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WHY IT MATTERS: One of President Trump’s big closing arguments is all about fracking, and there’s a good reason why: He thinks it can deliver him the voters he needs to win Pennsylvania, potentially the pivotal state in this election.
Trump has been building up his pro-fracking argument for weeks, intensifying the push after his Democratic rival Joe Biden said during the final presidential debate he would “transition from” the oil industry as part of his climate plans.
This weekend, Trump sought to seal the deal. On Saturday, he signed a presidential memorandum directing the Energy Department to conduct an analysis of the economic effects of banning fracking within 70 days.
If there was any doubt what conclusion that analysis will come to, Energy Secretary Dan Brouillette said in a statement on the memorandum, “A ban on fracking would result in the loss of millions of jobs, the doubling of gasoline prices, and the quadrupling of electricity costs.”
The hub of gas fracking: Fracking for natural gas is especially prominent in Pennsylvania, where gas production hit an all-time high this summer, according to new data Friday from Rystad Energy. Pennsylvania’s total shale gas output reached more than 19.8 billion cubic feet per day in August, 100 million cubic feet per day higher than the previous record from November 2019.
“Even a partial ban on fracking would have significant consequences, including increases in energy prices and losses to property values, tax revenues and royalties paid to local and federal agencies,” Dan Eberhart, CEO of oil services company Canary and a Trump donor, told us in an email.
Trump has a specific audience in mind: According to new polling released over the weekend by the New York Times and Siena College, 52% of Pennsylvania voters support fracking, while just 27% oppose it.
A vast majority (86%) of stated Trump voters in the state back fracking, along with 25% of people who said they’re voting for Biden. Support for fracking is also high among the rural Pennsylvania voters the Trump campaign is hoping to turn out. Nearly two-thirds (65%) of rural voters in the state support fracking, compared to just 32% of city voters (38% of city voters in the state outright oppose fracking).
“The president believes that the message that the economic benefits from the Marcellus could go away under a Biden administration resonates with the rural voters he needs,” Eberhart said.
State of play: Trump won Pennsylvania in 2016 by just over 44,000 votes. Right now, Biden holds a slight edge in polling in the state, but his lead has been narrowing.
In a blitz of rallies in the state this weekend, Trump continued to hammer away on the issue of energy, claiming, counter to Biden’s platform, that Biden would “outlaw” fracking and destroy Pennsylvania jobs. The Trump campaign even accused Biden of a bad romance on the trail, saying the former vice president’s campaign event with “anti-fracking activist Lady Gaga” is a “sharp stick in the eye” of Pennsylvania oil and gas workers.
Biden, “barnstorming” throughout the state today, is likely to seek to clarify his position (as he’s been doing for weeks) that he wouldn’t ban fracking, hoping to peel off some unionized energy workers. He’s been banking on assembling a broader coalition that also includes black voters and white suburbanites.
Check this out: The Washington Examiner’s investigative reporter Barnini Chakraborty has a story this morning about how neighboring New York’s economy has been affected by the state’s fracking ban.
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.
MEANWHILE, OIL AND GAS COMPANIES RACE TO GET AHEAD OF POLICY CHANGE: Drilling and fracking activity has accelerated ahead of the election, according to another analysis by Rystad this morning.
The rally was mainly triggered by oil prices stabilizing in the third quarter of this year. But Rystad also identified fast-tracked permitting processes on federal land in New Mexico, as companies try to get ahead of Biden’s proposed drilling ban on federal territory.
There were 780 started fracking operations last month in North America, up from a low of 352 in May during the worst of the price crash.
The U.S. horizontal oil rig count last week increased by 10 to 188, rising for a seventh straight week to reach its highest level since end-May, data by Baker Hughes shows.
CHINA’S NEW CLEAN VEHICLES TARGET: Sales of electric, plug-in hybrid, and hydrogen-powered vehicles will make up 20% of China’s new car sales by 2025, the country’s State Council announced this morning as part of its five-year plan.
China is already the world’s largest market for EVs, but new energy vehicles currently only equal 5% of the country’s car sales.
To grow that portion, the State Council calls for “significant improvements in the technologies of China’s EV components and building more efficient charging and battery swapping networks,” according to Reuters.
The Chinese government also vows to improve its green car quota system in which it gives automakers credits for new-energy vehicles that can be traded. China plans to end direct subsidies of EVs and other new-energy vehicles in two years. The country made waves in September by setting a long-term target for carbon neutrality across its economy by 2060.
