Daily on Energy, presented by API: The latest on the clean energy deal

The omnibus could be introduced today and it’s expected to include the big ticket items we reported first yesterday, with provisions to boost technologies such as advanced nuclear power, energy storage, carbon capture utilization, and direct air capture.

But lobbyists following the negotiations have their eyes peeled for last-minute snags.

House Speaker Nancy Pelosi’s team last night complained of “inadequate” labor protections in the energy section of the omnibus as one of the few unresolved items but said it could be “readily resolved.”

Democrats are likely to try to get in some sort of win for unions, but close-watchers don’t expect that to kill the detail.

Conservative-leaning groups that support the package, meanwhile, were asked to shore up the White House and Department of Energy. President Trump, always a wildcard, would have to sign off on the final spending bill. There is no major red flag here that we think would lead to Trump threatening to exercise veto power in the way he is doing with the annual defense policy bill.

One more thing: Mike McKenna, an energy lobbyist who used to work on Trump’s legislative affairs team, flagged a “sense of the Senate” provision written in the package that states “in order to meet 100% power demand in the United States through clean, renewable and zero emission energy sources, the Secretary of Energy must prioritize funding” for research and development through DOE’s office of science.

“The back end is not terribly important, but the front end seems really destructive to Republican arguments about the Green New deal, Carbon taxes, etc.,” McKenna told Josh.

But that seems like relative small-ball, and could easily be removed, as Senate Republicans have sought to do.

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.

SHELL SKETCHES PATH FOR NET-ZERO EMISSIONS IN US: Shell is planning to introduce this afternoon a pathway it created for the U.S. to reach net-zero carbon emissions across all sectors of energy by 2050.

It’s the first time Shell, a European oil major, is releasing a net-zero emissions “scenario” for a single country.

Josh obtained highlights of the proposal, dubbed the “Sky Scenario,” which calls for “fundamental changes to the US energy system at a pace of change that will be highly challenging,” but is “economically and technically possible.”

Shell calls for a “key” role for carbon pricing, with the price starting slowly this decade before ramping up to $140 per ton of carbon dioxide equivalent in 2050.

It says the U.S. must double the size of the electricity grid, while shifting the grid to 85% renewables. There would be no coal, but a big role for carbon capture, presumably for natural gas.

Shell says the U.S. would need to open one new carbon capture facility every three months until 2050, allowing for capturing more than 8 million metric tons annually.

The company also sees hydrogen providing 7% of the final energy mix, viewing it as important to decarbonize transport and heavy industry.

And it calls for a big ramp up in biomass — by five times the amount of today — for use in power and industrial purposes.

NOT JUST PARIS…THE OTHER CLIMATE DEAL BIDEN CAN JOIN: In his first days in office, President-elect Joe Biden is also likely to begin implementing a lesser-known global climate deal to restrict potent greenhouse gas refrigerants known as hydrofluorocarbons, or HFCs.

Like the Paris Agreement, the Obama administration also helped negotiate the HFC deal, known as the Kigali Amendment, which would set the U.S. and the world on a path to phase down the refrigerants over the next several decades. If governments meet its targets, it could avoid up to a half a degree Celsius of warming by the end of the century.

The HFC deal, however, has some notable differences from the Paris pact that makes Biden’s path to reengage with it more complex than the Paris Agreement. Biden would likely have to send the Kigali deal to the Senate for ratification, and while he would see some GOP support, there’s no guarantee it would be approved.

The Biden administration could see some help from Congress this year, though. Lawmakers could soon approve a bipartisan measure setting domestic HFC restrictions in line with the Kigali deal. The HFC bill is expected to be included in the omnibus package.

More on the dynamics around the HFC deal in Abby’s story posted this morning.

LONG ROAD BACK FOR OIL DEMAND: Global oil demand will rise by 5.7 million barrels per day in 2021 compared to the historic fall of 8.8 million barrels per day this year, the International Energy Agency projected this morning.

But compared to last month, IEA slightly cut its oil demand forecast for next year by 170,000 barrels per day, thanks to falling expectations about the recovery of air travel. Gasoline and diesel consumption will return to near normal levels in 2021.

Global oil demand next year still projects to be about 3 million barrels per day less compared to 2019, before the pandemic, as uncertainty lingers about how quickly people get vaccinated and return to normal travel habits.

“It will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand,” the report said.

CALL IT A COMEBACK: House Democrats are bringing back their special select climate committee next Congress, Pelosi announced yesterday.

Pelosi created the committee, which cannot write legislation, at the beginning of the 116th Congress as a way to draw attention to climate change ahead of the election. She tasked the committee with producing a report on climate policy that would inform the work of committees of jurisdiction, which the panel’s Democrats released this year without the input of Republicans. The plan endorsed both a clean electricity mandate and carbon pricing, without specifying a preference, as the core means to eliminate emissions from the power sector by 2040.

Pelosi insists the committee still serves a purpose next year to help coordinate climate policies and “champion ambitious progress.” She said Rep. Kathy Castor of Florida will remain chairman. Rep. Garret Graves of Louisiana is expected to return as the top Republican.

IT’S OFFICIAL: The Federal Reserve announced today it has formally joined a global group of central banks working on climate change, known as the Network for Greening the Financial System.

