Daily on Energy: New calculation for carbon pricing proposed

Their research comes just weeks after the number two Democrat in the Senate, Dick Durbin, unveiled a new carbon pricing bill, bringing the grand total of proposals this Congress up to nine.

The new approach — outlined by researchers at Columbia University, Smith College, and University of Maryland in a report published Monday in Nature Climate Change — roots carbon pricing math in the net-zero emissions by 2050 target most Democratic lawmakers, companies, and scientists have agreed to. It also calculates the price across just a 10-year timeframe, as opposed to looking at climate damages and the benefits of mitigation over centuries, as the Obama-era social cost of carbon does.

Noah Kaufman, a research scholar at Columbia University’s Center on Global Energy Policy and lead author of the report, told Abby the research was born out of policymakers asking for a more precise way to calculate a carbon price.

And what they’ve developed, which they dub a “near-term to net-zero” carbon price, more closely tracks with how policymakers are thinking about carbon pricing. Most Democratic lawmakers, for example, acknowledge a carbon price alone won’t be enough to slash emissions at the pace necessary to meet a net-zero by mid-century target.

“They’re focused on not carbon pricing in a vacuum, but a broad climate policy strategy with a carbon price as one piece of that strategy,” Kaufman said. The approach they’ve crafted, he added, would allow policymakers to calculate a carbon price with that broader context in mind.

The prices aren’t as high as you’d think: To reach net-zero emissions by 2050, for example, a carbon pricing using the researchers’ approach would come out to $52 per metric ton of carbon dioxide. To reach net-zero by 2060, the 2025 price would be $32 per ton, and for 2040, $93 per ton, according to the report.

Those levels, by the way, aren’t that far off from what lawmakers have proposed in various carbon pricing bills to date. Those range from $15 per ton $52 per ton, according to analysis of the proposed legislation by Resources for the Future. The GOP-led MARKET CHOICE Act, for example, sets a starting price of $35 per ton in 2021.

Under the net-zero pricing approach, climate policies that lead to more coal plant retirements, more aggressive energy efficiency, and more ambitious deployment of low-carbon technologies could reduce those carbon prices by as much as $10 to $20 per ton, the research adds.

“There’s this conventional wisdom out there that you could never set carbon prices high enough that they need to be to put us on a serious net-zero pathway, and our results definitely give a different impression,” Kaufman said.

That’s because when part of a broader climate policy strategy, a carbon price “doesn’t have to carry all the weight,” he added.

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SCORCHED CALIFORNIA NOT OUT OF THE WOODS FROM POWER OUTAGES: California’s grid operator held off Monday on imposing rolling blackouts after Gov. Gavin Newsom had warned of more potential energy shortages into midweek as the state grapples with a historic heat wave.

In deciding not to impose periodic power outages, the California Independent System Operator thanked reduced demand due to cooler than expected weather and consumers’ adhering to conservation efforts heeded by state leaders.

The grid operator, however, warned consumers are not out of the woods, with “exceedingly” hot temperatures expected into Wednesday.

“With continued help from California residents in conserving energy, much like today, we can reduce the risk of power outages,” said Steve Berberich, California ISO president and CEO, who claimed during a board meeting that the grid operator has been warning the state’s public utility commission for years that it hasn’t required utilities to possess sufficient reserves during extreme events.

But that did not stop Newsom from calling blackouts Friday and Saturday “unacceptable and unbefitting” of California, prompting him to demand an investigation into energy regulators’ failure to anticipate shortages during the heatwave.

Sticking by renewable targets, but admitting ‘vulnerability’: Newsom, in a Monday press conference, reaffirmed his commitment to California’s aggressive clean energy mandates, despite acknowledging the state’s increasing reliance on variable renewables have left the grid “vulnerable.” California is reducing natural gas generation and is shutting down a large nuclear plant.

Newsom urged California ISO to “review its assumptions” of the available capacity of solar power during times of strain on the grid.

He said California must become more “mindful” of providing backup power to renewables with “peaker” gas plants that can be turned on quickly during high demand, along with more hydropower.

