Daily on Energy: Republicans accuse Democrats of trying to have it both ways on oil and gas

“You name it, they have been doing their best to decrease production of oil and natural gas in America,” Sen. Bill Cassidy of Louisiana told Josh and co-host Neil Chatterjee for a new episode of our “Plugged In” podcast out next week. “Now that we have skyrocketing fuel prices, now that we are in this situation and they feel electorally vulnerable, they are asking OPEC to increase production and they also want to halt exports…You can’t have it both ways.”

In a separate interview with Josh, Sen. Kevin Cramer of North Dakota advised President Joe Biden against releasing crude oil from the Strategic Petroleum Reserve, arguing it would set a bad precedent because the current high prices are not from an emergency, but rather are the product of a supply and demand imbalance coming off the pandemic.

“I am calling it out as BS,” Cramer said of Biden’s attempts to cajole more supply into the market after pausing oil and gas leases on public lands and pushing to raise costs on fossil fuel producers in other ways, such as mandating emissions and climate risk disclosures.

“Sometimes it’s not the president’s fault [for energy prices to rise] but he created the conditions for a lot of this,” Cramer said. “We ought to be exporting and producing more and controlling the global price rather than let the global price control us.”

Cassidy echoed testimony offered by Stephen Nalley, acting administrator of the Energy Information Administration, at an Energy Committee hearing this week that restrictions on exports of oil and LNG would lower prices in the U.S. market in the short term but cause prices to further spike internationally. The lower U.S. prices would discourage domestic producers from restoring output.

“Not only are you decreasing future U.S. production because of lower prices, but you also are proving we are untrustworthy as a trade partner or as a national security ally,” Cassidy said. “And oh by the way, many of them [importing countries] will go back to using coal and worsening global greenhouse gas emissions.”

To be sure, the Biden administration is still not revealing its cards on actions it might take, and there is little indication it will heed calls by Senate Majority Leader Chuck Schumer and others to halt exports.

Granholm strikes back: Energy Secretary Jennifer Granholm reiterated in an interview published in the Washington Post today that the administration is “evaluating the full range of tools that he has” and that “some are more likely than others.”

Granholm, using the most direct terms we’ve seen from an administration official, said Biden called for an increase in supply “all over,” not just among the oil producing nations of OPEC+, and she accused U.S. operators of acting in a “curious” manner by not coming off the sidelines despite higher prices.

Despite pausing new leases before a court ruling forced them to reverse course, Biden has been issuing permits on existing leases at a steady clip.

“They’ve already got all of these permits and leases that they haven’t even been using at all,” Granholm said.

In a strange twist, Granholm even questioned the capital discipline oil and gas companies have been exercising in response to calls from shareholders who’ve been burned by years of poor returns.

“They’re sitting on [a] record amount of cash, not investing in capital, and instead using it to do shareholder buybacks. So let’s get the supply out there to relieve the pain at the pump right now,” Granholm said.

Mission accomplished? Amid the noise, oil prices are down significantly today, at least somewhat in response to Biden’s mere threat of action, along with concerns about a resurgence of pandemic restrictions and subsequent demand impact in Europe.

“If the US presidential administration wants the oil market’s attention, it now has it,” said Louise Dickson, senior oil markets analyst at Rystad Energy, in a note this morning.

The International Energy Agency has already projected this week that a “reprieve” from high oil prices and tight supply could be “on the horizon” largely because U.S. producers are actually coming off the sidelines more than they had been.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Jeremy Beaman (@jeremywbeaman). 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.

A NOTE TO READERS: As most of you likely already learned, Josh is leaving the Washington Examiner to cover energy and climate change at Politico. This is his last edition of Daily on Energy before handing the keys fully to Jeremy, who is ready to lead and won’t miss a beat.

Josh wants to thank newsletter readers (and sources) for the love over the last four years. He is grateful for you trusting and following a newbie reporter on a competitive beat.

Also, if you are wondering, the future of the Plugged In podcast is still to be determined. Josh and Neil appreciate you listening.

SPECIAL EDITOR’S NOTE — FAREWELL, JOSH: I, Joe Lawler, Josh’s editor for just a few hours longer, am happy for Josh to take on new opportunities but am sorry to see him go. I’m proud of his reporting and the work we’ve done together. Josh has broken important stories and given readers authoritative insight into some of the most significant developments on a beat that often involves coverage of very weighty or seemingly apocalyptic topics. Of all the stories that he wrote and I edited, though, I have to say that my favorite might be his report on John Delaney’s 350-lbs. deadlift.

Please join me in wishing Josh the best of luck in his new role.

