Daily on Energy, sponsored by EFP: ‘Climate day’ at the White House

President Biden is poised to sign a sweeping executive order this afternoon mobilizing the government toward the goal of addressing climate change: purchasing more carbon-free power and electric cars, elevating climate change as a national security threat, ensuring federal infrastructure investments reduce climate pollution, and much more.

Perhaps the most controversial piece of today’s order is a pause in new oil and gas leasing on federal lands, a move environmentalists are cheering as Biden beginning to deliver on a campaign promise and the oil industry is slamming as a threat to the economy. (More on that below).

However, as Daily on Energy readers know well, it’s much easier to make promises and directives than it is to deliver on them.

The Biden administration is already going to face a potentially years-long slog to reverse and rewrite Trump-era environmental deregulations, critical if he wants to tighten greenhouse gas mandates for power plants, passenger cars, and the oil and gas industry.

And for many of his major efforts, Biden would need support from Congress, through additional resources and funding, approval, or even new authorizations for federal agencies.

Biden’s top climate officials, climate envoy John Kerry and national climate adviser Gina McCarthy, are briefing reporters on the new climate directives shortly. Stay tuned for coverage of how they answer some of the tough questions about how they’ll get this all done.

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EXAMINING BIDEN’S LEASING BAN: The leasing pause is a big deal, no doubt, given it lasts indefinitely while the administration reviews whether, and under what conditions, oil and gas development could resume under the federal minerals leasing program.

But there’s carveouts, and the immediate impact, especially on emissions, seems pretty minimal, as Josh wrote this morning.

The order exempts Native American tribes, which control about 20% of known oil and gas reserves on federal lands.

Banking leases and permits: The Biden administration is also emphasizing how the oil and gas industry has already stockpiled millions of acres of leases, which can last up to 10 years, while stashing permits as well. The Interior Department said in a fact sheet this morning that of the more than 26 million acres under lease to the oil and gas industry on public lands onshore, nearly 13.9 million (or 53%) of that is unused and non-producing. Of the more than 12 million acres of public waters under lease, over 9.3 million of those are not being used.

The industry is also sitting on 7,700 unused, approved permits to drill.

Permits are safe, to a point: Despite concern Interior would also freeze permitting, the agency says the pause “won’t impact existing operations or permits for valid, existing leases, which are continuing to be reviewed and approved.” Permits to drill usually are good for two years. But the Biden team is likely to impose tougher permitting requirements, with new guidance that requires permitting officers to evaluate factors such as greenhouse gas lifecycles, the social costs of carbon, methane, and more.

“Producers who can will likely shift their focus to assets on state and private lands. But the existing stockpile of drilling permits won’t last forever,” Dan Eberhart, CEO of the oil services company Canary and a Republican donor, told Josh.

Emissions effect is minimal to start: Democrats and environmentalists say that addressing greenhouse gas emissions on public lands represents a significant piece of the puzzle in mitigating climate change despite the fact that most oil and gas drilling occurs on private property.

Critics argue targeting fossil fuel production on public land would not significantly decrease emissions because if demand for oil and gas rebounds after the pandemic, production could move to other areas of the U.S. or to countries with less cumbersome regulations.

“Even if you do a moratorium on drilling on federal land, demand for oil will come from somewhere,” Arvind Ravikumar, an assistant professor of energy engineering at the Harrisburg University of Science and Technology, told Josh. “Overall, it might not have a lot of impact directly on emissions in the near-term.”

Biden’s action, however, sends a market signal that could make it harder for oil and gas producers to acquire financing, making drilling more expensive over time and leading to long-term U.S. emissions reductions.

“Wall Street is going to look at the current administration’s policies and see the oil and gas sector as a bad bet,” Eberhart said.

ON THAT NOTE…OIL DEMAND ON UPWARD TREND: U.S. oil demand rose for the third straight week, slightly ticking up to 19.68 million barrels per day from 19.64 million barrels p/d the previous week, the Energy Information Administration reported today.

Demand has now recovered to about 4% below the same period of last year, just before the pandemic.

Crude oil inventories fell by 9.9 million barrels for the week ending Jan. 22 from the previous week, relieving the glut in the market and sending prices higher this morning.

GRANHOLM ASSURES REPUBLICANS ON FOSSIL FUELS: Biden’s nominee to be Secretary of Energy, Jennifer Granholm, assured Republicans during her confirmation hearing today that fossil fuels will play a role in the administration’s aggressive plans to reduce emissions to combat climate change.

“It is important as we develop fossil fuels we also develop the technology to reduce greenhouse gas emissions,” Granholm said. Read Josh’s recap of the hearing.

SCHUMER ‘PLAYING WITH FIRE’ WITH CLIMATE EMERGENCY, GOP SENATORS SAY: Sen. John Barrasso, the new top Republican on the Senate Energy Committee, on Majority Leader Chuck Schumer encouraging Biden Monday night to declare a national climate emergency: “Chuck Schumer is playing with fire…. Schumer wants the president to go it alone and produce more punishing regulations, raise energy costs, and kill even more American jobs.”

