loan office, highlighting allegations of director Jigah Shah giving preferential treatment to the Cleantech Leaders Roundtable – a private trade group he founded in 2017.

Barrasso has previously raised questions about Shah’s relationship with the group and its alleged influence over the loan program, claiming the nonprofit serves as a “gatekeeper” for companies requesting financial assistance from the DOE. Barrasso, along with House Energy and Commerce Chairwoman Cathy McMorris Rodgers, has also expressed conflict of interest concerns about a $3 billion loan guarantee to solar company Sunnova, whose board of directors shares one common board member with CTLR: Anne Slaughter Andrew.

If you’ll recall: Donaldson was sworn in as the fifth inspector general of the DOE in 2019 under the Trump administration. In October, both Donaldson and Shah testified before the committee during a tense hearing on DOE climate spending.

What’s also new: Barrasso’s newest letter contains correspondence from Shah himself, who distanced himself from the DOE’s loan-guaranteeing process, reaffirming that he does not make individual decisions on whether an applicant enters the DOE’s evaluation process or whether an applicant gets issued a loan. The official also disassociated himself from his former trade group, stating he had been “unaffiliated with CTLR since I took office,” but noted he has attended a number of events in his “personal capacity.” He also said that, during CTLR events where he was a speaker or events co-hosted with the DOE, DOE officials were consulted to ensure that proper ethical guidelines were adhered to.

“These engagements are not forums to discuss details about LPO’s evaluation process, business confidential or proprietary applicant information, or other matters that are handled in LPO’s official business as part of the evaluation and due diligence of applications,” Shah said in his letter.

In response, however, Barrasso pushed back against Shah’s claims of dissociation from the nonprofit, pointing to CTLR’s promotion of the DOE official on its website as recently as December 2021 and March 2023. The current website, however, does not feature Shah on the homepage anymore.

Barrasso wites in the letter that it “appears that Director Shah is downplaying his role within the LPO to mitigate concerns about his close ties with CTLR.”

The significance: The latest letter marks the fourth correspondence from Barrasso probing into Shah. The last letter called for Susan Beard, the Designated Agency Ethics Official for the DOE, to investigate Shah for any ethics violations.

In his latest letter, however, the ranking member is digging deeper into Shah’s response to his claims, requesting that Donaldson look further into the DOE official’s relationship with CTLR – specifically, if he had authorized to be put on the trade group’s homepage while in his official position, and if his attendance at CTLR events were all conducted in a “personal” capacity.

When asked for comment on Barrasso’s latest efforts to probe Shah, a spokesperson for the DOE official referred back to Shah’s official correspondence to the ranking member.

Read the letters here. 

A spokesperson for Donaldson did not immediately respond to a request for comment.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). 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.

BIDEN OFFSHORE LEASE PROGRAM CRITICIZED BY GOP AND GREEN GROUPS: The Biden administration finalized its plan Friday to hold just three oil and gas auctions in the Gulf of Mexico through 2029, in what will be the smallest five-year offshore program in U.S. history.

The lease program, first announced by Interior in September, will consist of three Outer Continental Shelf auctions to be held in 2025, 2027, and 2029. It has provoked the ire of both Republicans and environmental groups, who view the plan, respectively, as overly restrictive or at odds with President Joe Biden’s campaign trail promises to halt all new federal drilling.

The number is far fewer than the 11 leases included in the previous five-year plan. It’s also the minimum Interior must approve in order to comply with offshore wind targets thanks to an Inflation Reduction Act provision linking oil and gas leasing to renewable energy development on federal lands and waters.

But Sen. Joe Manchin, who oversaw that provision’s inclusion in the IRA, has sharply criticized Interior’s five-year plan, which he argues amounts to the “bare minimum,” and prioritizes political goals over energy security.

RED SEA ATTACKS PROMPT MORE SHIPPERS TO REROUTE: Major shipping firms have either halted or rerouted Red Sea operations amid a spike in attacks from Iranian-backed Houthi rebels, threatening to disrupt global commodities shipments and add significant price pressure as companies look to avoid the Suez Canal, a critical international waypoint.

