Daily on Energy: Democrats draw starkest lines yet on fracking

Two clear visions emerged: Centrists Michael Bloomberg and Amy Klobuchar questioned whether a total ban on fracking would be doable and argued natural gas can help the U.S. move toward lower carbon emissions. Progressives Bernie Sanders and Elizabeth Warren, meanwhile, defended their proposals to ban fracking in order to eliminate fossil fuel use.

Centrists see a ‘transition fuel’: Bloomberg, in his first foray onto the debate stage, took his most specific position to date on the future of fracking, arguing the drilling technique should not be banned because the country is not ready to use exclusively renewable energy.

“We aren’t going to get rid of fracking for awhile,” Bloomberg said. “We want to go to all renewables. But that’s still many years from now,” he added.

Bloomberg did say there needs to be tougher regulation of methane, and he’s targeting natural gas in other ways. As part of his climate agenda, he’s pledged to stop the construction of new natural gas plants to achieve 80% clean electricity by 2028.

Klobuchar also defended natural gas’s role (which has gotten sharp criticism from some environmentalists), though she appeared to walk it back a bit, suggesting she’d support a pause on new natural gas permits “until we make sure that it’s safe.”

Liberals say natural gas workers should look to jobs of the future: “What I tell these workers is that the scientists are telling us that if we don’t act incredibly boldly within the next six, seven years, there will be irreparable damage done not just in Nevada, not just to Vermont or Massachusetts, but to the entire world,” Sanders said Wednesday night in response to a question about potential job losses in the oil and gas industry.

“Those jobs are for tomorrow,” Warren said in response to a similar question, arguing new jobs would be created under a Green New Deal. “Those are the ones we need to be working on to harden our infrastructure right now.”

Why this debate matters politically: Centrists fear that curbing fracking could make it harder for Democrats to win the White House, given that they need to win states heavily dependent on the shale boom, such as Pennsylvania, to beat President Trump.

In 2016, Pennsylvania went Republican in the presidential election for the first time since the 1980s, driven in part by voters in rural and energy-producing parts of the state.

Progressive Democrats like Sanders, however, are banking on pulling enough liberal support out of the woodwork, changing the voter turnout equation to beat Trump rather than trying to win back some of the constituencies who voted for him last cycle.

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.

BLOOMBERG CLAIMS INDIA IS ‘BIGGER PROBLEM’ THAN CHINA ON EMISSIONS: Bloomberg said in the debate that India is a “bigger problem” than China when it comes to the worst contributors to climate change, despite the fact that China is by far the world’s largest emitter of carbon dioxide.

China emitted about 9,302 metric tons of carbon in 2017, the most recent year for which the International Energy Agency has data, while India emitted 2,162 metric tons that year.

“In all fairness, China has slowed down,” Bloomberg said. “It’s India that is an even bigger problem. But it is an enormous problem. Nobody’s doing anything about it.”

Bloomberg’s move to deflect blame from China was a marked contrast to other candidates, who have taken a tougher line and suggested the United States should use tools such as carbon import tariffs to force Beijing to cut emissions.

Joe Biden, by contrast, warned China during the debate that, “If you continue, you will suffer severe consequences because the rest of the word will impose tariffs on everything you’re selling.”

Analysts were skeptical.

“Bloomberg seemed either uninformed or more likely an apologist for Chinese emissions by falsely claiming India was a bigger problem, perhaps because he was on the defensive about his business dealings in China,” said Paul Bledsoe, a former Clinton White House climate adviser and lecturer at American University’s Center for Environmental Policy.

Read more of Josh’s story posted this morning that digs into the data.

A BAN WITH THE DOOR CRACKED OPEN: Warren also suggested last night she’d be open to certain “exceptions” to a drilling and mining ban — but only for minerals “we have to have access to.”