ANOTHER OIL AND GAS MAJOR TARGETS NET-ZERO: Norwegian-based Equinor joined the group of oil and gas companies pledging to become net-zero energy businesses by 2050.
The new net-zero target announced today is the first action of new Equinor CEO Anders Opedal. “It is a sound business strategy to ensure long-term competitiveness during a period of profound changes in the energy systems as society moves towards net-zero,” Opedal said of the new goal.
The target builds on climate plans Equinor announced earlier this year to achieve carbon neutral operations by 2030 and to cut greenhouse gas emissions in Norway to near-zero by mid-century.
What it means for Equinor’s business: The company is still expecting to deliver oil and gas production growth for the next few years, around 3% growth from 2019 to 2026, but around 2030, it expects a gradual decline in global oil and gas demand. Equinor is planning big growth in renewables, including offshore wind, and carbon capture.
The company also says its net-zero target includes direct emissions (scope 1 and 2) and indirect emissions (scope 3). The devil is in the details, though, and Equinor says it will present an updated strategy in June of next year.
LABOR DEPARTMENT FINALIZES RULE TARGETING ESG INVESTMENTS: The Department of Labor finalized a rule Friday that could make it harder for retirement funds to consider environmental performance factors when making investment decisions.
The final rule requires private retirement plan managers to select investments based on “pecuniary factors,” and prevents them from taking on additional risk or increased costs in order to promote goals unrelated to the financial interests of participants in the plan.
Jeanne Klinefelter Wilson, acting assistant secretary of Labor for the Employee Benefits Security Administration, told reporters “this does not mean that fiduciaries are prohibited from considering such issues as environment impact and workplace practices when they are relevant to the financial analysis.”
Nonetheless, Gregory Wetstone, president and CEO of the American Council on Renewable Energy, called the rule a “transparent attempt to slow the growth of ESG [ Environmental, Social and Governance] investing.”
“Over the long run, it won’t work. ESG investing is popular precisely because it drives superior investment performance. Rule or no rule, ESG investing is here to stay,” Wetstone added.
HOW-TO GUIDE FOR OIL AND GAS INVESTORS: Investors looking to continue investing in the oil and gas industry should focus on companies that set near-term climate targets, not just goals out to 2050, according to a blog post this morning published through the World Economic Forum.
Investors should prioritize companies that set metrics for 2025 on eliminating methane emissions, achieving zero routine flaring, investing in clean energy, and limiting funding in lobby groups that oppose emissions reduction policies, according to authors Ben Ratner of the Environmental Defense Fund and Erin Blanton Columbia University’s Center on Global Energy Policy.
MASSACHUSETTS WEIGHS FUTURE OF NATURAL GAS: The state’s Department of Public Utilities announced Friday it is opening a probe into the role of natural gas companies as the state strives to reach net-zero greenhouse gas emissions by 2050.
“[T]his Order will help assess how to best achieve deep emissions reductions while ensuring a safe, modern and cost-effective heating distribution system for Massachusetts ratepayers,” said Department of Public Utilities chair Matthew Nelson in a statement. Massachusetts Attorney General Maura Healey, a Democrat, had requested the utility regulators undertake such a probe earlier this summer.
Under the order, every natural gas distribution company operating in Massachusetts must hire an independent consultant to determine how that company can help the state reach net-zero emissions. Each company’s consultant will also work to align the company’s plans with the state’s climate plans outlined in the governor’s pending 2030 and 2050 climate strategies, expected to be finished by the end of this year.
WINTER IS COMING…AND BRINGING MORE GAS CONSUMPTION: The Energy Information Administration expects U.S. natural gas consumption for home heating to be roughly 5% higher than last winter, as a result of expected colder weather and work from home boosting home heating needs, the agency said in a research note today.
According to the EIA, nearly half of all U.S. homes use primarily natural gas for heating. The EIA also expects natural gas prices to be lower this winter for residential consumers, but projects homes using natural gas will likely pay more for their heating this winter because lower prices won’t offset the increase in consumption due to work from home.
The Rundown
Bloomberg ‘Hydrogen wars’ put Europe v. China for $700 billion business
New York Times A typhoon spared the Philippine capital. Will Manila be so lucky next time?
Financial Times US pension funds failing in climate change challenge
Washington Post The climate crisis spawned a generation of young activists. Now they’re voters.
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TUESDAY | NOV. 3
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