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WHAT IT MEANS FOR OIL AND GAS: President Joe Biden’s sweeping executive order directing federal agencies to address climate-related financial risk is likely to increase pressure on banks to restrict their investments in oil and gas development to align their financing with global climate change targets.
Biden’s order doesn’t specifically address fossil fuel investments. Instead, it directs federal agencies to incorporate the economic risks from climate change into decisionmaking. That includes what is often known as “transition risk,” which accounts for economic losses the government could face by investing in carbon-intensive companies or products.
To get a sense of the financial risks the government and companies face, the Biden administration is pushing mandatory climate disclosures, requiring businesses to report their greenhouse gas emissions and any physical risks they face from climate change.
The oil and gas industry, however, is extremely wary of such disclosures, which they see as a threat. Many of the biggest U.S. banks, as they’ve set targets to align their financing with the Paris climate agreement, have backed away from funding coal projects. The oil industry fears it could be next on the chopping block.
“[P]olicymakers must avoid new climate disclosure rules that discriminate against American oil and gas producers,” said Anne Bradbury, CEO of the American Exploration and Production Council, which represents independent oil and gas producers.
“Sweeping and misguided climate policies disguised as financial policies will only mislead investors and unnecessarily limit opportunities for American families and American businesses,” Bradbury added.
Many Republican lawmakers have echoed the oil and gas industry’s concerns, arguing the Biden administration’s moves to incorporate climate change into financial regulation are a veiled attempt to choke off capital to fossil fuel producers.
The industry might have good reason to worry: Environmental activists who have long called for halting investment in new oil and gas production were given a boost by the International Energy Agency this week, which said stopping new development is critical for the world to reach net-zero emissions.
Ben Ratner, a senior director at Environmental Defense Fund+Business, said the IEA’s report will increase scrutiny on oil and gas companies, especially if they’re investing in traditional production with “unabated emissions.”
“Savvy management teams will tighten their belts in oil and gas and take a hard look at new ways to align with the social and technological shifts toward cost competitive zero carbon energy solutions,” Ratner told Abby.
While Biden’s executive order strongly encouraged improved climate disclosures, it didn’t require them for public companies yet because most financial regulatory agencies are independent. Nonetheless, the Securities and Exchange Commission is moving quickly to issue disclosure requirements. It is currently taking public input on a disclosure framework through the middle of next month.
We expect the oil and gas industry will be particularly interested in how broad and intensive of a disclosure regime the SEC intends to develop. Earlier this month, top SEC officials met with representatives from oil majors Shell and ConocoPhillips about the disclosure rules.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). 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.
MARK YOUR CALENDARS: Colonial Pipeline CEO Joseph Blount will face congressional scrutiny June 9, when he’ll appear before the House Homeland Security Committee for a hearing on the ransomware attack that shut down the pipeline for several days and prompted fuel shortages all along the East Coast.
Several states are still dealing with the fallout of the pipeline shutdown and people’s subsequent race to the pumps to fill up that caused gasoline demand to spike, prices to increase, and thousands of gas stations to run out of fuel. As of this morning, more than 7,000 gas stations are still without gasoline, according to data from GasBuddy.
Blount is likely to face tough questions about why the pipeline company wasn’t prepared for the ransomware attack, which government officials say they have been warning companies to secure against for years. Expect lawmakers to also criticize Blount’s decision to pay the hackers’ $4.4 million ransom.
“I know that’s a highly controversial decision,” Blount told the Wall Street Journal this week of his decision to pay. “I didn’t make it lightly. I will admit that I wasn’t comfortable seeing money go out the door to people like this. But it was the right thing to do for the country.”
Members of the House Homeland Security Committee met yesterday with Colonial Pipeline officials to discuss the attack in advance of the hearing.
GOP SENATORS WANT TO REINSTATE NORD STREAM 2 SANCTIONS: More than a dozen Republican senators, led by Sen. Kevin Cramer, introduced legislation yesterday that would reinstate sanctions on the Russian company in charge of constructing the Nord Stream 2 natural gas pipeline into Germany.
Biden’s decision has prompted criticism from both Republicans and hawkish Democrats, who say Biden is violating congressionally mandated sanctions by waiving penalties on the Russian company and its CEO. The State Department cited national security in waiving the sanctions.
The GOP senators’ bill would reinstate the sanctions, as well as expand sanctions to cover the subcontractors of any entity working on the pipeline.