The Massachusetts senator didn’t get into specifics, but she was likely referring to minerals like lithium, cobalt, and copper, required for battery production. Ramping up battery production would be critical to meeting the ambitious greenhouse gas plans of Warren and her Democratic colleagues, which lean on electric vehicles and large-scale battery storage to support increasing renewable power.

Her comments are a tacit admission the U.S. doesn’t have enough critical minerals: Right now, China controls 80% of the global supply chain for rare earth elements like lithium, according to the State Department.

KLOBUCHAR PLUGS CARBON TAX AND DIVIDEND: The Minnesota senator described a carbon tax that returns revenue to taxpayers as the most realistic climate policy that can pass Congress, despite little evidence Republicans would support it.

“When it comes to putting a price on carbon we have to make sure that that money goes back directly as dividends to the people that are going to need help for paying their bills,” Klobuchar said during Wednesday night’s debate. “Otherwise, we’re not going to pass it.”

Groups like Citizens Climate Lobby and the GOP-backed Climate Leadership Council have tried to push a carbon tax and dividend as a “middle ground” policy from the Green New Deal, but only two congressional Republicans support the concept. At least one fellow candidate, Pete Buttigieg, has also endorsed a carbon tax and dividend.

Republicans aren’t the only barriers: Liberal Democrats are also skeptical of the idea’s political viability, given the unpopularity of carbon taxes, and argue the policy is insufficient compared to mandates.

“Listen to Senator Klobuchar’s point,” Warren said after Klobuchar pitched a carbon tax. “She says we have to think smaller in order to get it passed. I don’t think that’s the right approach here.”

Warren proceeded to say she would kill the Senate filibuster to ensure she can pass her agenda without Republicans.

“If you’re not willing to roll back the filibuster, then you’re giving the fossil fuel industry a veto overall of the work that we need to do,” she said.

AT LONG LAST, IRS UNVEILS CARBON CAPTURE GUIDANCE: But after more than two years, the tax agency isn’t out of the woods yet.

The Internal Revenue Service released just two pieces of guidance needed to implement bipartisan carbon capture tax credits Congress extended and expanded in 2018. But the IRS left the thorniest questions — the rules investors really need to have confidence in funding capital-intensive carbon capture projects — unresolved.

What the IRS did release is certainly welcome: Carbon capture advocates say the IRS largely followed their recommendations and stuck to well-vetted precedents the tax agency has used to implement other energy tax credits, like those for wind and solar.

The items released Wednesday define what companies must do to demonstrate they’ve begun construction on a project in order to qualify for the credit (which has an end of 2023 deadline) and outline how various partners in a carbon capture project, from the developer of the equipment to investors, can claim pieces of the credit.

“There are projects that are ready to go,” said Brad Crabtree, vice president of carbon management for the Great Plains Institute who helps convene the Carbon Capture Coalition.

“More work will continue now” on those because these two guidances are out, and companies considering developing projects “will start to get more serious about it,” Crabtree told Abby.

But he said that work could be held up if the IRS doesn’t issue a “very prompt follow-up” proposal to resolve the remaining three biggest issues. Those include what companies will need to do to demonstrate they’ve securely stored carbon underground and in what situations the government can reclaim the tax credit if there are carbon dioxide leaks.

“We’re very concerned” about timing, Crabtree said, referencing the IRS’ promise it would release its proposal “in the near future.”

“That’s the kind of thing we’ve been hearing since before Thanksgiving. Just a few weeks, next month, end of the year, end of this quarter,” he said, adding that meanwhile two years of the tax credit’s window have already passed by.

Abby has more on the guidance here.

FARMING’S CLIMATE ‘INNOVATION AGENDA’: It isn’t just Republicans on Capitol Hill lauding innovation as the best way to address climate change. The farming industry, long hesitant to embrace climate policy, is also starting to see innovation as its strategy to reduce emissions.

The Agriculture Department wants to help farmers out. It’s setting new environmental “benchmarks” that include a “net reduction” in agriculture’s carbon footprint and a ramp-up of biofuels production, to reach 30% of transportation fuels by midcentury.

