Daily on Energy: Renewables get administratively what they didn’t get in legislation

In a notice posted on Wednesday, the Internal Revenue Service extended the so-called “safe harbor” provisions under the wind and solar tax credits to account for delays companies have faced because of the pandemic. It’s relief the renewable energy sector has been seeking for months but hasn’t succeeded in getting from Congress.

That’s because when Democrats tried to go out on a limb for the renewable energy sector in the CARES Act, some Republicans fought back fiercely, accusing them of trying to jam the progressive Green New Deal into pandemic relief.

After the GOP outburst, most renewable energy backers acknowledged they weren’t likely to see their relief provisions in pandemic-related legislation until Congress moved past the emergency response phase to focus on sector-specific requests.

That’s even as the clean energy sector shed nearly 600,000 jobs in March and April. Analysis released earlier this month by BW Research, Environmental Entrepreneurs, the American Council on Renewable Energy, and E4TheFuture projects the sector could lose 850,000 jobs, or a quarter of its workforce, by the end of the second quarter if Congress and the administration do nothing to help.

So what changed? Even as their colleagues complained, some Republicans started to put pressure on the Treasury Department to do as much as it could administratively to help the renewable energy industry.

Senate Energy Committee Chairwoman Lisa Murkowski, Senate Finance Committee Chairman Chuck Grassley, and Majority Whip John Thune joined three Democrats in April in calling on the Treasury to extend the safe harbor deadlines. The “modest adjustment” would “help preserve tens of thousands of jobs and billions of dollars in investments,” they wrote.

And even after the Treasury committed to make the change, Murkowski led a letter with Maine Sen. Susan Collins and North Carolina Sen. Thom Tillis asking the agency to take additional steps to account for equipment delivery delays, a step especially important to the solar industry. The IRS notice incorporates that request.

The GOP pressure reflects reality on the ground in their states: Many red states have booming renewable energy industries. In fact, Texas, Florida, Georgia, North Carolina, and Ohio all ranked in the top 10 states losing the most clean energy jobs in April, according to BW Research.

Heather Reams, executive director of the conservative Citizens for Responsible Energy Solutions, praised the Republican senators for their leadership, which offered a “much-needed jolt” to the clean energy sector. The safe harbor extension is a “strong first step toward recovery,” Reams said, adding she’s hoping to see more from Congress and the administration on other low-carbon technologies, including carbon capture.

The renewable energy industry, too, is hoping to see additional relief, especially in the form of a “direct pay” option for their tax credits. Gregory Wetstone, head of ACORE, called on Congress “to swiftly enact temporary refundability for renewable energy credits and take other commonsense measures so the renewable sector can be an economic driver for the nation through this downturn, and an effective climate solution over the long haul.”

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.

GASOLINE DEMAND TRICKLES UP WHILE OIL INVENTORIES RISE: New data from the Energy Information Administration on Thursday confirmed gasoline demand is only slowly picking up despite states starting to re-open their economies.

The U.S. consumed 7.25 million barrels per day of motor gasoline for the week ending May 22, up from 6.8 million barrels per day the week before, the EIA said in its Weekly Petroleum Status report. But that’s still way below a year ago, when gasoline demand was 9.4 million barrels per day.

To put it another way, over the past four weeks, gasoline demand has averaged 7 million barrels a day, down by 25.7% from the same period last year.

People still aren’t flying much: Jet fuel demand was down 66.6% compared with the same four-week period last year, EIA said, although it slightly increased the week of May 22 compared to the week prior from 634,000 barrels per day to 860,000 barrels per day (compared to 2 million barrels per day a year prior).

US crude inventories spike on higher Saudi imports: U.S. stocks of crude, a measure of oil in storage, jumped last week compared to the previous week by 7.9 million barrels to 534.4 million barrels, about 13% above the five-year average for this time of year.

