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MANCHIN FIGHTS FOR HIS VERSION OF THE IRA: Sen. Joe Manchin is full-swing into an Inflation Reduction Act marketing tour to explain and defend his motivations for negotiating and voting for the massive spending package against critics, and against an administration he sees as undercutting the chief goals of the law.
Manchin, who will be up for reelection next year if he decides to run, upset just about everyone who has a seat at the table with the IRA:
– Republicans, for approving more spending, despite his own stated inflation fears
– Democrats, for softening the more ambitious Build Back Better package
– International leaders, for seeing through the approval of protectionist component sourcing requirements for EVs and other tech
– Environmental and conservation groups, for slipping in pro-oil and gas provisions
Now, the Energy and Natural Resources chairman is out to counter-brand the law, which the Biden administration and other supporters celebrate as the largest-ever federal effort at climate change mitigation.
“The only purpose of the Inflation Reduction Act is for energy security,” Manchin said yesterday during remarks at a nuclear energy-focused event hosted by Third Way. “Now, the administration has a hard time saying ‘energy security,’ but you’ve got to be speaking truth to power. Energy security is our main purpose.”
The how and the why: His remarks during yesterday’s event, whose theme was American leadership in the global nuclear energy sector, quickly morphed beyond the merits of atomic energy into an apologia for different aspects of the IRA.
The war in Ukraine reoriented the debate over Democrats’ reconciliation package, Manchin said, and distilled the necessity of being energy independent if the U.S. is to maintain superpower status. He said he would support exploitation of “any and every source” of energy the country has to that end.
Back to intent: The fossil fuel provisions Manchin wrote into the law are bearing fruit. The administration has advanced new oil and gas lease sales onshore and offshore in the past seven months because of the law, but Manchin was angered by Interior’s decision not to select a lower royalty rate in the Cook Inlet lease sale (ordered by the IRA) after BOEM concluded it would result in greater energy security but would not apply an “appropriate surcharge” to account for climate change and GHGs.
Interior ultimately went with the highest 18.75% rate (also authorized by the IRA). Commercial interest in the blocks was meager.
Manchin said he supported the higher royalty range to align federal rates with state rates and that he had no problem with the rate itself.
“I’m worried about when the royalty rates are basically to diminish people participating. That wasn’t the intent,” Manchin told Jeremy yesterday when asked about whether he was worried about what rates Interior will set in the two remaining offshore lease sales this year.
Looking globally: The U.S. has taken a lot of heat from allies for how the IRA’s industrial policy elements are structured to incentivize manufacturing in the U.S. or with its trade-agreement partners.
European leaders have been negotiating with the administration to be grafted in anywhere they’re not currently so their companies can take advantage of the subsidies, especially in the consumer clean vehicle credit. The EU has also advanced its policy response to the IRA to enable more industrial self-reliance.
Manchin’s thoughts: “If people think the IRA bill is not successful, the whole world has changed because of it. And the whole world is not pleased about it because we made them get back into the game and start competing again,” he said.
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MANCHIN EXPLORING NATIONAL NUCLEAR COST-SHARING PROGRAM: Manchin is also looking into developing a federal program whereby ratepayers across the country share in the cost of maintaining the nation’s fleet of nuclear reactors for both its energy security and carbon-free benefits.
Federal and state subsidies, like those passed in the bipartisan infrastructure law and Illinois’s Climate and Equitable Jobs Act, are not endless, he said, and taxpayers will not be forever willing to pay for plants to stay alive.
“There has to be a stabilized market for nuclear if you’re going to meet any of your goals,” he said.
This “federal nuclear market” idea, as detailed yesterday, would involve utility consumers paying a small surcharge that would go toward legacy reactors.
The need: There is bipartisan consensus in Congress around the value of protecting the existing reactor fleet from early retirements due to the continued penetration of cheaper generating sources.
Some have dubbed the retirement of carbon-free nuclear plants, and their replacement with renewable generating capacity, as “treadmill decarbonization” where retirements result in no net gain in clean generation.
It’s not only renewables that have displaced nuclear generation, however. Proliferation of cheaper natural gas makes gas plants significantly more affordable to operate than other thermal sources in many markets, including New England.
ALASKA GROUPS ASK FOR PRELIM INJUNCTION TO BLOCK WILLOW: Environmental plaintiffs challenging the Bureau of Land Management’s approval of the Willow project are now asking for quicker relief to prevent ConocoPhillips from beginning construction of the project.