Agriculture Secretary Sonny Perdue announced the benchmarks, part of the new “Agriculture Innovation Agenda,” this morning at the department’s annual outlook forum. Abby got a first look at the agenda, which sets an overall target to increase U.S. agricultural production by 40% by 2050 while cutting the sector’s environmental footprint in half.

Baby steps: Perdue’s announcement comes as the farming industry writ large is inching more into the climate policy discussion. Twenty-one of the nation’s largest farming groups announced a new coalition Wednesday — Farmers for a Sustainable Future — to stake out their seat at the table as lawmakers of both parties plot out broader climate legislative agendas.

FERC VOTES TO IMPOSE PRICE FLOOR ON NEW YORK’S CLEAN ENERGY: The Federal Energy Regulatory Commission voted Thursday to impose a price floor on subsidized renewable and nuclear energy in New York’s power market, acting on a proposal from gas generators in the state.

The action, approved 2-1 with the support of FERC’s two Republicans, is similar to price floors the commission has approved in New England and in PJM — America’s biggest power market covering the Mid-Atlantic — which also seek to combat below-cost bids from subsidized renewable and nuclear.

Both actions are designed to raise payments to non-subsidized sources of energy in the power markets, primarily to fossil fuel plants.

Democratic commissioner Richard Glick warned the price floor for New York will “increase prices and make renewables, demand response, and energy storage less likely to clear in the market.”

Senate Democratic Leader Chuck Schumer pushed FERC against applying the price floor, writing in a letter obtained by Politico on Wednesday that doing so would “undermine New York’s climate and clean energy goals.” New York Gov. Andrew Cuomo has set a goal of eliminating carbon emissions from power plants by 2040, and 70% renewables by 2030.

Jordan Cove LNG plant stalls: Also Thursday, FERC was unable to approve the proposed Jordan Cove LNG export project in Oregon, which would be the first terminal for natural gas on the West Coast permitted by the commission.

Republican Commissioner Bernard McNamee asked for more time to consider the project after Oregon sent a letter to FERC regarding permitting issues.

FERC Chairman Neil Chatterjee, a Republican, said he’s “disappointed” the commission could not approve Jordan Cove, but stressed that “today’s vote is not a denial. The application remains pending before the commission and we will vote on this when we are ready.”

POWER EMISSIONS KEEP DROPPING: In 2019 alone, power plants’ carbon emissions declined 8%, nitrogen oxide fell 14%, and sulfur dioxide dropped by nearly a quarter (23%), according to the Environmental Protection Agency’s latest data.

EPA Administrator Andrew Wheeler boasted “ever-improving air quality” under the Trump administration, and he noted that, for the first time in modern history, annual emissions of sulfur dioxide are below 1 million tons. The EPA also found power sector greenhouse gases have fallen roughly 20% since 2011.

What Wheeler didn’t say: Much of the decline in emissions of carbon and criteria air pollutants comes from increasing retirements of coal plants across the country.

The Rundown

Washington Post Boston harbor brings ashore a new enemy: rising seas

Wall Street Journal On rising Great Lakes, backyards are disappearing overnight

Bloomberg America’s coal country isn’t dead — it’s preparing for a comeback

Reuters Fires and climate fears rattle Australia’s giant coal lobby

The Hill Trump budget calls for slashing funds to climate science centers

Calendar

SATURDAY | FEB. 22

9:30 a.m. 1 Tamarack Park in Beckley, West Virginia. The Senate Energy and Natural Resources Committee holds a field hearing to receive testimony on S. 2555, a bill to designate the New River Gorge National River in the State of West Virginia as the “New River Gorge National Park and Preserve,” and for other purposes.

WEDNESDAY | FEB. 26

10 a.m. 1324 Longworth. The House Natural Resources Committee holds a legislative hearing to consider the “American Public Lands and Waters Climate Solution Act of 2019” and the “Trillion Trees Act.”