That happened as the U.S. imported more oil from Saudi Arabia than at any time since August 2016, coinciding with the beginning of an arrival of a tanker armada. Imports from Saudi Arabia last week rose to 1.59 million barrels per day compared to 0.64 million barrels per day the week before.

BONUS…ANOTHER MILESTONE FOR RENEWABLES: The U.S. consumed more energy from renewables than coal last year for the first time since 1885 (you read that right), the EIA said Thursday.

Renewable energy consumption in the U.S. grew for the fourth year in a row to a record-high of 11.5 quadrillion Btu in 2019. U.S. coal consumption decreased for the sixth consecutive year to 11.3 quadrillion Btu, the lowest level since 1964.

HOUSE REPUBLICANS TARGET CHINA WITH CRITICAL MINERALS BILL: In a swipe at China, House Republican leaders introduced legislation Thursday to encourage U.S. production of critical minerals used in clean energy technologies to lessen reliance on Beijing.

The measure was timed to retaliate against China for its handling of the coronavirus pandemic, which Republican Leader Kevin McCarthy says has “exposed” the need to develop domestic supply chains.

What’s in the bill: It directs federal agencies to ease permitting for mining of critical minerals and directs the Energy Department to establish an R&D program for advanced mineral technologies. It also prevents the executive branch from making large areas of public land eligible for mineral development without congressional approval. And it directs the Interior Department to identify vulnerabilities in the domestic minerals supply chain and publish and periodically update a list of critical minerals.

Pandemic imperils mineral production: The coronavirus has already set back mining operations across the world, imperiling clean energy supply chains, the International Energy Agency recently warned.

Clean energy technologies such as electric vehicles, battery storage, solar cells, and wind plants generally require more minerals than fossil fuel products.

The pandemic has exposed the risks from the production of essential minerals being concentrated in a few countries, including in Congo and Chile, in addition to China.

For example, China, the world’s largest producer of electric vehicles, is the leader in producing graphite, used in EV batteries, supplying a third of U.S. imports in 2019, according to House Republicans. Half of U.S. imports of gallium, used in solar cells, come from China. And the U.S. imports a quarter of its tellurium, used in solar panels, from China.

PENNSYLVANIA COULD BE A HUB FOR THE ELECTRIC VEHICLE SUPPLY CHAIN: The state already boasts nearly 4,400 jobs in the electric transportation supply chain, about the same number of natural gas extraction jobs in the state, according to a new report from Advanced Energy Economy. And electric transport-related jobs are poised to grow 24% over the next four years, eight times the rate of overall employment growth in Pennsylvania, AEE found.

“There’s a vibrant and burgeoning supply chain for electric vehicles and component manufacturing in the state already,” said Daniel Bloom, a policy principal with AEE who leads the group’s Pennsylvania work. “With additional nurturing of that industry, it’s poised to grow, and that’s without there being policy signals,” Bloom told Abby.

The AEE report also finds more than 350 Pennsylvania companies could transition to serve the EV supply chain without reinventing the wheel. Workers in those firms already “have the skill sets that are needed to transition,” Bloom said. “It’s not the same as taking a coal miner and teaching them to do a wind turbine technician job.”

With policy incentives, Pennsylvania can see even bigger growth: AEE is hoping their report will convince policymakers in the state that they should move more quickly to encourage electric transportation. If the state doesn’t move fast, it could fall behind, as other states around it — including New Jersey, New York, and Maryland— are all moving aggressive on EVs, said Matt Stanberry, AEE’s managing director.

Stanberry also noted Pennsylvania can benefit doubly from electric cars because the state has a really strong electrical industry supply chain. “And in the electrical industry, electrification is basically pure growth,” Stanberry told Abby.

MIXED BAG FOR SHAREHOLDER CLIMATE ACTIVISM AGAINST US OIL MAJORS: Chevron investors voted Wednesday to force the board to issue a report on the company’s climate-related lobbying, an achievement the activist shareholder movement called “historic.”