Plaintiffs who earlier in the week asked the U.S. District Court in Alaska for a declaration that BLM violated NEPA and other laws, and a vacatur of its record of decision, have now filed for a preliminary injunction in hopes of blocking the imminent start of road construction to serve Willow.
“Today, ConocoPhillips is racing to start construction, and there are just days left before bulldozers start moving gravel and construction begins,” said Kristen Miller, executive director for Alaska Wilderness League, one of the plaintiffs in the suit.
The chief plaintiff is Sovereign Iñupiat for a Living Arctic. Their complaint is distinct from another filed this week in the same court by the Center for Biological Diversity and other environmental NGOs, who are being represented by Earthjustice.
ConocoPhillips said Monday it had made preparations with contractors and intends to “immediately initiate gravel road construction activities” for Willow now that it has approval.
More litigation: Several of the parties to the above litigation notified the Biden administration yesterday of their intent to sue over Interior’s lack of response to a joint petition they filed promoting a phaseout of oil and gas production on public lands.
The groups petitioned Biden and Secretary Deb Haaland last January to use their “inherent authority” to implement restrictions on oil and gas production both onshore and in the Outer Continental Shelf.
Their petition included a recommended schedule for phasing down production to 50% of its 2020 baseline in 2026. By 2035, the schedule provides for production levels to be only 2% of 2020 levels.
The notice sent yesterday said the groups intend to sue under the Administrative Procedure Act if Interior doesn’t respond and said Biden is failing to keep true to his climate goals and promises to limit extraction on federal lands.
EPA PUTS STATES ON NOTICE FOR BLOCKING EAST PALESTINE WASTE: The EPA notified states today that they cannot block shipments of hazardous waste from the East Palestine train derailment site, putting on notice the growing number of state leaders and federally licensed disposal sites that have tried to refuse the contaminated materials, leaving tons of hazardous materials sitting in piles in and around the site of the crash.
Any state that is blocking the shipments “may be impeding Norfolk Southern in its ability to comply with its obligations under CERCLA, [the Comprehensive Environmental Response, Compensation, and Liability Act], as well as EPA’s order to Norfolk Southern, which is unlawful,” EPA Administrator Michael Regan said today, noting that such interference could run afoul of the Commerce Clause.
Oklahoma Gov. Kevin Stitt blocked a shipment of contaminated soil from being shipped to his state earlier this week. And officials in Indiana, Texas, and Michigan have also complained about contaminated soil and water being shipped to their states.
The U.S. is home to 218 hazardous waste management facilities, and Regan stressed that the federal hazardous waste management system overseen by the EPA is specifically designed to ensure the safe transport and disposal of such materials.
“There was nothing special or out of the ordinary about this waste, other than the fact that it’s coming from a town that has suffered deeply in the wake of a horrible trauma,” Regan said. Read more from Breanne here.
SAUDI ARABIA MASSIVELY RAMPS UP RUSSIAN DIESEL IMPORTS: Saudi Arabia is importing massive quantities of Russian diesel despite having more than enough of its own supply, in the latest indication of how Western sanctions and efforts to reduce Russian revenue have rerouted markets.
The kingdom imported nearly 2.5 million barrels of diesel-type fuel from Russia in the first 10 days of March alone, according to Bloomberg, higher than any point in the last six years.
Data compiled by the firm Kpler shows that Saudi Arabia began to increase its shipments of the Russian refined products beginning late last year, around the time the G-7-backed Russian oil price cap on crude came into force. (The cap on refined petroleum products took effect two months later, in February.) Turkey, another diesel exporter, also massively increased its imports from Russia during the same period.
Both countries were already key suppliers of diesel to Europe, showing how global oil markets are adjusting in the months since the price cap and EU ban on Russian oil products took effect. Traders there could also be turning a profit by amassing the Russian fuel and selling to Europe at a higher price, though it’s hard to estimate where Russian supplies are currently trading.
The Rundown
Bloomberg Pumping heat a mile underground is helping one city cut carbon
Politico EU The great EU subsidy shakedown
CNBC UK backs Rolls-Royce project to build a nuclear reactor on the moon
Calendar
TUESDAY | MARCH 28
10:00 a.m. 2123 Rayburn. The House Energy and Commerce Subcommittee on Environment, Manufacturing, and Critical Materials will hold a hearing on the government’s response efforts to the East Palestine train derailment.
