Daily on Energy: Iraqi energy transition grows more urgent amid tensions with Tehran

Experts warn it will be a tricky, and potentially dangerous, road ahead for Iraq as a U.S. ally that still has political factions and militias with close ties to Iran.

The international effort is to leverage a mix of private sector investment with country-to-country involvement to move Iraq off of Iranian natural gas imports and onto resources from Saudi Arabia and Iraq’s own wells.

Much of Iraq’s electricity comes from natural gas-fired power plants fueled by Iranian natural gas that it has grown dependent on. Iraq has enough of its own natural gas to displace what it receives from Iran, but needs time to build out the infrastructure, which could take years.

One-year anniversary of Iran deal exit: Of course, the reason for doing this stems from President Trump’s decision a year ago to undo the Iranian nuclear deal and reinstate sanctions on Iranian imports, which has forced Iraq to pull together an expedited energy transition plan.

Iraqi delegations have fanned out in recent weeks, John has learned, striking deals with Siemens in Germany, for example, to help build out the nation’s grid. In addition, Iraq’s electricity ministry is scrambling to ensure new hydroelectric power plants are not confounded by delays.

The International Energy Agency drafted a plan for Iraq to become energy independent, which IEA director Fatih Birol hand-delivered to Baghdad last month. The plan says the country has more than enough of its own natural gas to supply its needs.

The Iraqi oil minister said Wednesday, after a surprise visit by Secretary of State Mike Pompeo, that a deal will be announced soon with ExxonMobil and the Chinese firm PetroChina to invest $53 billion in its oil sector, which experts say could be leveraged for natural gas production.

China also has a stake in ensuring Iraq remains a stable oil supplier and could help invest in new natural gas infrastructure, say experts.

Pompeo said he discussed these “big” energy deals with Baghdad. The State Department later told John that he wasn’t just referring to private sector announcements, but forthcoming country-to-country efforts to move Iraq off of Iranian energy.

Rumors of war: Pompeo was also there to assure the Iraqi government that the U.S. has its back militarily if Iran tries to create instability in the country.

It’s a “very drastic” time for Iraq, said Dr. Abdulwahab Al-Qassab, an expert on Iraqi strategy at the Qatar-based Arab Center’s think tank in Washington. On one hand, Iraq is moving forward to secure these deals, but on the other hand it still has the strong influence of Iranian-backed militias that will act if Tehran tells them to, said Al-Qassab.

But for the time being, most of the threats made by Iran to close the oil transit point at the Straits of Hormuz are just saber rattling by Tehran, Al-Qassab tells John.

The only means they have to do that is by using thousands of small machine gun boats, which they have used to harass U.S. vessels in the past. Al-Qassab wrote a paper last week on the possible ramifications of blocking the straits.

He says the only countries to be harmed by such an undertaking would be Kuwait and Iran itself. Its likely target, Saudi Arabia, can use pipelines and alternative oil export routes on the Red Sea to continue moving oil unabated.

Oil prices moving upward: The Energy Information Administration ratcheted up its price forecast for oil on Wednesday due to the sanctions. Read more from John’s story here.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers John Siciliano (@JohnDSiciliano) and Josh Siegel (@SiegelScribe). Email [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.

PERRY FORCED TO SQUARE DOE’S ‘DEAD ON ARRIVAL’ BUDGET WITH INNOVATION AGENDA: House Democrats criticized Energy Secretary Rick Perry’s “dead on arrival” fiscal 2020 budget request on Thursday morning, arguing his proposed cuts to clean energy research is inconsistent with the Trump administration’s “energy dominance agenda.”

“I am extremely frustrated and disappointed that the budget is largely the same flawed, out of touch document that we saw last year,” said Rep. Frank Pallone, D-N.J., the chairman of the Energy and Commerce Committee, who called the budget “basically dead on arrival,” as Perry testified before the panel.

