Daily on Energy: Smith lobbies for aggressive strategy to pass Biden 2035 climate target in split Senate

Sen. Tina Smith, a Democrat from Minnesota, laid out this expectation at an event with the liberal climate groups Evergreen Action and Data for Progress today, in which she endorsed pursuing a clean electricity standard as a mechanism to achieve President Biden’s goal of using 100% carbon-free electricity by 2035.

Smith’s advocacy is noteworthy because in a split 50-50 Senate, every Democrat carries immense power and can operate as a swing vote. Sens. Ben Ray Luján and Martin Heinrich, both of New Mexico, released statements supporting passing a standard with infrastructure legislation.

“The way of accomplishing it is very much on our minds as we look to the next six months,” Smith said of a clean electricity standard. “It should be the center of an infrastructure plan we look forward to working on.”

The case for CES through reconciliation: While not dismissing working with Republicans, Smith agrees with a view proffered by Evergreen that a clean electricity standard could be passed through reconciliation, which enables the passage of fiscal legislation with a simple majority instead of 60 votes.

“There are a variety of ways of getting [it] passed. I am open to all the tools,” Smith said, noting that using reconciliation doesn’t guarantee a bill is passed strictly on a partisan basis (she said the tool has been used 17 times to pass bipartisan bills).

Some have voiced skepticism about the possibility of passing a standard via reconciliation, which would seem to be a better fit for a carbon tax. But Evergreen lays out various scenarios to design a standard that would comply with the so-called “Byrd Rule” that prohibits “extraneous matters” unrelated to the budget to be considered in reconciliation.

The mechanisms are too complex to spell out there, but generally Evergreen proposes the federal government take over a market for distributing credits to utilities that generate a certain amount of clean electricity. Usually these markets are operated outside the government between utilities. “By taking those credits and turning them into revenue and outlays for the federal government you turn this into a budgetary item,” said Sam Ricketts, co-founder of Evergreen.

Smith’s sway: The Minnesota senator is no stranger to clean electricity standards, which generally require utilities to obtain an increasing amount of electricity from renewable and zero-carbon energy sources.

In 2019, she introduced legislation with Lujan, who was then in the House, that aimed to make the U.S. electricity sector more than 90% clean by midcentury.

Smith tailored the bill so that it could win support from Republicans (it hasn’t so far), by allowing the use of nuclear power and carbon capture technology on fossil fuel plants to count toward the mandate, as well as wind and solar, which she said won’t be able to entirely carry the load until there are advancements in long-duration storage technology.

Now, Smith is calling for a stricter version of her clean electricity standard that would help fulfill Biden’s more aggressive goals.

She said she’s pitched the idea to Republicans, noting that 30 states have passed a version of a standard, including Minnesota, whose former GOP Gov. Tim Pawlenty, signed such a bill in 2007.

Any standard would have to be tailored to allow utilities in carbon intensive states more time to weaning off fossil fuels, Smith said. That’s an important sell for a fossil fuel state like West Virginia, whose centrist Democratic Sen. Joe Manchin has notably expressed discomfort with the concept of a standard.

It’s a “big mistake” if Democrats “discount” the challenge of the transition to clean energy in fossil fuel states, Smith said.

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.

ANOTHER DAY, ANOTHER LOSS FOR BIG OIL: European oil giant Shell posted a fourth-quarter loss this morning, capping a year in which its profits dropped to its lowest in two decades.

But Shell is predicting strong recovery of oil demand in the second half of this year and is confident enough that it plans to raise its dividend payment to shareholders in the first quarter. It had cut its dividend last year and written down the value of its oil and gas assets by billions of dollars during the worst of the pandemic price crash.

Shell’s report follows big losses posted by rivals BP, ExxonMobil, and Chevron earlier this week.

The company is planning to provide an update to its long-term strategy on Feb. 11, when it will start to fill in details of its pledge to be a “net-zero energy business” by 2050.

PUMP THE BRAKES…EIA SAYS DEMAND RETURN YEARS AWAY: U.S. energy consumption won’t return to its pre-pandemic levels until 2029, although that projection is highly dependent on the pace of economic recovery, the Energy Information Administration said yesterday in its Annual Energy Outlook for 2021.

Energy demand for transportation will struggle to return to its previous heights because of continued restrictions on travel and people working from home during the pandemic. By the time those might be lifted, EIA projects there to be improved fuel economy in vehicles.

U.S. air passenger demand, which was hit the hardest by the pandemic, falling by nearly two-thirds in 2020, won’t return to normal until 2025. Light-duty vehicle travel sees an earlier bounce back by 2024, but bus passenger transport doesn’t return to pre-pandemic levels until 2031.

Bullish on production and exports: Despite the slow comeback of demand, EIA sees U.S. oil and gas production returning to historically high levels starting in 2023, and lasting through 2050.

And the U.S. will continue to find markets for its natural gas, with EIA expecting LNG exports to more than double between 2020 and 2029.

Caveats apply: All of these projections are based on EIA’s “reference case” in which there are no significant changes in policies, which seem highly unlikely.

Even in that scenario, renewable energy, especially solar, will continue to be the fastest growing electricity sources.

REGAN LIKELY TO WIN GOP SUPPORT: Republican senators, though raising alarm at Biden’s aggressive climate policies, generally seemed pleased with Michael Regan, Biden’s nominee to lead the EPA, during his confirmation hearing before the Senate Environment Committee yesterday.

