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CENTRISTS AND METHANE FEES: House Democrats are managing to keep centrist members from oil and gas districts on board with their proposed methane fee, which has been a top subject of attack from Republicans and industry who say it amounts to a tax hike at a time of mounting inflation.
The House Energy and Commerce Committee is continuing to mark up its portion of the reconciliation bill this morning after an all-day session yesterday that went past midnight. The committee is still debating the core energy portion of the package that contains the centerpiece “clean electricity payment program,” but it already approved the pollution portion that contains a fee on methane emissions.
Rep. Lizzie Fletcher, a Texas Democrat whose district is home to several oil majors’ headquarters, thanked Committee Chairman Frank Pallone for accommodating changes to the methane fee in response to her constituents’ concerns. Fletcher voted for the modified methane fee, because she said the industry cleaning up methane emissions would assure natural gas is a “clean and competitive fuel source.”
But she indicated that her final support for the reconciliation package could hinge upon further changes, potentially including the application of the methane fee to non-oil and gas sources such as agricultural and waste management.
Democrats described their fee as an important and modest first step to address methane emissions, which have a more potent short-term effect on climate pollution, and fought Republican attempts to characterize it as a tax that would be felt by consumers.
“This is not a tax. It’s a fee on natural gas waste,” said Rep. Diana DeGette, Democrat of Colorado, adding oil and gas operators have the technologies to combat methane leaks at low cost. “The smart players want to prevent waste because they can capitalize it to make money. Customers won’t be paying a fee on gas delivered. The only fee will be paid [by an operator] on what doesn’t make it to the consumer.”
Republicans, however, countered there is no such thing as a fee on industry that doesn’t translate to a consumer tax.
“I don’t think you can credibly say this will have no effect on anyone earning less than $400,000 a year,” said GOP Rep. Michael Burgess of Texas, suggesting the fee would violate a core pledge by President Joe Biden on not raising taxes to the middle class.
In a preview of attacks to come over House Democrats’ clean electricity payment program, which blocks most natural gas plants from earning credits, Republicans accused their counterparts of seeking to “villainize” gas and drive it out of the nation’s power system.
Rep. Anna Eshoo of California argued that’s exactly the point of Democrats’ aggressive climate efforts, which are taking on more urgency during a summer in which nearly one in three Americans were hit by extreme weather.
“Any society not moving away from fossil fuels doesn’t have a future,” she said. “We are paying a heavy price for not having done it sooner.”
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ENVIRONMENTALISTS CRITICIZE DEMOCRATS FOR KEEPING OIL INDUSTRY TAX BREAKS: As the House Ways and Means Committee this morning marks up Democrats’ green energy tax plan, environmentalists are blasting tax breaks for the oil and gas industry that are preserved as part of the package.
House Democrats’ proposal “neglects crucial provisions” to end oil and gas subsidies in the domestic tax code,” said Collin Rees, U.S. Campaigns Manager at Oil Change International.
Democrats’ draft, which could be amended, doesn’t address a Biden request to eliminate oil and gas companies’ ability to expense so-called “intangible drilling costs,” such as labor costs and developing a well site.
It also spares a percentage depletion deduction that allows producers to recoup costs based on how depleted the resource is at a particular drilling site, which is predominantly used by small, independent producers and royalty owners.
Environmental activists are turning their attention to the Senate, where a tax plan advanced by Democrats on the Finance Committee earlier this year targets many of the same favorable provisions for oil and gas companies that Biden has asked Congress to eliminate.
The Ways and Means Committee’s sweeping clean energy tax package 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.
Carbon capture tax treatment gets mixed reviews: A coalition of industry and environmental groups called the Carbon Capture Coalition warned a provision of the tax plan extending and modifying the 45Q carbon capture credit “includes damaging provisions.”
“While the legislation helpfully lowers the annual carbon capture eligibility thresholds in the 45Q program, it pairs those lower thresholds with harmful new percentage carbon capture requirements applied at the level of the whole facility,” said Jessie Stolark, the coalition’s public policy and member relations manager.
Stolark said that these adjustments to 45Q would “block deployment” of carbon capture technologies at industrial and power plants.
Democrats’ proposal increases 45Q credit values for direct air capture, but it does not do so for power sector and industrial uses, “where higher credit values are essential to realizing widescale deployment.”
On the other side of things, the League of Conservation Voters called for House Democrats to remove carbon capture tax benefits for all uses other than industrial applications and direct air capture.
RURAL CO-OPS SAY DEMOCRATS’ CLEAN POWER PLAN ‘TOO AGGRESSIVE’: The group representing electric co-ops is warning House Energy and Commerce Committee leaders that its proposed program to pay utilities to use more clean electricity and penalize those who fail is “too aggressive.”
House Democrats’ proposed clean electricity payment program would require utilities to raise the share of zero-carbon power by four percentage points each year from 2023 through 2030. If they fail to reach the four-point target, they must pay a penalty for falling short.