MORE FROM CRAMER ON NEW SENATE GOP CLIMATE PLAN: Cramer in the interview with Josh touted a new Republican climate plan he led with Sens. Dan Sullivan of Alaska and Cynthia Lummis of Wyoming, pledging to cut global emissions up to 40% by 2050.

The plan, as we first reported here, leans heavily on Republican favorites, such as developing, deploying, and exporting carbon capture, advanced nuclear reactors, and battery storage, while “revitalizing” manufacturing of renewable energy technologies in the U.S, a goal shared by Democrats.

Cramer confirmed a sentiment Sullivan also shared with Josh that a second component of the plan being developed would address emissions from fossil fuels, which the initial plan ignores.

“Emissions from fossil fuels can be reduced at the same time as cleaner energy processes are developed,” Cramer said. While he acknowledged carbon capture is barely in use at the moment, he called the technology our “favorite thing” in North Dakota.

“If we can’t produce coal and oil a lot cleaner, we probably can’t do them,” Cramer added.

Cramer said his interest in addressing climate change, despite coming from a fossil fuel-dependent state, “starts with the premise the American people really want the federal government and Congress to do something about this.”

“There is an obligation and political opportunity to deal with the problem,” he said.

Interested in international climate diplomacy: Cramer, in an unusual position for a Republican, asked former President Donald Trump to stay in the Paris agreement, arguing that “abandoning our leadership on the world stage only benefits our competitors.”

Still, he was not very complimentary of the Biden administration’s performance at COP 26 in Glasgow, where the U.S. strengthened its climate pledges as part of the Paris agreement.

Cramer said he regretted not attending the conference.

But he accused Biden officials of undertaking an “apology tour” and poked Climate Envoy John Kerry for predicting the end of coal by 2030, which he said equated to submitting “unilateral disarmament of the U.S. economy.” He also said Kerry provided “contrived political cover” for China by reaching a climate agreement that contained few new details committing Beijing to reducing its emissions sooner.

HOUSE PASSES CLIMATE SPENDING BILL: Now the real fun begins. The House this morning passed Biden’s Build Back Better Act, sending the measure to the Senate, where the legislation could significantly change.

Democrats approved the bill — containing the most spending on climate measures in U.S. history — with only one defection among their ranks, Rep. Jared Golden of Maine.

Democrats were forced to vote this morning after GOP Leader Kevin McCarthy commandeered the floor overnight with a speech lasting more than eight hours in which he denounced the spending legislation.

Reminder of what’s in the bill: It includes $555 billion for climate change initiatives, led by significantly expanded tax credits for clean energy technologies.

It offers “supercharged” versions of previous rounds of credits, aimed mainly at wind and solar, that have helped boost renewable deployment.

The tax incentives would remain on the books for a decade, providing certainty to clean energy developers who have faced a series of lapses — and subsequent renewals — for a shorter time frame.

They would also expand to new technologies, such as energy storage and direct air capture, and several of these incentives would be eligible for “direct pay,” a main demand made by clean energy companies, allowing them to monetize credits upfront without relying on banks to finance them. There is also a first-of-its-kind production tax credit to keep alive existing nuclear reactors.

The bill creates a Civilian Climate Corps, provides rebates for homeowners to electrify and make their houses more efficient, a green bank to give low-cost financing for clean energy projects, and it raises fossil fuel leasing royalty rates on federal lands for the first time in over 100 years.

Speaker Nancy Pelosi was able to corral the votes of Texas centrists like Rep. Henry Cuellar who were skeptical of a methane fee included in the bill.

Outstanding questions: It’s unclear if even the compromise version of the methane fee, which provides subsidies to help oil and gas operators combat leaks, can pass muster with centrist Joe Manchin of West Virginia, who has already weakened the package to remove provisions restraining fossil fuel use.

Manchin has also criticized the House bill’s bonus tax credits for union-made electric vehicles.

Senate climate hawks such as Sen. Sheldon Whitehouse of Rhode Island, meanwhile, could look to make their own imprint on the bill by adding a carbon tax, which proponents say would help fill the emissions reduction gap left when Manchin forced the removal of the clean electricity performance program.

“The Senate will continue to fine tune the bill in consultation with the House so that we can swiftly arrive at a final agreement that every member of our caucus supports,” Whitehouse said in a statement this morning.

House liberals, though, are urging the Senate to keep intact the House’s version of the Build Back Better Act because they worry dragging the process out is risky ahead of the midterm elections and are skeptical Manchin would support a carbon tax.

ON CUE…ENVIRONMENTAL GROUP BUCKS UP CENTRISTS: EDF Action, the advocacy arm of the Environmental Defense Fund, launched an ad campaign today thanking House moderates who backed the Build Back Better Act.

