Daily on Energy: The latest clues from Manchin for energy policy

Manchin, the chairman of the Energy Committee, advised President Joe Biden and Senate Majority Leader Chuck Schumer against using the reconciliation budget procedure to bypass the Senate filibuster and ram through major legislation with party-line votes.

“We should all be alarmed at how the budget reconciliation process is being used by both parties to stifle debate around the major issues facing our country today,” the West Virginia moderate Democrat said in a Washington Post op-ed. “I simply do not believe budget reconciliation should replace regular order in the Senate.”

Biden is claiming he’s open to compromise on his big green infrastructure bill, but notably he’s not talking about toning down the content of the spending in his proposal, just how to pay for it.

That won’t be enough to get any GOP votes, in our view, because they see a political advantage in tearing down the package as Green New Deal-lite (Can you really envision Republicans going for a Cash for Clunkers-style EV rebate program?).

That means Democrats almost certainly will have to use reconciliation, the procedure enabling them to pass the infrastructure bill through the split Senate by a simple majority, with Vice President Kamala Harris as the tie-breaker.

Manchin could single-handedly block the plan from making it through reconciliation: It’s hard to see that happening though.

Notably, as Axios’ Ben Geman observed in his newsletter today, Manchin does not mention energy and climate-related policy in name-checking a bunch of areas that should go be approved on a bipartisan basis and go through so-called “regular order.” His list: Voting rights reforms, instituting health-care protections and changes to the federal tax code and business regulations.

Biden’s infrastructure plan also includes a specific carrot to Manchin, proposing to extend an advanced manufacturing tax credit program offering companies subsidies to build or retool manufacturing and industrial facilities in rural areas (hello West Virginia) to make clean energy technologies. Manchin has proposed legislation to this effect. And not to mention the infrastructure plan goes big on carbon capture, Manchin’s favorite technology.

Manchin could get more wins too: “He wasn’t as strident on reconciliation as he was on filibuster,” a lobbyist following the infrastructure negotiations told Josh. “It’s a smart move because it increases the cost Schumer needs to pay for his vote.”

It’s easy to imagine Manchin falling in line once Biden takes a crack at wooing Republicans, and inevitably fails. Does he really want to be the guy who killed what Democrats see as their best shot to chance significant climate legislation?

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.

BIDEN’S BET ON REBATES TO SPUR ELECTRIC VEHICLES: Biden’s infrastructure proposal promises to give consumers point-of-sale rebates to buy American-made electric vehicles in order to help battery-powered cars become affordable for everybody, Josh reports in a new story digging into whether it would actually work.

The idea is modeled after a $392 billion trade-in program proposed last year by Schumer to provide drivers rebates to swap old gas guzzlers with zero-emission vehicles, in what would be a major expansion of the Obama administration’s $3 billion “Cash for Clunkers” program.

Schumer talks it up at every chance he gets, touting it would remove more than 63 million gas vehicles off the road over a decade, replacing 25% of the gas-powered fleet.

Proponents want to lower sticker prices: Which remain higher than gas-powered cars despite the lifetime cost of owning an EV being lower.

A rebate designed to encourage the purchase of electric vehicles could bring in new buyers, beyond just the wealthy people who frequently buy new cars.

“What you would see is new buyers coming out rather than people who would have bought a new car anyway,” said Ryan Gallentine, director of transportation at Advanced Energy Economy.

You can’t do it in isolation: Auto market analysts and economists say a trade-in rebate program on its own is unlikely to spur demand for electric vehicles, which remain stuck at 2% of U.S. total sales.

What’s also needed are policies to mandate stricter fuel-efficiency standards, along with investing more in charging infrastructure to reduce range anxiety, spending on technology to reduce the cost of batteries, and incentivizing factories to build electric vehicles.

And timing is important. If rebates are offered before supply, charging, and production capacity are scaled up, it might not be effective.

“You have to sequence it correctly,” said Kristin Dziczek, senior vice president of research at the Center for Automotive Research.

