Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what’s going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!
CARBON PRICING PROSPECTS: Don’t call it a comeback quite yet, but the Senate Finance Committee is considering including carbon pricing in its portion of the budget reconciliation climate package.
The primary evidence for this is a leaked Finance Committee document listing a bunch of different revenue raising provisions under consideration, including a “per-ton tax on the carbon dioxide content of fossil fuels upon extraction,” starting at a modest $15 per ton and escalating over time.
According to the document, any price on carbon would also be paired with “rebates or other direct relief for low-income taxpayers” and “a border adjustment to ensure foreign companies also pay the tax.”
The Finance Committee is expected to release its reconciliation bill soon, and its chairman Sen. Ron Wyden of Oregon is making the rounds today in webinar events previewing his forthcoming plan.
Ahead of a conversation with Wyden hosted this afternoon by the group E2, a coalition of companies called Business Climate Leaders sent out an email urging supporters to lobby Wyden to include carbon pricing in reconciliation.
Wyden, at the event, said today he is working “very closely” with Finance Committee colleague Sen. Sheldon Whitehouse of Rhode Island on the “pricing issue.”
Wyden added, “as part of carbon pricing you’ve got to make sure people are whole,” by using revenues to offset higher energy prices for low-income people.
Whitehouse, perhaps the most vocal Democratic proponent of carbon pricing, told me it remains on the table.
“It is hard to lead the planet to safety without a carbon pollution fee that quickly reduces emissions and charges the fossil fuel industry, as market economics principles demand, for the damage the industry emissions inflict on our planet and economy,” Whitehouse said.
More on the logic of putting carbon pricing in reconciliation below…
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [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.
More on carbon pricing… It’s not either-or: Carbon tax supporters say the policy could enhance rather than compete with Democratic policies headlining its climate push, namely the “clean electricity payment program” paying utilities to use more carbon-free power, combined with a package of new and expanded tax subsidies for clean energy technologies.
Senate Majority Leader Chuck Schumer recently told his colleagues that those two policies, combined with other smaller measures proposed by Democrats, could cut U.S. emissions 45% below 2005 levels by 2030. That’s short of President Joe Biden’s pledge to slice emissions in half by 2030.
A carbon price, supporters say, could close that gap by reaching into all aspects of the economy to raise the price of fossil fuels.
“It’s complimentary to a lot of other policies. It plays well with others,” Daniel Richter, vice president of government affairs for the Citizens’ Climate Lobby, told me. “You get a lot of emissions reductions even at modest carbon prices.”
A carbon tax is also a natural fit for the budget reconciliation process as a revenue-raiser, while it remains unclear if the clean electricity payment program will pass muster with the parliamentarian.
Whitehouse has said another Democratic priority — imposing a tax on imports of carbon-intensive imports — would be jeopardized if not paired with a domestic carbon price.
Nat Keohane, president of the Center for Climate and Energy Solutions, said that including a carbon price with payments to utilities and tax subsidies would result in extra emissions reductions of at least a couple million tons a year that would otherwise not occur with just the latter two policies.
“We need all the tools we can get through this reconciliation package that address carbon emissions,” Keohane told me.
Let’s be clear — there are big obstacles: It’s very questionable whether a carbon tax survives to a final negotiated package between House and Senate Democrats.
The more liberal House has left out carbon pricing from its reconciliation package, even as Democrats in the lower chamber have proposed a methane fee.
President Joe Biden has never proposed a carbon price as part of his climate agenda, and centrist Democrats from oil and gas states such as Joe Manchin have been vocally opposed to raising the price of fossil fuels.
“The president and Democrats have made a decision to pursue a Keynesian climate strategy not a Milton Friedman one,” Paul Bledsoe, an adviser with the Progressive Policy Institute, told me. “They have made their bed and now they are probably going to lie in it.”
E&C COMMITTEE ADVANCES CEPP AND OTHER CLIMATE MEASURES: The House Energy and Commerce Committee voted 30-27 on a mostly partisan basis yesterday to advance the core energy portion of its Build Back Better Act, a plan to pay utilities to generate a growing percentage of power from clean sources.
Centrist Democratic Rep. Kurt Schrader of Oregon broke from his party to join all Republicans in opposing the measure.
The Energy and Commerce Committee allocated $150 billion for its version of the program, which would use a carrot-and-stick approach to push the utility sector to reach 80% clean electricity by 2030, issuing grants to power companies to increase their clean energy portfolio while imposing financial penalties to ensure utilities don’t fall behind.
Committee Democrats approved other climate provisions as part of the reconciliation bill, imposing a fee on methane emissions from oil and gas operations and spending $13.5 billion on electric vehicle charging stations, $9 billion for electric transmission lines to deliver renewable energy, $30 billion to replace lead pipes, and $27.5 billion for a green bank, and more.
This isn’t the end for CEPP: The House still has to negotiate its climate plans, including the clean electricity payment program, with the more centrist Senate, where it could be subject to changes.
While Schrader’s opposition to the CEPP program has been expected, his vote suggests Democratic leaders might need to accommodate a more lenient version of the program that Manchin and others could support, perhaps by leaving some room for natural gas as a qualifying fuel.
HYDROPOWER INDUSTRY REBUKES DEMOCRATS’ GREEN TAX PLAN: The hydropower industry is feeling left out of House Ways and Means Committee Democrats’ green energy tax plan, as the panel continues today to markup its portion of the reconciliation bill.
The National Hydropower Association said the tax plan fails to include a new 30% investment tax credit to maintain and enhance the existing hydropower fleet, which it called “a significant missed opportunity to accelerate the nation’s transition to a clean energy grid.”