“Days after Russian hackers successfully attacked an American pipeline, President Biden decided to give Vladimir Putin his own pipeline and hand him a major geopolitical win that cuts right through the NATO alliance,” Cramer said in a statement.
SENATORS PRESS CEQ TO EASE PERMITTING FOR CARBON CAPTURE: A group of bipartisan senators is asking the White House Council on Environmental Quality for an update on its implementation of legislation to help speed up the permitting of carbon capture and storage projects.
Under the legislation, known as the USE IT Act, the CEQ chair must issue a report by June 25 examining ways the federal permitting process could be made more efficient for carbon capture and storage projects, as well as the carbon dioxide pipelines supporting them. Following that report, the CEQ must develop guidance to better facilitate permitting of carbon capture projects and infrastructure.
“A key barrier limiting CCUS project deployment has been the complicated maze of permitting requirements,” reads the letter sent yesterday by more than a dozen senators, led by Sen. Shelley Moore Capito. “Therefore, CEQ will play a pivotal role in implementing the law and removing barriers to encourage these innovative projects.”
The senators ask for a status report from CEQ on the legislation’s implementation by June 10, as well as updates every three months after.
LIGHTBULB MOMENT: The Energy Department took the first steps yesterday toward issuing stricter efficiency standards for light bulbs, after the Trump administration delayed acting on a congressional mandate to ensure nearly all light bulbs are energy efficient by January 2020.
The agency isn’t proposing new standards yet, but is instead seeking data on the availability of general service lamps that could meet a 45 lumen-per-watt efficacy standard. The Energy Department says implementing such a standard could save people 30% on their lighting bills by phasing out inefficient incandescent and halogen bulbs.
“About a third of light bulbs sold today are still using incredibly inefficient incandescent technology,” said Andrew de Laski, executive director of the Appliance Standards Awareness Project. “Raising the standard will finally ensure that all consumers benefit from low-cost, modern, light-emitting diode (LED) technology that’s also good for the environment.”
The Natural Resources Defense Council estimates that in total, stricter light bulb efficiency standards would save people $2.5 billion per year in electricity costs and avoid around 50 million tons of carbon emissions by 2030.
ELECTRIC VS. GAS-POWERED F-150: It would cost twice as much per mile to fill up a gas-powered F-150 pickup truck than to charge the fully electric version Ford debuted this week, according to calculations from Robbie Orvis, director of energy policy design at Energy Innovation.
The savings math, posted on Twitter by the research firm’s communications director Silvio Marcacci, uses 2020 average gas and electricity prices. Filling up a gas-powered F-150 would be even more expensive now, with gas prices still high (the national average hovering at $3 per gallon) after fallout from the Colonial Pipeline hack.
In total, the cost to fully charge an electric F-150 would be roughly $13, while the cost to fully fill up the gas-powered version would be a little more than $56, according to Orvis. However, it’s worth noting a gas-powered F-150 would run 585 miles on a tank of gas, while the base model electric F-150 would go 230 miles on a single charge.
CALIFORNIA PUSHES RIDESHARING COMPANIES TO ELECTRIFY: California air officials adopted regulations yesterday requiring ridesharing companies such as Uber and Lyft to eliminate their greenhouse gas emissions and ensure 90% of their vehicle miles are driven with electric vehicles by 2030.
The ridesharing companies can reach the greenhouse gas target by surpassing the 90% electric miles target, limiting the amount of miles they drive without passengers, and increasing the number of passengers per trip. The regulations also offer optional greenhouse gas credits for companies that invest in sidewalk and bike lane infrastructure.
Major ridesharing companies Uber and Lyft have both already set targets to move to zero-emissions vehicles by 2030.
The Rundown
New York Times Climate is high on agenda as Korean leader heads to White House
Politico The lucrative climate proposal that’s going nowhere in Washington
E&E News Trump EPA took eleventh-hour look at endangerment finding
Bloomberg Bill Gates-led fund invests in startup that helps scale EV charging
Calendar
MONDAY | MAY 24
1 p.m. The House Natural Resources Committee’s Subcommittee on Energy and Mineral Resources will hold a virtual hearing titled, “Expanding Clean Energy on Public Lands.”
TUESDAY | MAY 25
11:30 a.m. The House Energy and Commerce Committee’s Environment and Climate Change Subcommittee will hold a virtual hearing on the drinking water provisions of the CLEAN Future Act.
WEDNESDAY | MAY 26
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a subcommittee hearing on the state of the national park system.