The ad buy is approximately $264,000, bringing the total ad campaign spending to $7 million since June.

Among the lawmakers named in the new campaign are: Cuellar, and fellow Texas centrists Lizzie Fletcher, Vicente Gonzalez, Marc Veasey, Filemon Vela, among others.

GOP REP. GARBARINO SPEAKS ON NEW GIG AS CLIMATE CAUCUS CO-CHAIR: Freshman Rep. Andrew Garbarino is seeking to restore the “depleted” Republican ranks of the Climate Solutions Caucus, speaking to Josh exclusively about his recent elevation as co-chair and his trip to Glasgow for COP26, reported here for the first time.

The caucus, the ranks of which once included more than 100 members, has struggled to regain its footing after it suffered huge losses of Republican members in the 2018 midterm elections.

Republicans in the group, many of them relatively centrist, lost their seats to Democrats in left-leaning swing districts.

Garbarino, 37, is motivated by both his age, with polls showing young Republicans are increasingly concerned about climate change, and his district along the south shore of Long Island, which was devastated by Hurricane Sandy in 2012 and is vulnerable to extreme weather worsened by global warming.

Seeking to elevate the profile of the group and his role in it, Garbarino traveled to Glasgow this month as part of a delegation led by the Climate Solutions Foundation, a bipartisan nonprofit group that funded the trip.

His delegation also included Democratic Rep. Chrissy Houlahan of Pennsylvania and business leaders from companies including Exelon, an electric utility, Amazon, and SAP, a software company.

“I want to get as many Republicans in Congress as educated as possible on these issues so next time there is a Republican administration, there is support for climate-friendly policies,” Garbarino said.

His record and policy goals, so far: Garbarino was one of 13 House Republicans who voted for the bipartisan infrastructure bill signed into law by Biden this month, a vote that caused him to receive death threats.

Garbarino noted the bill contains record funding to address climate “resilience,” federal money directed to protect against floods, reduce damage from wildfires, and even relocate communities away from vulnerable places

But like all other Republicans, Garbarino is opposed to Democrats’ social and climate spending bill. Garbarino said he is still educating himself on policy. For now, he is aligned chiefly with mainstream Republican ideas such as supporting private sector innovation in clean energy technologies while opposing more expansive regulations and taxes.

Garbarino said, “It’s tough to start out with a tax to get Republicans on board” as he seeks to restore the caucus’s GOP ranks. But he said he was surprised to learn in Glasgow how many U.S. companies support carbon pricing.

Garbarino also said he backs Biden setting a target to reduce U.S. emissions in half by 2030, and acknowledged the U.S. must reduce emissions from fossil fuels, calling “going after methane” a “low-hanging fruit.”

“We set a goal just recently, and we now need to work toward meeting that goal,” Garbarino said, adding he wants to make sure the target is “achievable” in a way that business can help meet.

BIDEN AVOIDS EV TENSIONS IN MEETINGS WITH CANADA AND MEXICO: Biden glossed over tensions with allies Canada and Mexico around a U.S. push to promote American-made electric vehicles during separate meetings yesterday at the White House.

As we detailed yesterday, Canada and Mexico are worried a rupture in the North American supply chain for automobiles could hamper the transition to EVs.

“We underlined to what point this would be a big problem for auto production in Canada,” Canadian Prime Minister Justin Trudeau said at a news conference yesterday after the North American Leaders’ Summit. “We very clearly underlined our position.”

Nonetheless, according to a White House fact sheet, Biden agreed with Trudeau and Mexico’s President Andrés Manuel López Obrador to “more rapidly” expand deployment of electric vehicles. The three leaders also pledged to develop a North American strategy on reducing methane emissions from all sectors, especially oil and gas.

Biden and Trudeau said they would form a working group on regional supply chain issues, including for critical minerals, which the U.S. will depend on from Canada as part of their electric vehicle push.

EPA MOVES TO UNDO TRUMP ROLLBACK OF WOTUS: The EPA and the Army Corps of Engineers announced a proposed rule yesterday that would undo a Trump administration rollback of water regulations, Jeremy reports.

The proposal would reintroduce the definition of the “waters of the United States” that had been in place through 2015, a broader category than what was established under Trump. The EPA said the new definition would be “updated to reflect consideration of Supreme Court decisions.”

The Rundown

Wall Street Journal Fed programs have kept finance flowing to fossil fuels

Washington Post Biden officials to propose road ban on much of Alaska’s Tongass National Forest

Reuters US EPA proposes extending refinery compliance deadline for biofuel laws

Calendar

MONDAY | NOV. 22

The House and Senate are on recess for Thanksgiving.