The National Rural Electric Cooperative Association in a letter yesterday said that level of annual increase in clean electricity deployment is “not attainable for many of our members.” It added the program’s “very narrow” 10-year program implementation window seeking for the utility sector on average to achieve 80% carbon-free power by 2030 is “unrealistic.”
While U.S. utilities are moving to clean energy, the shift is happening more slowly at co-ops that service much of rural America. Because they are owned by customers, not shareholders, they can’t raise equity and rely on debt financing. As non-profit businesses, they can’t use renewable tax credits. Co-ops are also often locked into long-term contracts with coal plants.
Sen. Tina Smith of Minnesota recently told me Democrats as part of their reconciliation package are looking to find ways to help co-ops and non investor-owned utilities transition to clean energy
WELL, DUH…INDUSTRY GROUP WARNS CEPP WOULD KILL COAL: Democrats’ proposed clean electricity payment program aiming for 80% carbon-free power by 2030 would lead to the elimination of coal power by the end of the decade, if not sooner, an industry group warned yesterday in a letter to the leaders of Energy committees in both chambers.
Michelle Bloodworth, president and CEO of America’s Power, said a strategy to reduce carbon emissions from the power sector “must allow more than eight years to develop and deploy enabling technologies, especially carbon capture and storage.”
Bloodworth copied Joe Manchin of West Virginia, the chairman of the Senate Energy Committee, on the letter, the latest pitch from coal interests for him to oppose the CEPP.
United Mine Workers of America President Cecil Roberts wrote Manchin last month warning the CEPP plan would “virtually eliminate” West Virginia’s entire fleet while not giving sufficient time for wide-scale carbon capture deployment on coal and gas plants.
BIDEN CONTINUES CLIMATE PITCH TOUR: Biden is visiting the National Renewable Energy Laboratory in Denver this afternoon with Energy Secretary Jennifer Granholm to pitch his Build Back Better Agenda as an investment in clean energy.
Granholm, in a tweet, previewed that Biden’s public remarks during his visit will hit on topics like “great jobs, cool research, untamed wildfires and clean energy.”
Biden is increasingly trying to justify the need for his aggressive infrastructure and social spending agenda by recognizing a brutal summer of extreme weather events is being made worse by climate change.
Yesterday, in visits to Idaho and California, he pitched Democrats’ climate-heavy spending plan and surveyed damage in a pair of states working to manage 35 wildfires.
“We can’t ignore the reality that these wildfires are being supercharged by climate change,” Biden said. “It isn’t about red or blue states. It’s about fires. Just fires.”
“These fires are blinking ‘code red’ for our nation. They’re gaining frequency and ferocity,” Biden added after concluding his tour of Caldor Fire damage to communities around Lake Tahoe. “We know what we have to do.”
BIG SUPPLY OUTAGES FROM IDA OFFSET BY FALLING DEMAND, IEA SAYS: Hurricane Ida is still causing problems for U.S. and global markets, helping to force a decline in oil supply for the first time in five months, the International Energy Agency said in its monthly oil market report this morning.
But supply disruptions haven’t produced higher prices because global oil demand has been falling as a result of rising coronavirus cases and new mobility restrictions in Asia.
Hurricane Ida, which hit the U.S. Gulf Coast late last month, initially knocked out 1.7 million barrels per day of production. Total supply losses from the storm could approach 30 million b/pd this month.
But supply growth is set to resume in October, IEA said, when the market “should shift closer to balance” if OPEC+ continues to restore production as planned.
Global oil demand is also expected to rebound by a sharp 1.6 million barrels per day in October and continue to increase until the end of 2021.
EXELON’S ILLINOIS NUCLEAR PLANTS SURVIVE: The Illinois Legislature has approved legislation providing nearly $700 million in subsidies over five years to save unprofitable nuclear plants, acting in the final hour to stop at least one from shutting down as part of a massive clean energy package. Democratic Gov. J.B. Pritzker said he intends to sign the bill into law.
The nuclear aid is part of a larger clean energy bill putting Illinois on the path to a carbon emissions-free electric grid by 2045, one of the fastest timelines in the nation. The legislation’s “carbon mitigation credit program” provides financial support to Chicago-based utility Exelon’s Byron, Dresden, and Braidwood nuclear power plants.
In response to the bill’s passage, Exelon committed to refueling its Byron and Dresden nuclear plants, keeping them alive. The utility will also “move to immediately fill hundreds of vacant positions and resume capital projects required for long-term operation.”
The Rundown
Wall Street Journal Chevron to triple low-carbon investment
Reuters US, EU pursuing global deal to slash planet-warming methane
Bloomberg Relentless energy surge prompts EU governments to step in
Washington Post As the largest-ever US climate bill inches forward, a lobbying frenzy ensues
New York Times In California, worsening fires show limits of Biden’s power
Calendar
WEDNESDAY | SEP. 15
9:30 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a business meeting and hearing on EPA nominees.
