Daily on Energy: Schumer now under pressure from green left

Liberal climate activists are signaling they won’t be satisfied with a “moderate” agenda of pursuing an infrastructure bill with green provisions (EV charging and transmission) and stimulus funding for clean energy technologies after inauguration. These are the most likely possibilities, in our eyes, with more direct climate policies such as a clean electricity mandate and carbon pricing being more remote.

“Expectations for Biden and the Dems should rightly be raised after last night’s victories,” said Collin Rees, a senior campaigner for Oil Change U.S.

“If Dems stick to moderate plans and aren’t willing to stand up to corporate interests and materially improve people’s lives, they’ll get crushed,” Rees texted Josh.

The Sunrise Movement, which helped bring attention to the Green New Deal, is taking credit for inspiring turnout for Georgia Democrats Jon Ossoff and Raphael Warnock, despite neither of them running on the liberal climate plan.

Sunrise Movement ran a large voter outreach effort in support of Ossoff and Warnock for the runoffs, and the group is hosting a training session Sunday for new activists on how to pressure Democrats and Biden to adopt Green New Deal measures.

“From the moment he steps into office, we need to be ready to demand that Biden take swift, bold action on climate. And if we do that, we could have some seriously big wins. But he’ll only listen to the people if movements make him,” the Sunrise Movement website says.

How will Democrats weigh priorities? In a short two-year window with full control of Washington, activists want to make sure Biden uses his political capital on climate before anything else.

Democrats margins are smaller than 2009, when President Barack Obama had the benefit of a trifecta. The Senate is evenly divided with 50 members from each party for the first time since 2001 (Vice-president elect Kamala Harris is the tiebreaker), and they have a shrunken 11-seat House majority. But Biden priorities are greater in number, with expectations for coronavirus relief, tax and health care reform, infrastructure, racial justice and voting rights, and of course, climate. As we detailed earlier this week, Biden will need 60 votes for most of these items (some of which can be tackled as part of the same legislation), because Senate Democrats won’t have the votes to kill the filibuster.

Our favorite terms (reconciliation and CRA): To get around that challenge, climate activists are eying the Congressional Review Act and reconciliation, tools that would allow Democrats to overturn recently completed Trump administration regulatory rollbacks and pass budget policy measures with a simple majority, respectively.

Rees said Democratic leaders need to use the tools effectively “to avoid a massive midterm collapse.”

Watch out for the committees: Liberal activists also want to see climate elevated in committees that normally don’t tackle climate change, such as the Judiciary Committee and Budget and Finance Committees.

If progressives had their way, Judiciary under Sen. Sheldon Whitehouse, a vocal opponent of the fossil fuel industry, would compel oil and gas executives to testify about their “decades of lying and denying the climate crisis,” Rees said. Sen. Ron Wyden’s Finance Committee will look to invigorate manufacturing of clean energy technologies through new tax subsidies, the Oregon Democrat has already promised. Bernie Sanders, the Budget Committee chief, will have a new platform to elevate climate change.

The Energy Committee will be led by the most conservative Senate Democrat, Joe Manchin, who is positioned to be D.C.’s biggest power broker.

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.

WILL ANWR LEASE SALE BRING ANY TAKERS? The Interior Department will hold its first lease sale this afternoon for companies to earn the chance to drill for oil and gas in the Arctic National Wildlife Refuge after a federal judge denied an attempt from environmentalists to block the auction.

The decision is a win for the Trump administration, which has been racing to conduct a lease sale before Biden takes office to make it more difficult for him to reverse, since oil and gas leases on federal lands are considered government contracts.

This afternoon’s lease sale will be for a little over 1 million acres of the 19.3 million-acre refuge, known as the “1002 area,” where billions of barrels of oil are believed to lie beneath the coastal plain. The area had been long off limits, until Republicans opened it for energy exploration as part of the 2017 tax cut bill.

Questions abound: But it isn’t clear how interested energy companies would be in the opportunity, with low oil prices from the pandemic because of sapping demand for fuels and competition steep from cheaper oil and gas in the nation’s lower 48 shale regions. Investors concerned about exposure to climate change financial risks, including several U.S. banks, have also turned against funding Arctic drilling. And Democrats with control of the Senate could look to roll back the Republicans’ opening of ANWR drilling.

There will be at least one bidder: An economic development corporation owned by the state of Alaska may step in and buy leases, according to the New York Times, a move that might be legally questionable.

MAKING SENSE OF SAUDI’S GIFT TO OIL MARKET: Saudi Arabia’s surprise decision to voluntarily cut its oil production by 1 million barrels per day for the next two months provided a gift to fellow producers and the market, as the U.S. benchmark price breached $50 per barrel for the first time since February.

Some oil market observers were scratching their heads as to why Saudi Arabia would slash output and give up market share while allowing Russia — and also Kazakhstan — to increase production. Most of the rest of the OPEC+ alliance will keep their output steady, but historically the Saudis prefer all members to take a fair share of the cuts. U.S. shale producers, of course, will be able to benefit from the higher price and increase their output.

“The Saudi move, if realized, is not only offering a soft pillow to the oil market, but also a full set of blankets, bed covers and most likely the bed itself,” said Bjornar Tonhauge of Rystad Energy.

Matt Reed, the vice president of Foreign Reports, says Saudi Arabia’s decision makes sense, signaling the Kingdom’s concerns about the pace of the oil market recovery, and the health of the global economy.

“This move shows the Saudis aren’t taking a global economic recovery for granted,” Reed told Josh. “They want to help and they’re willing to do more than their fair share, knowing it will help them in the long run. They also know rising prices can be a shot in the arm for ailing U.S. producers. But they’re not worried about it.”