There is bipartisan legislation in both chambers providing a strengthened ITC for hydropower, specifically focused on tax incentives for environmental improvements, dam safety enhancements, and grid resiliency measures.
But that was left out of a Ways and Means plan that features features a host of green tax credits worth a combined $235 billion over 10 years, including extending wind and solar incentives through 2033, as well as boosts for carbon capture, direct air capture, existing nuclear plants, transmission, energy storage, and more.
The House Ways and Means proposal does include provisions for pumped storage and would provide a 10-year extension of the existing hydropower production tax credit (although at half the value of other zero-carbon technologies such as wind and solar).
INVESTORS PUSH OIL AND GAS COMPANIES ON NET-ZERO GOALS: More than 20 global investors with collective assets worth $10.4 trillion have published a standard setting minimum expectations for what oil and gas companies need to do to align their capital spending and production plans with net-zero emissions targets.
The ‘Net Zero Standard for Oil and Gas,’ published today, outlines the actions that oil and gas companies should be taking and how they should be reporting on those actions so that investors can effectively evaluate their progress.
While a number of companies have set net zero targets and started developing transition plans, there is significant variation in the extent and scope of these commitments.
“Ultimately, this is intended to create a level playing field in transition plan reporting so that we can understand, compare, contrast, and robustly perform our role as long term stewards of our assets,” said Adam Matthews, chief responsible investment officer for the Church of England Pensions Board, who helped develop the standard.
A group of European oil and gas companies, including BP, Eni, Repsol, Shell and Total, have agreed to participate in a pilot program with investors to test the standard out, suggesting a level of buy-in from the industry.
Some of the actions companies should take to meet the standard are diversifying into new areas of business, particularly renewables; working with customers to transition to low carbon energy; developing technology to reduce emissions; and ceasing exploration and running existing assets down to return cash to investors.
BIDEN: CLIMATE CRISIS = ECONOMIC OPPORTUNITY: Biden was in Colorado yesterday where he continued to plug the climate provisions of Democrats’ reconciliation package after surveying developing technologies at the National Renewable Energy Laboratory outside Denver.
Biden described a “code red” situation on climate, but leaned into the idea that the situation can be used as an occasion to grow the workforce with high-paying union jobs in support of things like building grid resiliency and manufacturing renewable technologies.
“I spent a lot of time, before I announced my plan, meeting with all the unions to convince you all that this is the future; these are where the jobs are,” he said. “When I say ‘jobs,’ I’m not talking about $15 an hour. … You know, I’m talking about union jobs — not 15, 20 bucks an hour; 45, 50 bucks an hour.”
“Yes, we face a crisis, but we face a crisis with an unprecedented opportunity to create good jobs of the future, to create industries of the future, to win the future, to save the planet,” he said.
Biden and Democrats have been especially vocal about their intent to use the reconciliation bill’s energy and climate-related items to prop up union ranks, a key constituency, but the effort could contribute to higher costs over the course of transition to more renewable energy, as I reported last week.
GOP ACCUSES HOUSE DEMOCRATS OF ‘DOUBLE DIPPING’ ON CLIMATE ITEMS: After 15 hours of work, the House Transportation and Infrastructure Committee finished marking up its $60 billion portion of the reconciliation package late yesterday, over and against Republican objections that committee Democrats violated Biden’s commitment to not ‘double dip’ on provisions already addressed in the Senate’s bipartisan infrastructure deal, the Washington Examiner’s Jeremy Beaman reports.
Biden said Democrats would not use reconciliation to rehash physical infrastructure and related items negotiated or left out of the Senate deal. Transportation committee Republicans argued numerous items included in the markup did just that.
The committee’s final product includes $10 billion to fund HUD and Federal Transit Administration grants for zero-emissions housing and transit projects, as well as billions to support emissions reductions grants for passenger rail and other surface transportation — programs already negotiated in the Senate bill, Republicans said.
“The bill that this committee passed out and passed through the House floor 40 different programs … related to this very thing — to reducing emissions, focused on the transportation sector,” Louisiana Rep. Garret Graves said yesterday, pointing to the committee’s work on the House’s partisan infrastructure bill that passed in July.
“The Senate bipartisan bill effectively ignored [them],” Graves added. “But they chose one, and it’s already in their bill. It actually has a chance of passing, so this would be double dipping.”
Chairman Peter DeFazio previously signaled that he wouldn’t be held to Biden’s double-dip commitment.
“I didn’t sign that agreement,” he said in August. “In fact, I don’t believe anybody in the majority in the Senate, except for a couple of senators, signed off on that agreement. We are working with the White House to see if there are ways around it.”
HURRICANE IDA STILL HITTING DEMAND: U.S. oil demand slightly fell last week for the second straight week, as the effects of Hurricane Ida linger.
Oil demand declined to 19.91 million barrels per day from 19.95 million barrels p/d, the Energy Information Administration said in its Weekly Petroleum Status report.
That’s a big come down from oil consumption of 22.8 million barrels p/d reached before Hurricane Ida hit the Gulf Coast and deprived gas stations across Louisiana of fuel.
Gasoline demand in particular fell sharply last week to 8.9 million barrels p/d from 9.6 million barrels p/d.
The Rundown
Washington Post The government helped Tesla conquer electric cars. Now it’s helping Detroit, and Elon Musk isn’t happy.
Bloomberg SEC takes a different route than Europe on climate disclosures
Politico Soaring power prices drive anxiety over EU climate plans
New York Times Spain moves to reduce rising electric bills
Calendar
THURSDAY | SEP. 16
Congress is out in observance of Yom Kippur.