Barrasso added the bipartisan clean energy innovation measures included in the year-end spending package prove lawmakers can work across the aisle on efforts that “dramatically reduce greenhouse gas emissions.”

Sen. Kevin Cramer said Schumer’s suggestion is “an early admission that Democrats’ climate proposals are too extreme to be passed by Congress.” Schumer, in the same interview with MSNBC in which he called on Biden to consider declaring a climate emergency, suggested he’s looking for ways to use budget reconciliation to advance policies to encourage electric cars and restrict gas-powered vehicles, an effort sure to garner fierce opposition from many in the GOP.

Worth watching: It’s possible Schumer is partly using the threat of a climate emergency as a negotiating tool to coax Republicans on board with policies to curb emissions that are more robust and comprehensive than just clean energy innovation spending.

We’re expecting one of Biden’s chief negotiating levers with Congress on climate to be the threat of stricter emissions mandates. It seems like Schumer might be on the same page.

PUBLIC HEALTH GROUPS DECLARE CLIMATE AN EMERGENCY: More than two dozen public health groups, including the American Lung Association and the American Public Health Association, are telling Biden climate change is a public health emergency that demands immediate action to curb emissions.

The groups, in a letter to Biden yesterday, encourage Biden to tighten air pollution limits for soot and smog, speed the adoption of zero-emission vehicles, set carbon standards for power plants that include a “rapid phaseout” of fossil fuel facilities, and issue tough methane controls for oil and gas production. The health groups also call on Biden to increase resources to minority and low-income regions that suffer most from pollution-related health damages.

“It is imperative that efforts to build up our public health and health care infrastructure in the wake of COVID-19 incorporate climate action and climate justice, to avoid recreating the same vulnerabilities that have been laid bare by the pandemic,” the letter reads.

NEW GLOBAL PARTNERSHIP TO DECARBONIZE HEAVY INDUSTRY: More than 400 major companies and organizations are joining together to speed up efforts to curb emissions from hard-to-abate sectors including aviation, shipping, and heavy manufacturing such as cement, steel, and chemicals.

The Mission Possible Partnership launched today at the virtual Davos Agenda and will be run by the Energy Transitions Commission, the Rocky Mountain Institute, the We Mean Business Coalition, and the World Economic Forum. The coalition’s efforts are funded initially by the Bezos Earth Fund and Bill Gates’ Breakthrough Energy.

The partnership focuses on seven sectors that make up about 30% of the world’s emissions. If those sectors continue emitting on a business-as-usual trajectory, “then we’re talking about eating up the rest of the carbon budget we have within a decade,” said Cate Hight, a principal at the Rocky Mountain Institute.

The new coalition is aiming to bring companies together with investors, environmental groups, and other stakeholders to identify clear pathways to get these industries to net-zero emissions, Hight told Abby. In its first year, the partnership will focus on creating industry-wide climate agreements in the aviation, shipping, and steel industries. After that, it will craft emissions reduction roadmaps for the remaining sectors: trucking, chemicals, aluminum, and cement.

GAS UTILITIES EXPAND ESG REPORTING EFFORTS: The American Gas Association, in partnership with the Edison Electric Institute, is unveiling a new framework for natural gas companies to measure and report their methane intensity across the fuel’s supply chain.

“This is not meant to replace regulations, but to provide a meaningful tool to increase transparency and to continue to decrease emissions,” David Anderson, the gas group’s chair, told the CFA New York Society in a virtual presentation today, in remarks shared with us.

The framework, known as the Natural Gas Sustainability Initiative and developed with the help of investors, builds on methane reporting templates the two industry groups have been developing over the past couple of years. The new effort includes methane sources beyond those captured by the EPA’s greenhouse gas reporting program, as well as detailed reporting templates for each piece of the natural gas supply chain.

SENATE GOP SEEKS TO PROTECT TRUMP WATERS RULE: More than two dozen Republican senators, led by Iowa’s Joni Ernst, introduced a resolution today seeking to preserve the Trump EPA’s Navigable Waters Protection rule, which replaced the Obama-era waters of the U.S. (or WOTUS) rule.

Republican lawmakers, especially those from rural states, have long complained the WOTUS rule is a prime example of overregulation. The Trump EPA’s rule set a significantly narrower definition of which waters are covered under federal protections, excluding wetlands connected to covered waters through groundwater, many ditches, and ephemeral streams, or streams that flow with rain water.

Environmentalists said that went further than rolling back the Obama-era regulation, excluding from federal protections waters that have been covered for decades.

MOVERS AND SHAKERS: Climate Leadership Council, a GOP-led group supporting a carbon tax that distributes the revenue to households, has hired Tiffany Adams as executive vice president to lead its public affairs efforts.

Adams previously held several senior positions at the National Association of Manufacturers.

The Rundown

Wall Street Journal Exxon planning board, other changes amid activist pressure

Bloomberg Law Dakota Access pipeline loses appeal, fueling shutdown fight

New York Times The battle lines are forming in Biden’s climate push

Financial Times Gas tycoon Charif Souki urges industry to clean up under Biden

Calendar

THURSDAY | JAN. 28

1 p.m. The House Energy and Commerce Committee holds a virtual organizational meeting.