US OIL DEMAND STUMBLES: U.S. oil demand fell to 17.05 million barrels per day last week from 19.32 million b/pd the previous week, the Energy Information Administration reported today.

Consumption of gasoline, jet fuel, and diesel fell across the board, continuing the topsy turvy ride of demand as the coronavirus rages.

Crude oil inventories decreased by 8 million barrels, easing the glut in the market.

SHALE PRODUCERS BRACE FOR METHANE REGULATIONS: A lobbying group representing the largest independent shale oil and gas producers is angling for influence over the scope of methane regulations the Biden administration plans to impose.

The American Exploration and Production Council suggested in a statement yesterday that it supports federal regulation of methane, but only if the rules “encourage innovation and flexibility, instead of command-and-control.”

AXPC also said methane regulations should incentivize the development and use of technologies to monitor and mitigate methane emissions, “appropriately quantify” the costs and benefits of implementing new requirements for existing oil and gas facilities, and avoid overlapping with state rules.

While big oil majors support regulation of methane, arguing it would allow them to market natural gas as a transitional fuel, smaller companies and their trade groups encouraged the Trump administration’s rollback of regulations. So it’s interesting to see an oil lobby group feel the need to get out ahead of the issue knowing Biden has promised to regulate methane.

EXXON’S INDIRECT EMISSIONS: The U.S. oil major unveiled for the first time yesterday data on its scope 3 emissions (or the emissions from the sale and use of its products), and it’s an eye-popping number: 730 million tons in 2019 from petroleum product sales.

The scope 3 emissions, the highest of any Western oil company according to Bloomberg, are equivalent to the annual emissions of 188 coal-fired power plants (per the EPA’s greenhouse gas emissions calculator).

Exxon is releasing the data as it has come under increasing pressure from investors and other stakeholders to make available more complete emissions accounting and take more aggressive measures to curb emissions. Just last month, Exxon set short-term targets to cut greenhouse gas emissions, pledging to reduce the intensity of its emissions of oil and gas production by 15%-20% by 2025 and the intensity of its methane emissions by 45%-50% in five years.

In its report yesterday, however, Exxon cautions that scope 3 emissions estimates could be “misleading” and don’t provide “meaningful insight” into how the company is cutting emissions. “For example, increased natural gas sales by ExxonMobil that reduce the amount of coal burned for power generation would result in an overall reduction of global emissions but would increase Scope 3 emissions reported by the Company,” the oil major said.

BIG BANKS ASK TRUMP TO SCRAP ‘FAIR ACCESS’ PLANS: Major U.S. banks are slamming plans from the Office of the Comptroller of the Currency seeking to keep banks from dropping fossil fuel investments, saying the proposal’s “approach to promoting fair access is impractical, unworkable, and inconsistent with safe and sound banking practices.”

The proposal, unveiled in November, would bar banks from restricting specific industries from access to lending and other services, a direct response to Republican lawmaker complaints about U.S. banks refusing to invest in new oil and gas drilling in the Arctic.

The proposal’s requirements “would effectively replace the traditional business of American banking” with one in which “the OCC would directly intervene in the market to dictate to whom financial services must be provided, on what terms and with what competitive effect,” wrote the Bank Policy Institute in comments to the agency. The institute represents major U.S. banks, including Bank of America, Citibank, JPMorgan, and Wells Fargo.

More than a dozen Democratic lawmakers also sharply criticized the Trump administration’s proposal, saying it would exacerbate potential financial risks from climate change because it would keep banks from managing the risks they face from continued investment in fossil fuels.

REGAN MEETS WITH FARMING GROUPS: Michael Regan, Biden’s nominee to lead the EPA, met yesterday with more than a dozen CEOs of agriculture and farming groups, including the largely Republican American Farm Bureau.

Regan, who currently serves as North Carolina’s top environment official, talked with the farming groups about finding “practical, common sense solutions to environmental challenges,” as well as harnessing “the ingenuity of farmers and ranchers to promote clean energy and tackle climate change,” according to a readout from the transition team. Regan was joined in the meeting by Cedric Richmond, a senior adviser to Biden and incoming director of the White House Office of Public Engagement.

Farming groups, long hostile to policies that curb greenhouse gas emissions, have more recently begun engaging in climate policy talks, Abby reported recently for our magazine. In November, for the first time, major farming groups, along with environmental groups, forestry groups, and state agriculture officials, released recommendations for policies to combat climate change.

SPEAKING OF THE TRANSITION: It’s ongoing at the EPA, even if Trump officials aren’t acknowledging Biden’s election win yet.

EPA Administrator Andrew Wheeler mentioned yesterday, during an event unveiling the agency’s newly final science transparency rule, that his team has put together “literally thousands of pages” of documents for the Biden transition team.

Wheeler also said EPA staff has conducted more than 50 briefings with Biden transition team staff on various topics, though he didn’t specify on what other than to say the science transparency rule wasn’t discussed.

MOVERS AND SHAKERS: The Carbon Capture Coalition, which has more than 80 members, including fossil fuel companies, labor unions, and environmental groups, has hired Madelyn Morrison to serve as external affairs manager. Morrison, the coalition’s second full-time staff member, joins from the Alzheimer’s Association, where she was a federal affairs specialist, and she has previously worked at the Interior and Agriculture departments and as a staffer for former North Dakota Sen. Heidi Heitkamp.

The Rundown

Los Angeles Times California is scrambling to avoid blackouts. Your refrigerator could help

Bloomberg Environmental debt risk is bigger than Japan’s GDP

Calendar

THURSDAY | JAN. 7

12 p.m. The Bipartisan Policy Center holds a webinar event with ARPA-E Director Lane Genatowski to discuss energy innovation in 2020 and beyond.