He said that in the long term, energy storage technology, which can allow for the use of wind and solar when it’s not sunny or windy, must be “substantially improved.”

Environmentalists, however, blamed problems on poor performance from gas plants that are supposed to ramp up to provide backup when solar declines at night, along with insufficient transmission lines.

Berberich said Monday that a power plant (he didn’t specify the fuel type) on Friday “tripped,” which caused the facility to go dark. But Saturday’s outage occurred after 1,000 megawatts of wind went offline, according to Politico.

REFINERS FACE ‘IRREPARABLE’ DAMAGE: U.S. fuel makers continue to suffer from the pandemic-caused demand collapse and are facing an uncertain future as people avoid flying and refiners face the prospect of more strict environmental regulations.

“Thankfully, I am not invested in refineries,” Tom Kloza, global head of energy analysis at IHS Markit and founder of Oil Price Information Service, told Josh for a story in our magazine this week. “They are having a pretty miserable year. They don’t have a marquee hydrocarbon making a reasonable return right now.”

Jet fuel is a small percentage of the refining industry’s total output, typically at 8%-10% of production. But before the pandemic, it was a source of predictable profits, less cyclical than gasoline demand, which picks up in the summer, and diesel, a big money-maker in the fall and winter.

Refineries are now operating at 81% utilization, as demand for gasoline and diesel has mostly recovered, according to the Energy Information Administration. But that’s still less than 95% from a year ago, and many are struggling financially or operationally.

“We have a little bit of a profit margin now, and we are not losing tens of millions of dollars a day, depending on the facility and where you are,” said a refining industry lobbyist.

Making changes as more regulations loom: A number of refiners have begun or pledged conversions to producing renewable fuels. But renewable fuels are more expensive to produce and require less manpower, resulting in job losses.

Meanwhile, Joe Biden has promised strengthening fuel-efficiency standards that Trump weakened, along with pledging major investments into electric vehicles. The Biden campaign has also called for stricter airline greenhouse gas emissions rules.

“Now is not the time to double and triple down on environmental mandates when the refining industry is struggling,” said Derrick Morgan, senior vice president of federal and regulatory affairs for American Fuel & Petrochemicals Manufacturers, the top U.S. refining industry lobby.

SUPPORT FOR OIL AND GAS IN SWING STATES, INDUSTRY GROUP FINDS: The American Petroleum Institute is playing offense during the week of the Democratic National Convention, releasing new polling Tuesday that it says demonstrates support for oil and gas in swing states.

The poll, conducted by Morning Consult, surveyed 8,600 registered voters in Arizona, Colorado, Florida, Georgia, Iowa, Michigan, Minnesota, Nevada, New Mexico, Ohio, Pennsylvania and Texas.

It found 33% of them, including 26% of Democrats, say oil and gas will play a “very significant” role as a part of America’s energy needs 20 years from now.

Forty percent, with nearly an equal percentage of Democrats and Republicans, said oil and gas would have a “somewhat significant” role in the future. Only 3% said these fossil fuels would have no role at all.

The survey also found that 23% said the oil and gas industry would play a “very important” role in helping the economy recover from the pandemic. Forty percent said it would be “somewhat important” to recovery, while 6% said oil and gas would not be important at all.

A closer look: The questions are phrased to suggest policies to reduce fossil fuel production would leave the U.S. vulnerable to more imports of oil and gas, leaving it less energy secure.

“Proposals to ban U.S. energy production are out of step with bipartisan support for an all-of-the-above energy approach and would set America back by returning us to the days of relying on foreign energy,” API CEO Mike Sommers told Josh.

One question asks whether swing-state voters are more or less likely to back a candidate who supports policies ensuring access to U.S. produced oil and gas. Majorities said they would be at least “somewhat” more likely. Only about 10% would be less likely to vote for such a candidate, but 26% of those polled were unsure.

