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WHAT THE METHANE VOTE WILL MEAN: The Senate is poised to vote later today to scrap a Trump administration action in a move that will clear the decks for the Biden EPA to set strict controls on methane emissions from the oil and gas sector.
Senators will vote on a resolution under the Congressional Review Act to cancel a Trump administration action that would have blocked the EPA from setting methane standards for the oil and gas industry. If signed by President Joe Biden, the measure would reinstate requirements for oil and gas companies to monitor and repair equipment leaking methane, a greenhouse gas dozens of times more potent than carbon dioxide. It’s worth noting, though, that these requirements will be a weaker version of the Obama administration’s controls as revised by the Trump administration last year.
Why the vote is such a huge assist for Biden’s team: Biden has directed the EPA to propose stronger methane limits for new oil and gas operations and issue new regulations for methane from existing operations by September of this year.
It’s already a tight timeline for an EPA that is also grappling with deadlines to propose new fuel economy standards for passenger cars by July and reconsider several dozen Trump administration deregulatory actions as soon as possible.
If the Trump administration’s methane action remains in place, however, meeting that September deadline would be extremely challenging, if not impossible. Without the CRA resolution, the EPA would have to eliminate the Trump action, which entirely removed the agency’s ability to directly regulate methane from the oil and gas industry, in a lengthy notice-and-comment rulemaking before even turning to new methane controls.
The White House, in a statement yesterday backing the CRA resolution, acknowledged the resolution would “clear a pathway for EPA to evaluate opportunities to promulgate even stronger standards.”
That clear pathway is especially important for the Biden administration’s desire to target existing oil and gas operations, the bulk of the industry’s methane emissions. The Obama administration had begun the process to issue existing source regulations before it left office, a step that was quickly canceled by the Trump administration.
The regulatory process to come is the true test: Several oil and gas companies have publicly backed the CRA resolution (see the full list below) and have come out in favor of methane controls on new and existing operations since Biden was elected.
But supporting the CRA is a low bar, as Biden’s team would undoubtedly move forward on new methane controls even if Congress didn’t cancel the Trump administration’s deregulatory move (it would just take them a little longer).
Thus far, however, most oil companies haven’t indicated exactly what kind or how strict of methane controls they would support. The Biden administration also hasn’t tipped its hand on how much further it wants to move past the Obama EPA’s controls.
We’ll be watching whether the Biden administration is able to reach any agreement with the oil and gas industry, much of which stridently opposed any regulations until very recently, on where to set the methane controls.
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JOCKEYING AHEAD OF METHANE VOTE: Majority Leader Chuck Schumer is touting the action to restore methane regulations as the “most significant act the Senate has taken on climate in more than a decade.”
Schumer, during remarks on the floor this morning, also challenged more Republicans to support the measure, with only centrist Susan Collins of Maine vowing to join Democrats so far.
“If the leaders of the oil and gas industry are for this, how can our Republican friends not vote for it?” Schumer said.
Sen. Shelley Moore Capito, top Republican of the Environment Committee, quickly provided her justification for opposing the resolution, warning “we should not demonize” the oil and gas industry and that the “market” is already pushing companies to reduce methane.
Yeah, about that: But oil and gas industry support for Democrats’ resurrection of federal methane limits is rising.
Last night, Devon Energy, an independent oil and gas producer active in west Texas and southern New Mexico, endorsed the CRA resolution, joining other U.S. companies Cheniere, Occidental Petroleum, EQT Corporation, and Pioneer Natural Resources. European oil majors Shell, BP, and Total also back the move.
Other companies, including U.S. majors ExxonMobil and Chevron and the trade group American Petroleum Institute, are not weighing in despite their professed support for the Biden administration’s effort to regulate methane.
“As policymakers discuss a path forward for methane regulation, API is focused on working with the administration in support of the direct regulation of methane for new and existing sources through a new rulemaking process,” a spokesman for the oil and gas lobby group told Josh.
BIDEN’S ‘DOWN PAYMENT’ ON TRANSMISSION: The Biden administration is taking first steps to jumpstart construction of electric transmission lines essential to delivering on its promise of having 100% clean power by 2035.
The Energy Department announced yesterday it is offering $5 billion in loan guarantees to support transmission projects, including lines to connect offshore wind, and facilities sited along rail and highway routes. It is also opening up $3.25 billion in funding from the Western Area Power Administration, a federally owned utility, for transmission delivering wind and solar generated in remote western states to more populated areas.
Separately, the Transportation Department issued guidance to states on how to build transmission lines, renewable energy, and electric vehicle charging along existing highway right-of-way.
This second one could be big: Transmission along highways and roadways could break open quicker construction because the lines can be built underground, which is more expensive than an above-ground line, but would avoid public backlash caused by visible power lines.
States are the owners of interstate rights of way, but federal guidance could encourage states to try this untested method type of transmission development.
Congressional action is key: Energy Secretary Jennifer Granholm touted the new actions as a “down payment” on the administration’s transmission investments, but she acknowledged Congress would need to pass Biden’s proposed infrastructure package to make a real difference. Biden’s plan has an investment tax credit for transmission and gives more authority for DOE to build lines.
