Daily on Energy: House GOP won’t pony up for Kerry’s pledge for loss and damage fund

Delegates at COP28 made significant headway on Day 1 of the summit, adopting a framework outlining how to manage the loss and damage fund. Several rich nations pledged money to help launch the program that would aim to compensate vulnerable countries hit by natural disasters.

Kerry promised the U.S. would contribute $17.5 million to the program, adding that officials expect the fund to be “up and running quickly” and that the contribution would be drawn “from a variety of sources.”

“That’s pretty generous of him. I hope he’s got the money to cover it,” said Republican Rep. John Curtis of Utah, chair of the Conservative Climate Caucus. The lawmaker made a note to mention that Congress had the power to authorize budgets – not the executive branch.

Other House Republicans on the Energy and Commerce Committee asserted that funding for the program is a non-starter, citing the growing national debt as an issue that needs to be addressed first.

“I can’t imagine that’s a position we’d support. We’re $33 trillion in debt,” said E&C Vice Chair Kelly Armstrong, a Republican from North Dakota. “So let’s figure out how we lower energy costs; get cheaper, cleaner energy and go from there.”

The significance: House conservatives have been implacable over spending – to the extent that disagreements over appropriations levels catalyzed Kevin McCarthy’s ouster, and has become an issue inherited by now-speaker Mike Johnson.

And it’s not just Republicans asserting that spending on the loss and damage fund is a problem. Even some Democrats acknowledged the political difficulty of fulfilling the U.S.’s promises on the global stage if it involves a funding vehicle moving through Congress.

When asked if he thought it was possible for the House to move on a measure for the fund, Natural Resources Committee Ranking Member Raúl Grijalva simply said, “No.” However, the Arizona Democrat underscored the importance of the loss and damage fund, highlighting that climate change is a worldwide issue.

“I think it’s a valid commitment,” Grijalva told Nancy in a brief interview. “These countries don’t have the wherewithal to do anything about it themselves.”

Another avenue: The Biden administration is also looking for ways to pull in money from the private sector, in case Congress doesn’t approve spending for the climate fund. But, there might be a bit of a time crunch in doing so, as the World Bank announced they could be ready to dole out cash in as little as three months, Senior Managing Director Axel van Trotsenburg said in a Bloomberg podcast. 

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). 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.

NEWSOM V.S. DESANTIS: Political rabble rousers Gavin Newsom and Ron DeSantis went toe to toe in a “blue versus red state” debate hosted by Fox News and moderated by Sean Hannity Thursday night, clashing over gas prices and both of their environmental records.

Both Hannity and DeSantis went after Newsom for California’s high gas prices, to which Newsom fired back by calling attention to the Florida governor’s conservation record.

“We’re suing the industry responsible for this climate crisis – by the way, the same climate crisis that Ron DeSantis celebrated as human-caused,” Newsom said, referencing lawsuits his state filed against fossil fuel companies over their alleged role in exacerbating climate change. “Who campaigned for a fracking ban, who campaigned to oppose offshore oil drilling, and then two days after he got elected signed an executive order … doubling down.”

Newsom sought to highlight the seemingly conflicting rhetoric and past record of the Florida governor, citing praise from environmentalists for DeSantis’ 2019 executive order – which forced Florida’s Department of Environmental Protection to oppose all offshore oil and gas activities off the coast of Florida, along with hydraulic fracturing.

“You were celebrated by the Sierra Club for that action – until you weren’t,” Newsom said. “Once again, it shows the hypocrisy of Ron DeSantis.”

DeSantis, on the other hand, found ground in attacking Newsom over California struggling to support its electric car fleet while experiencing rolling blackouts. The Florida governor cited an instance in which the state government issued a notice to EV owners to limit charging during a summer heat wave. DeSantis looked to tie California’s policy initiatives to the White House, arguing that California serves as a model for President Joe Biden’s vision for the country.

“What Biden wants to do is he wants to take the California model, he wants to impose that nationally,” DeSantis said. “He wants to take away your ability to purchase the car that you want. He wants to kneecap reliable energy and he wants to bring these rolling blackouts all across the United States of America. It doesn’t work, it’s going to cause huge problems.”

DeSantis also went after Newsom over previous comments calling China a “partner” in the fight against climate change, framing it as an instance of the California governor kowtowing to Beijing.

“China’s adding two new coal plants every year,” DeSantis said. “China’s laughing at us with what they’re doing.”

The significance: The debate served two separate purposes for the governors. Although Newsom isn’t running for president, the debate allowed for the rising star to cement his standing as a national figure for the Democratic Party. DeSantis, who’s vying to be the Republican nominee in 2024, used the platform to reinvigorate his campaign against the frontrunner, former President Donald Trump.

MANCHIN GOES NUCLEAR AND AIMS TO REPEAL BIDEN ANTI-CHINA RULES: Senate Energy Committee chairman Joe Manchin came out hard this morning against the new rules outlined by the Biden administration meant to prevent Inflation Reduction Act EV subsidies from flowing to China. The West Virginia senator went so far as to say he would pursue a Congressional Review Act resolution to overturn the rule.

The background: The Biden administration announced this morning that it will bar any EVs from qualifying for subsidies if their batteries are made in China or with Chinese materials, a provision that extends to any companies globally that are under Beijing’s sway.