CLIMATE GETS LITTLE BILLING DURING NIGHT ONE OF CONVENTION: There were only a few references to climate change, which polls have repeatedly shown to be a top voting issue for Democrats this cycle, during last night’s kick-off of the Democratic National Convention.

By far, the focus of night one was racial injustice and the coronavirus, but the few mentions of climate change sought to show how Joe Biden has seemingly united left-wing and centrist Democrats on the issue.

“He has unified our group around a clean energy strategy,” said Washington Gov. Jay Inslee, originally known as the “climate candidate” during the primary, during a montage of Biden’s former Democratic rivals praising the former vice president.

Bernie Sanders, too, gave a shout-out to Biden’s revamped climate plans during his remarks, during which he threw his weight behind Biden and urged his supporters to vote for him. “Joe will rebuild our crumbling infrastructure and fight the threat of climate change by transitioning us to 100% clean electricity over the next 15 years,” Sanders said.

He added Biden’s climate initiatives “will create millions of good paying jobs all across our country.”

CALIFORNIA FINALIZES FUEL ECONOMY DEAL: Five automakers in total — BMW, Ford, Honda, Volkswagen Group, and Volvo — have agreed with California regulators to follow stricter fuel economy standards than the Trump administration set earlier this year, the California Air Resources Board announced Monday.

Under the voluntary agreements, the five automakers will increase the fuel efficiency of their cars at a rate slightly less strict than the Obama-era regulations, but much stronger than the 1.5% annual increase the Trump EPA finalized in March. All 13 states that follow California’s vehicle standards will also implement the voluntary agreements, CARB said.

Each of the automakers also signed onto additional commitments to speed up electric vehicle production (though the details of those commitments were redacted due to confidential business information). And the automakers agreed they wouldn’t join any lawsuit defending the Trump administration’s weakening of the fuel economy standards.

The Trump administration had tried, unsuccessfully, to throw a wrench in the deal. The Justice Department had opened an antitrust probe into four of the automakers pursuing the deal when it was proposed, a probe an agency whistleblower told Congress was politically motivated, but closed it in February.

STORAGE TO RESUME GROWTH AFTER BLIP IN 2019: Global installations of energy storage on the electricity grid are expected to grow more than 5 gigawatts in 2020 despite disruptions caused by the pandemic, research group IHS Markit said Tuesday.

Storage markets in the U.S. and Canada grew strongly at the beginning of the year, helping to offset the first ever global decline last year.

IHS Markit has also increased its forecasts for storage into the future and now expects a fivefold rise in annual installations from 2019 to 2025, led by growth in the U.S., where a number of states have set policies to encourage use of batteries to meet decarbonization targets.

“The fact that the energy storage industry is proving resilient and has resumed a growth trajectory during the pandemic and subsequent economic shock proves that the 2019 market retraction was an aberration,” said Julian Jansen, research manager at IHS Markit.

EDF MAKES NEW HIRES TO BOOST INDUSTRY CLIMATE COMMITMENTS: The Environmental Defense Fund has hired two members from the Harvard Leadership Fellows program to join an arm of the group focused on working with investors and companies to eliminate oil and gas methane emissions.

Andrew Baxter, a chemical engineer who has worked for Shell and Schulmberger, will manage EDF’s engagement with industry, investors, and technologists to help them combat methane emissions.

Ratnika Prasad, who did management consulting work at Bain & Company, will lead an initiative to push oil and gas companies to move towards net-zero emissions.

The Rundown

Reuters In the run-up to US election, drilling lobby promotes natural gas as ‘clean’

Wall Street Journal Chevron pursues oil exploration deal in Iraq

Reuters Mauritius oil clean-up team turns focus from sea to mangroves

Bloomberg Here’s one way to fight climate change: Stop rich countries from growing

Calendar

WEDNESDAY | AUG 19

10 a.m. MT. Wyoming Integrated Test Center. The Senate Environment and Public Works Committee hold a field hearing in Gillette, Wy. titled “Energy and Environmental Innovation: Wyoming’s Leadership in Using and Storing Carbon Dioxide Emissions.”