SHELL BACKS DEMOCRATS’ BID TO SAVE METHANE RULES: Shell lent its support yesterday to an effort by Democrats to use a procedural tool to cancel a Trump administration action that would essentially block the EPA from controlling methane emissions from oil and gas production.

European-based Shell became the first oil major to endorse a resolution introduced by Democratic Sen. Martin Heinrich and Independent Sen. Angus King of Maine, who caucuses with Democrats, to use the Congressional Review Act to scrap the Trump administration methane rollback in a fast-tracked manner with a simple majority vote.

Why it matters: Environmentalists said Shell’s endorsement could encourage other big oil companies to do the same. While Big Oil and its trade groups have said they support Biden’s plan to impose direct federal regulation of methane, they’ve been silent about Democrats’ CRA tactic until now.

“Energy companies that want to be part of the climate solution are going to support the methane CRA,” Ben Ratner, senior director with the Environmental Defense Fund+Business, told Josh.

MEANWHILE, GLOBAL CO2 AND METHANE LEVELS SURGED LAST YEAR: Even with the pandemic, which temporarily drove down greenhouse gas emissions as countries went into lockdown, global carbon dioxide and methane spiked in 2020, according to measurements released yesterday by the National Oceanic and Atmospheric Administration.

Global carbon dioxide levels rose by 2.6 parts per million last year, the fifth-highest rate of increase in NOAA’s 63-year record. Pieter Tans, senior scientist at NOAA’s Global Monitoring Laboratory, said if the economic slowdown hadn’t driven emissions down, 2020 would have seen the highest increase in CO2 levels on record.

Levels of methane, a shorter-lived greenhouse gas that is dozens of times more potent than CO2, also surged last year, with the largest annual increase on record. NOAA said that preliminary analysis shows the primary driver of increased methane came from biological sources, such as wetlands or livestock, as opposed to oil and gas production.

“Although increased fossil emissions may not be fully responsible for the recent growth in methane levels, reducing fossil methane emissions are an important step toward mitigating climate change,” said Ed Dlugokencky, a research chemist at the Global Monitoring Laboratory.

BIDEN TAX PLAN TARGETS $35 BILLION IN FOSSIL FUEL SUBSIDIES: The Treasury Department estimated yesterday that ending subsidies for fossil fuel companies, a component of Biden’s infrastructure plan, would provide $35 billion in federal revenue over a decade.

The Biden administration argues subsidies are accrued “within a handful of large firms” that can afford to lose federal government support.

“The main impact would be on oil and gas company profits. Research suggests little impact on gasoline or energy prices for U.S. consumers and little impact on our energy security,” Treasury officials wrote in a broader report on Biden’s tax policies.

They contend that tax breaks used by oil and gas companies discourage investment in cleaner alternatives, and “undermine the fight against climate change.”

The administration aims to counter that imbalance by providing a host of new and expanded subsidies for EVs, transmission, carbon capture, and energy storage. The Treasury report does not list specific tax policies used by fossil fuel firms that it’s seeking to change. But the industry has largely argued that provisions enabling them to deduct certain drilling costs and carry forward losses for future years are not designed specifically to help fossil fuels.

EPA SET TO FORMALLY SCRAP TRUMP SCIENCE TRANSPARENCY RULE: The EPA sent yesterday a rule to the White House budget office for interagency review that would eliminate a Trump administration regulation seeking to restrict the kinds of science the EPA could use in policymaking.

The move comes after a federal district court, in a ruling in early February, raised significant doubts that the Trump administration’s rule was on solid legal ground. That ruling, from a federal district court judge in Montana, struck down former EPA Administrator Andrew Wheeler’s attempt to make the science transparency rule effective immediately, but the judge also strongly suggested that the entire rule lacked legal basis.

The court ruling has allowed the Biden team a much easier and quicker path to scrap the Trump administration’s action, which environmentalists and public health experts argued could have hamstrung the EPA from setting stricter pollution limits.