As Breanne reported this morning, the restrictions apply not just to batteries made in China or with critical minerals sourced from China, but also to companies in other countries that are more than 25% owned by China (or other “foreign entities of concern” – Russia, North Korea, and Iran).

The standard is one of many provisions in the Manchin-negotiated IRA aimed at shoring up domestic manufacturing and encouraging “friendshoring” while moving the supply chain away from China. And it means fewer cars will be eligible for the up-to-$7,500 consumer tax credit included in the Inflation Reduction Act, which could threaten Biden’s ambitious goals on EV adoption.

But that wasn’t good enough for Manchin: Here’s his specific complaint, outlined in a press release: “The Inflation Reduction Act clearly states that consumer vehicles are ineligible for tax credits if ‘any of the applicable critical minerals contained in the battery’ come from China or other foreign adversaries after 2024. But this administration is, yet again, trying to find workarounds and delays that leave the door wide open for China to benefit off the backs of American taxpayers.”

It’s not immediately clear what Manchin’s specific objection is, although it is worth noting that the guidance doesn’t have the rules kicking in for critical minerals until 2025. We’ve asked his office for clarification.

Meanwhile, the auto industry says only 20 vehicles would qualify: Alliance for Automotive Innovation President and CEO John Bozzella, whose trade group represents nearly every major U.S. automaker besides Tesla, said that the guidance shows that “Treasury also recognized how complex – scratch that… how hard the EV transition is going to be in the U.S. and tried to strike a balance. A pragmatic balance.”

While only time will tell how many vehicles qualify for the tax credit under the new FEOC guidance, he said, only “about 20 vehicles qualify now (out of 103+ EV models for sale in the U.S.), but Treasury’s effort to make the rules workable means the list of eligible vehicles won’t completely disappear in 2024 (which was a real worry).”

Bozzella said the EV transition “requires nothing short of a complete transformation of the U.S. industrial base. It’s a monumental task that won’t happen overnight.” Read more from Breanne here.

…MEANWHILE, BYD NEARS TARGET WITH RECORD SALES IN OCTOBER: Chinese car company BYD said today that it reached a record number of sales in November, moving it closer to its annual target of 3 million—and its broader goal of surpassing Tesla sales.

BYD sold 301,378 cars in November—a 31% jump compared to the same period last year, and lifting its total EV and hybrid sales to 2.67 million so far in 2023. That’s close to its sales goal of 3 million hybrids and EVs.

Since that number includes pure battery electric vehicles and hybrids, it’s difficult to directly compare its sales with Tesla, which does not sell hybrid vehicles. Read more from Bloomberg here.

TREASURY ANNOUNCES NEW RUSSIAN OIL PRICE CAP SANCTIONS: The Treasury Department announced new sanctions today against three vessels for violating the Russian oil price cap, or the G-7-led plan aimed at keeping Russia’s oil on the market while also slashing its profits.

The three sanctioned vessels are based in the UAE, Libya, and Liberia, Treasury officials said in a statement announcing the move.

Deputy Treasury Secretary Wally Adeyemo said in a statement that enforcing the cap is a “top priority.”

…MEANWHILE, U.S. IS SEEKING TO HALVE RUSSIAN ENERGY REVENUE BY 2030: The U.S. is seeking to slash Russia’s oil and gas revenue by 50% by 2030, the assistant secretary of state for energy resources told the Financial Times, noting that Washington views the current sanctions efforts and the oil price cap as tools to reduce Moscow’s revenue for “years.”

“This is something that we’re going to have to stick to for years to come, as long as Putin persists in this war,” Geoffrey Pyatt told the outlet. “The goal of these sanctions is to change Russia’s behavior and to ensure that Putin is not in a position, whenever some kind of peace is achieved … to use three or four years to rearm and prepare himself and prepare his military for stage three of the Ukraine invasion,” he added.

He also weighed in on the Russian oil price cap, or the first-of-its-kind effort led by the G-7 aimed at keeping Russian barrels on the market while also limiting the country’s profits.

Russian oil and gas revenue jumped 28% in October compared to the same period, pushed higher by rising commodity prices and the Kremlin’s pause in subsidizing gas refiners.

In October, Urals exports were trading at $81.52 per barrel, according to data from the Russian Finance Ministry—the fourth straight month that profits exceeded the $60 per barrel mark. Read more from Breanne here.

MODI OFFERS TO HOST COP33: Indian Prime Minister Narendra Modi offered his country to host the COP climate talks in 2028, part of his broader effort to pitch India—the third-largest emitter in the world—as a climate leader.

Modi presided over the G-20 earlier this year, where he got leaders to commit to tripling their renewable capacity by the end of the decade. And, as he noted today, India is one of the few countries in the world that is on track to meet its climate commitments.

But much work remains to be done. While the country has made “significant” progress on renewables growth in recent years, Bloomberg notes that India’s climate targets have lagged far behind other countries, primarily due to its outsize reliance on coal. Read more on Modi’s bid for COP33 here.

The Rundown

E&E News With methane rule looming, oil and gas drillers launch objections

Washington Post Before China’s coal is even burned, its mines are warming the planet