RELATED…THE PIPELINE OF POWER LINE PROJECTS IS HUGE: The White House unveiled the new initiatives, as it happens, on the same day a report came out identifying 22 “shovel ready”, high-voltage transmission projects across the country that, if constructed, would lead to 60,000 megawatts of new renewable energy capacity.
A study from Americans for a Clean Energy Grid found finishing these projects would increase wind and solar generation in the U.S. nearly 50%.
In a webinar event promoting the report yesterday, Michael Skelly, a clean energy entrepreneur known for his failure to build a big interstate transmission line due to political and regulatory challenges, said many of the 22 projects have been underway for more than a decade and most are already permitted.
He said construction on them could start in the next one to three years if developers got a “little bit of a push” from the federal government.
“If we can get these projects done, success will beget more success and put us on a path for a carbon-free grid by 2035,” Skelly said.
Help wanted: The report advised passing the investment tax credit, which can encourage independent developers that have to find their own financing to start construction. It also called for FERC to use its authority to reform transmission planning and cost allocation, and advocated expediting the diffuse permitting process that is subject to delay because of local opposition from people living near the planned power lines (AKA NIMBYISM).
OIL DEMAND REBOUNDS: U.S. oil demand rebounded to 20.4 million barrels per day last week from 18.8 million b/d the week prior, continuing the up-and-down trend.
Gasoline consumption fell, but jet fuel increased slightly and diesel use spiked, the Energy Information Administration said today in its Weekly Petroleum Status report.
EIA also reported a small increase in crude oil inventories of 0.1 million barrels from the previous week, the second straight week of stock builds.
SENATE CONFIRMS MCCABE AS EPA DEPUTY: The Senate confirmed Janet McCabe as the EPA’s deputy administrator in a bipartisan 52-42 vote yesterday, installing at the agency an Obama veteran seasoned in crafting greenhouse gas mandates.
McCabe’s involvement in writing the Obama administration’s climate regulations, including the Clean Power Plan, was a point of contention with many Republican senators and Senate Energy Committee Chairman Sen. Joe Manchin, who broke with his party to vote against her nomination.
Three Republicans — Sens. Lisa Murkowksi, Chuck Grassley, and Collins — voted in favor of McCabe’s nomination.
McCabe served seven years as a political appointee in the EPA’s air office during the Obama administration, ultimately as its acting chief. She played a critical role in writing the Clean Power Plan, as well as controls on methane from oil and gas and tailpipe emissions standards for passenger cars.
As the EPA’s deputy, McCabe will oversee much of the day-to-day operations of the EPA, though it is likely given her experience that she will also play a role in helping craft new greenhouse gas emissions mandates critical to the Biden administration’s climate plans.
EPA MOVING QUICKLY TO LIMIT HFCS: The EPA is moving quickly to limit potent greenhouse gas refrigerants known as HFCs and allow access to climate-friendly alternatives, in line with bipartisan legislation passed during last year’s spending bill.
EPA Administrator Michael Regan signed a rule Friday approving several substitute refrigerants for use in retail food refrigeration, air-conditioning, and heat pump applications.
The rule “provides assurance to manufacturers that the alternative refrigerants they plan to use to replace HFCs in air conditioning and heat pump equipment will be available and approved for use once relevant building codes are revised,” said Stephen Yurek, president and CEO of the Air-Conditioning, Heating, and Refrigeration Institute.
The EPA is also expected to soon unveil proposed regulations to implement last year’s bipartisan legislation to limit HFCs.
AUTOMAKERS WITH MORE THAN A QUARTER OF UNITED STATES SALES COMMITTED TO ALL-ELECTRIC: With Honda’s announcement last week that it will sell 100% electric vehicles by 2040, automakers that have committed to an all-electric future now make up 29% of U.S. vehicle sales, according to analysis from the Rhodium Group.
Honda joins automakers General Motors, Jaguar, and Volvo, which have all committed to either all-electric sales or to eliminate the tailpipe emissions from their vehicles by a certain date.
BARRASSO WANTS PROBE OF GRANHOLM: Top Energy Committee Republican John Barrasso requested a DOE inspector general investigation yesterday of Granholm, accusing her of a potential conflict of interest related to the agency’s push for electrifying transportation because of her involvement with electric bus company Proterra.
Granholm sat on the board and was granted stock options in the company. But Granholm, as part of her ethics agreement, promised to resign from the board and divest fully.
The Rundown
Wall Street Journal An Ohio town grapples with tearing down a plant from the Cold War
Bloomberg Saudis in talks to sell Aramco stake to global energy firm
New York Times The Exxon of green power: A Spanish company and its boss set sky-high goals
Calendar
THURSDAY | APRIL 29
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing is to consider the nomination of Tommy Beaudreau to be deputy secretary of the Interior.
11 a.m. The House Energy and Commerce Committee’s Subcommittee on Environment and Climate Change will hold a remote hearing on the EPA’s fiscal year 2022 budget request.
WEDNESDAY | MAY 5
11:30 a.m. The House Energy and Commerce Committee’s Energy Subcommittee will hold a remote hearing on electric vehicle provisions in the CLEAN Future Act.