BP became the latest to pause operations in the Red Sea this morning, citing the “deteriorating security situation” and attacks on commercial vessels headed towards the Suez Canal.

“The safety and security of our people and those working on our behalf is BP’s priority,” the company said.

That announcement follows in the footsteps of shipping giants MSC, CMA, Hapag-Lloyd, and Maersk, the world’s largest shipping company, which took similar steps to either pause or re-route their shipments through the Cape of Good Hope in Africa.

Rerouting will have consequences: Vessels that are rerouting around the tip of Africa can expect an increase in transit time between seven to 10 days compared to using the Suez, according to a report from the freight platform Flexport.

The Suez is especially critical for global oil and LNG trade, and the news comes at a time when water levels along another alternative route—the Panama Canal—have plummeted to record lows, limiting the amount of vessels that can traverse its waters.

“We expect rates to increase significantly and fast unless the situation resolves,” Flexport added of the Red Sea violence, noting that in a worst case scenario, the crisis could remove as much as 25% of global capacity from markets.

Already, the announcements have pushed up oil prices. Futures for international benchmark Brent crude increased by $1.50 per barrel as of mid-morning.

“BP’s decision to halt shipping through the Red Sea may have crystallized concerns for the oil market,” Tim Evans, an oil analyst at Evans on Energy, told Reuters.

…Meanwhile, Russia said yesterday it will begin deepening its oil export cuts by 50,000 bpd in December: That is an acceleration of its timeline for the production cut as part of its effort to push oil prices higher.

The news comes after Russian President Vladimir Putin traveled to Saudi Arabia this month to meet with Crown Prince Mohammed bin Salman. Both countries agreed to extend voluntary supply cuts through 2024 and have been considered more bullish on oil prices compared to other members of OPEC+.

Russia had pledged to deepen voluntary supply cuts from its current status of 300,000 bpd to 500,000 bpd beginning in 2024.

Now, Russian Deputy Prime Minister Alexander Novak said, they could do so earlier than planned. “Already in December we will add additional volumes,” Novak said yesterday of the cuts, according to a transcript from the Russian outlet Interfax. “By how much, we’ll see based on the results of December – there may be an additional 50,000 bpd, maybe more.”

BREAKING: NIKOLA FOUNDER SENTENCED TO FOUR YEARS FOR FRAUD: Nikola founder Trevor Milton was sentenced today to four years in prison for fraud related to his EV and hydrogen-powered semi truck startup company, Bloomberg reports.

Prosecutors recommended last week that Milton face 11 years imprisonment over the fraud charges stemming from the founding of the EV startup as well as claims about its Nikola One semi truck.

Nikola was valued at more than $30 billion at its peak. In 2020, though, researchers at the firm Hindenburg released a report on “dozens” of false and inaccurate allegations made by the company, including that it faked a promotional video of its truck in action.

Read more about the upcoming sentencing hearing here.

REPORT: 3.2 MILLION HAVE LEFT NEIGHBORHOODS BECAUSE OF FLOOD RISK: More than 3.2 million Americans have left high flood-risk neighborhoods in the past two decades due to flood risk, according to a new study published today in the journal Nature Communications, which focuses on the relocation trend and emergence of so-called “Climate Abandonment Areas” in certain high-risk parts of the country. The report projects some 5 million residents will be displaced by 2052.

According to the report, authored by researchers at the First Street Foundation, the fast-growing states of Florida, California, and Texas are among those considered most at risk. Combined, these three states account for more than one-fourth of the total U.S. population—and 35% of all damages from climate risk.

“The population exposure over the next 30 years is a serious concern,” Evelyn Shu, the report’s lead author, said in a statement. “For decades we’ve chosen to build and develop in areas that we believed did not have significant risk, but due to the impacts of climate change, those areas are very rapidly beginning to look like areas we’ve avoided in the past.” Read it in full here.

The Rundown

Financial Times Protesters vs critical minerals: Panama copper fiasco shows risks to green transition

Washington Post With few easy solutions to their climate problem, airlines rethink contrails