The result “puts Chevron, and companies everywhere, on notice that investors view lobbying as a critical part of a company’s core climate strategy,” said Andrew Logan, senior director of oil and gas at Ceres, a sustainability investment advocacy group.

BlackRock, the world’s largest investment management firm, supported the resolution and was key to its passage. BlackRock recently decided to stop investing in some coal projects and to incorporate climate risk in its investment choices. The company said Chevron, the second largest U.S. oil company, should demonstrate greater “transparency” of its political spending and lobbying to prove its actions are aligned with Chevron’s stated support for the Paris climate agreement.

Exxon beats back climate-related resolutions: Investors in Exxon, the largest U.S. oil major, rejected a measure supported by BlackRock — one of its biggest shareholders — that would have split the CEO and chairman roles at the company. BlackRock also voted against two of Exxon’s board members on the grounds of their governance relating to climate change, but that effort failed too.

Exxon CEO Darren Woods, following the shareholder meeting, said his company won’t be joining European peers in setting long-term carbon reduction targets. BlackRock had harsh words for Exxon, saying the oil company is “not conveying a sense of urgency proportionate” to climate-related risks.

SOUTHERN COMPANY JOINS THE NET-ZERO CLUB: The Atlanta-based utility unveiled a net-zero greenhouse gas emissions by 2050 target during its annual shareholders meeting Wednesday, joining the ranks of major utilities like Xcel Energy, Duke Energy, and DTE Energy.

The utility says it has already cut its emissions 44% (below 2007 levels) and anticipates it can reach its 50% reduction target, originally set for 2030, potentially as early as 2025. To reach net-zero by 2050, Southern Company will rely on energy efficiency and renewable energy, as well as “negative carbon solutions” such as the nascent direct air capture and afforestation, according to a news release.

Environmentalists praised the move, but have questions about natural gas: The Natural Resources Defense Council’s Sheryl Carter and Luis Martinez called the utility’s commitment “historic,” saying that Southern Company “for decades was one of America’s largest emitters of carbon pollution and a frequent foe of environmental protections.”

Nonetheless, Lila Holzman, energy program manager of the shareholder advocacy group As You Sow, said Southern Company needs to offer more details about how it will deal with its natural gas resources, a tough question facing a lot of utilities setting their sights on net-zero.

“Investors need answers about the future viability of Southern’s natural gas assets as renewable clean technologies undercut them on cost, their climate footprints loom large, and carbon capture technology remains uneconomic,” Holzman said.

FUEL ECONOMY FIGHT KICKS INTO HIGH GEAR: California led nearly two dozen states, D.C., and four cities Wednesday in challenging the Trump administration’s weakening of fuel economy standards, in what will certainly be one of the most contentious legal battles between the Golden State and the White House.

California Attorney General Xavier Becerra told reporters that interagency documents revealing concerns raised by the EPA and White House staff will help the states prove their case. Those include documents made public earlier this month that show White House budget office staff questioned whether the legal justification for the rule was strong enough less than two weeks before its release. A dozen environmental groups also sued over the fuel economy rule Wednesday.

One interesting thing: The lawsuits from states and environmentalists come just days after the major auto industry trade group intervened in a separate challenge to defend the Trump administration’s rule. In that lawsuit, the Competitive Enterprise Institute is arguing the agencies should have gone further in weakening the standards. Six car companies, including the four that have publicly backed California in the fuel economy fight, declined to sign onto the auto trade group’s motion to intervene.

The state attorneys general don’t think automakers will intervene to support their challenge against the standards, though, out of fear of retaliation from Trump. More in Abby’s story from yesterday.

The Rundown

Wall Street Journal US threatens sanctions to deter tankers carrying fuel to Venezuela

New York Times Magazine In Louisiana, COVID-19 has achieved what Big Oil protesters could not

Financial Times Clean power stocks outperform fossil fuel peers during pandemic

Calendar

THURSDAY | MAY 28

The Senate is out. The House is in session.