Regan, currently the top environment official in North Carolina, said several times during the hearing he didn’t view regulation as the sole method of slashing emissions consistent with Biden’s climate goals.

He also sought to assure Republicans angry over Biden’s decisions on the Keystone XL pipeline and oil and gas leasing that he didn’t want to kill jobs in energy-producing states. Regan said he believes many of the skill sets of energy workers “can move quickly” to jobs securing methane leaks from oil and gas pipelines, building out water infrastructure, or modernizing the power grid.

Hints on policy: Regan largely dodged most policy-related questions, including on the scope of EPA’s authority to regulate power plant greenhouse gas emissions and how he’d handle contentious small refinery waivers under the Renewable Fuel Standard.

He did suggest, however, that the EPA would seek to undo Trump-era revisions to the Obama administration waters of the U.S., or WOTUS, rule, but Regan didn’t fully commit to reinstating the Obama standards without change. Republicans have long complained the WOTUS rule overstretched the EPA’s authority to regulate even puddles on farmers’ lands.

The Trump rule “was a rollback that went even further back” than administrations of either party, Regan said, adding he is seeking “common ground” to give both environmental activists and farmers certainty.

Regan also said he is already looking for resources within the EPA’s budget to appoint both an agricultural adviser and an environmental justice adviser who would report directly to him. In addition, Regan, who is poised to be a key player in implementing Biden’s environmental justice commitments, said he would install staff at every EPA office focused specifically on minority and low-income regions most affected by pollution and restructure the EPA’s Office of Civil Rights.

MORE PRESSURE ON BIDEN TO DECLARE CLIMATE EMERGENCY: Liberal Rep. Alexandria Ocasio-Cortez, Rep. Earl Blumenauer, and Sen. Bernie Sanders introduced legislation this morning to require Biden to declare a national climate emergency, a step that would allow Biden to use significant additional executive authorities to curb emissions.

The bill builds on a resolution the lawmakers introduced last Congress to declare a national climate emergency, which garnered the support of more than 100 House Democrats and nine Democratic senators. The bill would require the president to report to Congress each year specific actions taken to dramatically curb emissions.

The bill comes after even Majority Leader Chuck Schumer has called on Biden to look into declaring a climate emergency. Schumer’s comments met a sharp rebuke from several Republican lawmakers, who argued such a declaration would allow Biden to bypass Congress.

GOP COMMITTEE RESHUFFLE: Outgoing Chairman John Barrasso is leaving the Senate Environment Committee altogether, as he takes the top Republican spot on the Energy Committee as well as a seat on the Finance Committee.

Barrasso, who is a strong supporter of tax credits for carbon capture but has criticized renewable energy and electric car incentives, said he would emphasize “pro-growth energy tax policy” on the committee. He’ll also use his new perch there to fight aggressive climate policies, he said.

Joining the Senate Environment Committee are South Carolina’s Lindsey Graham and Wyoming’s Cynthia Lummis, while Indiana’s Mike Braun (Republican co-founder of the Senate Climate Solutions Caucus) and South Dakota’s Mike Rounds depart.

Oklahoma’s James Lankford and Kansas’s Roger Marshall are joining the Senate Energy Committee, replacing retiring Lamar Alexander and Cory Gardner, who lost his reelection bid.

INTERIOR RESUMES REVIEW OF MAJOR OFFSHORE WIND PROJECT: The Interior Department announced yesterday it will restart an environmental review of Vineyard Wind’s proposed project, slated to be one of the first large-scale offshore wind projects in the U.S.

“Offshore wind has the potential to help our nation combat climate change, improve resilience through reliable power, and spur economic development to create good-paying jobs,” said Amanda Lefton, newly appointed director of the Bureau of Ocean Energy Management. Lefton previously served as a top energy and environment official for New York Gov. Andrew Cuomo.

Lefton said BOEM would conduct a “robust and timely review” of the project, which had met several delays under the Trump administration. Biden, in his climate executive order, set a goal to double offshore wind production over the next decade.

HELP WANTED FROM THE FEDS: The Electric Supply Power Association, a group that represents power generators that compete in wholesale electricity markets, is calling on Biden and Democrats to pursue carbon pricing or a “well-designed” technology-neutral clean electricity standard.

The group was influential in pushing FERC to consider incorporating state carbon pricing policies into their markets, and is now looking for the federal government to implement a comprehensive climate policy to achieve “competitive” and “affordable” decarbonization.

EPSA argues natural gas will continue to provide “reliability” in a low-carbon electricity grid, according to a list of policy priorities it released yesterday.

What it doesn’t want: The group, which prefers a set of uniform rules, made clear its opposition to various state-level subsidies programs for nuclear plants, which it says “undermine market efficiency” and increase consumer costs.

MOVERS AND SHAKERS: The conservative clean energy group ClearPath announced today that former Trump Energy Department official Paul Dabbar has joined its advisory board.

Dabbar was DOE’s under secretary for science and managed the department’s national labs, where he led efforts to commercialize clean energy technologies.

The Rundown

Bloomberg Experts tell Biden: your climate goals require a carbon price

The Hill Supreme Court will hear case on PennEast pipeline

Bloomberg China brings back climate envoy with record of deals with US

Calendar

TUESDAY | FEB. 9

12 p.m. The House Energy and Commerce Committee’s environment and climate change subcommittee holds a hearing entitled “Back in Action: Restoring Federal Climate Leadership.”