GLOBAL CENTRAL BANK NETWORK TO STUDY BIODIVERSITY RISKS: The Network for Greening the Financial System, a global network of central banks focused on climate change, announced this week it would expand its work to study the financial risks of biodiversity and nature loss.

NGFS, of which the Federal Reserve is a recent member, will partner with one of its research stakeholders, the International Network for Sustainable Financial Policy Insights, Research, and Exchange, on the study. The aim of the research is to help central banks and financial supervisory authorities meet their biodiversity commitments, focusing on land-use and deforestation, according to a news release.

Related…JPMorgan expands deforestation policy: The U.S. bank said today it would require clients in the palm oil sector to meet “no deforestation, no peat, no exploitation” sourcing standards, as well as expand its policies on “forest-risk commodities” such as cattle, paper and pulp, and cocoa. JPMorgan will also increase forest management requirements for companies in the mining and infrastructure sectors, the bank said.

The move comes in response to shareholder pressure, including a resolution brought by Green Century Capital Management, an investment adviser to fossil fuel-free mutual funds. Green Century withdrew its shareholder resolution in response to JPMorgan’s policy changes.

MORE FROM JPMORGAN: The bank also announced today it is launching a “green economy” team to help boost the growth of four sectors — renewable energy, efficiency technology, sustainable finance, and agriculture and food technology.

“Our Green Economy banking team will not only deliver industry-specific advice, solutions and services to help green enterprises grow, but will also use our leadership position to promote a more sustainable world,” said Brian Lehman, who will lead the new team, in a statement.

JPMorgan announced in October that it would seek to align its financing with the Paris climate agreement, with a pledge to set interim targets for 2030 this year.

WHAT IS INFRASTRUCTURE (BABY, DON’T HURT ME): Biden is taking it upon himself to defend his broadly defined infrastructure plan that seeks to spend big on electric vehicle charging, transmission lines, clean energy R&D, manufacturing batteries, and more, saying the U.S. should be focusing on industries of the future.

“The idea of infrastructure has always evolved to meet the aspirations of the American people and their needs, and it’s evolving again today,” Biden said in an address yesterday. “Two hundred years ago, trains weren’t ‘traditional’ infrastructure either until America made a choice to lay down tracks across the country. Highways weren’t ‘traditional’ infrastructure until we allowed ourselves to imagine that roads could connect our nation across state lines.”

INTERIOR’S NEW SOLICITOR NOMINEE: The White House nominated Robert Anderson yesterday to be the Interior Department’s solicitor, the agency’s top lawyer. Anderson was director of the University of Washington’s Native American Law Center, and previously worked at Interior in the Clinton administration as Associate Solicitor for Indian Affairs and Counselor to the Secretary.

The Rundown

Bloomberg White House considering nearly doubling Obama’s climate pledge

Washington Post Tourists and looters descend on Bears Ears as Biden mulls protections

Politico Biden looks to appoint special envoy to kill Russia-Germany pipeline

New York Times How debt and climate change pose ‘systematic risk’ to world economy

CBS News Senator Bernie Sanders wants fossil fuel execs to testify to the budget committee

Calendar

FRIDAY | APRIL 9

12 p.m. OurEnergyPolicy will host a webinar on “The Future of Nuclear” discussing the state of the industry and its role in a clean energy future.

WEDNESDAY | APRIL 14

11 a.m. Green 2.0, US Climate Action Network, Climate Nexus, and the National Black Environmental Justice Network will hold an event called, “The First 100 Days: The People’s Town Hall for Justice.” Speakers include Rep. Donald McEachin, D-Va. and Shalanda Baker, deputy director for energy justice at the Department of Energy.

TUESDAY | APRIL 20

12:30 p.m. The National Capital Area Chapter of the United States Association for Energy Economics’ will hold its annual Energy Policy Conference. The virtual event runs over two days.