“As we develop our understanding of how best to assess the impact of climate change on the financial system, we look forward to continuing and deepening our discussions with our NGFS colleagues from around the world,” Fed chairman Jerome Powell said in a statement.

The move comes as the Fed has received backlash from GOP lawmakers for taking steps to acknowledge and address financial risks from climate change. Last week, nearly four dozen GOP lawmakers told the Fed it shouldn’t join the Network for Greening the Financial System unless it pledged not to implement any recommendations that would disadvantage U.S. banks and companies.

GE’S CASE FOR NATURAL GAS: General Electric announced earlier this year it would exit the business of building coal-fired power plants as it strives to be carbon neutral by 2030, but the company still believes natural gas has a role to play in reducing emissions in the short-term, it said in a white paper today.

“Viewed separately, renewables and gas generation technologies each have merits and challenges as a means to address climate change and optimum solutions will differ regionally,” GE’s white paper reads. “Together, their complementary nature offers tremendous potential to address climate change with the speed and scale the world requires.”

GE has a significant gas turbine business, as well as a renewable energy business. The company argues in its white paper that replacing coal worldwide with a combination of renewables and natural gas would prompt greater carbon reductions than replacing with renewable energy alone. It also recommends ways to decarbonize natural gas, including by using hydrogen and installing carbon capture equipment.

Speaking of: GE Gas Power joined the Carbon Capture Coalition today, which has more than 80 members, including fossil fuel companies, labor unions, and environmental groups.

CARBON CAPTURE TAX CREDIT EXTENSION GETS A BOOST: Senate Finance Committee Chairman Chuck Grassley signed on yesterday to a bipartisan measure to push back the deadline for carbon capture projects to qualify for federal tax incentives, a promising signal as carbon capture advocates work secure the measure as part of any year-end tax extenders package.

Fellow Iowa Republican Sen. Joni Ernst also lent support to the carbon capture measure yesterday, joining original co-sponsors that include the top two senators on the Senate Energy Committee next year, Sen. John Barrasso (who’s leaving his post as Senate Environment Committee chairman) and Sen. Joe Manchin. The bill would extend the 45Q carbon capture credit by five years and allow developers to claim the credit as direct cash payments.

FARMING GROUPS WARM TO EMISSIONS CUTS: Farming groups, long hostile to policies that curb emissions, are seeking a spot at the table, rather than be on the menu, as Biden eyes deep greenhouse gas cuts across the economy.

Major farm lobbying groups released climate policy recommendations for the first time last month, as part of a coalition with some green groups, forestry groups, and state agriculture officials. The coalition, which includes the largely GOP American Farm Bureau Federation, has already briefed Biden’s transition team.

The farming groups’ evolution on climate started well before Biden was elected, however. The coalition has been working on the recommendations for most of the year, and groups like the Farm Bureau started tip-toeing into climate policy talks in February.

Abby has all the details on the recommendations in a story for this week’s Washington Examiner magazine.

SOLAR IS BOUNCING BACK FROM PANDEMIC: More solar power was installed in the U.S. in the third quarter of this year than any other electricity source, with solar capacity addition increasing 9% over the second quarter, the Solar Energy Industries Association and Wood Mackenzie said in a market update today.

Despite the pandemic, the report also projects solar capacity will see record growth this year with 19 gigawatts installed, a 43% increase from last year. Rooftop solar, hit hardest by the pandemic lockdowns, has also started to recover, with installations increasing 14% over the second quarter, the report finds.

BUSINESS COUNCIL RECOMMENDS EXECUTIVE ORDERS FOR BIDEN: The Business Council for Sustainable Energy, a coalition of energy companies and trade groups ranging from wind and solar to natural gas, recommended today that Biden enact a number of executive orders to set energy efficiency requirements for federal buildings, establish clean energy procurement goals for the federal government, and create targets for renewable energy expansion on federal lands.

BCSE also backs Biden’s plans to create a climate innovation hub (ARPA-C, modeled off the Energy Department’s existing ARPA-E), asks Biden to revoke a Trump executive order on bulk power system equipment, calls for the EPA to use the Renewable Fuel Standard to support electric cars, and suggests ways to speed up permitting for energy projects.

CORPORATIONS DEMAND HELP FOR ELECTRIFYING VEHICLE FLEETS: A coalition of companies including Amazon, AT&T, Uber, and Exelon introduced today a set of demands to policymakers, regulators, and utilities that would help corporations electrify their vehicle fleets.

For companies to electrify, the group, known as the Corporate Electric Vehicle Alliance, says they need access to cost-effective and widely available charging infrastructure, a greater variety of zero-emission vehicle options, upfront cost parity with gasoline-powered cars, and improved coordination with power companies and utility regulators.

“Businesses need supportive policies at all levels of government to ensure the EV transition takes hold at the scale and speed necessary to avoid the worst impacts of the climate crisis,” said Alli Gold Roberts, director of state policy at Ceres, a sustainability group that organized the alliance.

The Rundown

Bloomberg Time’s up on corporate America’s 2020 climate goals. Here’s how they did.

New York Times Claims of ‘bleak’ environmental justice record appear to fell a Biden favorite

Calendar

TUESDAY | DEC. 15

Congress is working on an omnibus spending bill and pandemic response package