The DOE’s budget request proposed an 11% overall reduction from the 2019 level enacted by Congress, mostly through cuts to clean energy programs, and by eliminating ARPA-E, which funds next-generation energy technologies. It cuts the agency’s Office of Energy Efficiency and Renewable Energy by 86% from 2019 enacted levels.

“It is craziness to eliminate ARPA-E,” said Rep. Mike Doyle, D-Pa., “Cutting this program makes absolutely no sense and seems contrary to the goals the department has.”

Rep. Greg Walden of Oregon, the committee’s top Republican, however, said DOE has proven its commitment to clean energy innovation in other ways.

“I must say I am encouraged by the work DOE is doing to support transformative breakthroughs in ‘carbon free’ fossil energy, carbon capture technologies, advanced nuclear, energy efficiency, advanced energy storage technologies, and modeling for increased energy resilience, all to lower greenhouse gas emissions,” Walden said.

Perry, as he always says during budget hearings, vowed to defer to Congress’ wishes.

Lawmakers of both parties have repeatedly rejected Trump administration efforts to eliminate ARPA-E and cut clean energy research.

“I can assure you with great assurance we will follow Congress’ direction,” Perry said.

BRUCE WESTERMAN PROPOSES FOREST MANAGEMENT OVERHAUL TO CURB WILDFIRES: Rep. Bruce Westerman, R-Ark., introduced legislation Wednesday to increase the pace and scale of forest management projects meant to reduce the risk of wildfires that have become more destructive and common.

The bill would also limit lawsuits by environmentalists that Westerman and other Republicans say slow forest management projects.

It represents a continued push by Republicans backed by the Trump administration who argue poor forest management is contributing to the severity of wildfires in California and other parts of the western United States.

“I won’t be at all surprised if we continue to see fires as big as what saw in California last year,” Westerman said. “We probably need a decade or more of sound forest management.”

Dead on arrival: Westerman authored similar legislation that passed the then GOP-controlled House in the last session of Congress. Senate Democrats opposed the bill, saying it went too far in limiting environmental reviews, preventing it from passing.

Rep. Raúl Grijalva, D-Ariz., chairman of the Natural Resources Committee, told Josh his panel does not plan to hold a vote on Westerman’s bill, which the Democrat called a “special interest wish list.”

THREE MILE ISLAND NUCLEAR PLANT WILL CLOSE WITHOUT FINANCIAL RESCUE: The utility company Exelon announced Wednesday it is moving ahead with its planned shutdown of Three Mile Island, the site of the nation’s worst-ever nuclear reactor accident, because Pennsylvania lawmakers will not provide financial subsidies to keep it open.

The Pennsylvania nuclear plant, like others across the country, is losing money because of competition from cheap natural gas, wind, and solar.

Exelon said Three Mile Island will prematurely shut down by Sept. 30, as the company announced in May 2017. The plant had a license to operate through 2034.

The company had hoped Pennsylvania lawmakers would provide financial incentives to the plant in recognition of the value of nuclear’s ability to provide zero-carbon electricity.

CONSERVATIVE COALITION PUSHES CAPITOL HILL TO OPPOSE EV TAX CREDIT: A group of conservative and free-market groups Thursday re-upped their push against expanding tax credits for electric cars, calling them subsidies for the rich.

The coalition of 34 groups, led by Tom Pyle’s American Energy Alliance, sent letters to both the Senate Finance and House Ways and Means Committees, opposing any effort to restore or expand the current tax credit for electric cars.

Co-signers include FreedomWorks, Club for Growth, the Competitive Enterprise Institute, Heritage Action for America, and several others.

“It makes no sense for the federal government to subsidize the purchases of wealthy individuals,” the letter reads.

The groups cite recent polling that shows 67% of voters believe they should not be forced to subsidize a tax credit that has primarily been used to purchased vehicles for households who make over $100,000 a year.

Electric carmakers like Tesla have been lobbying hard to see the EV tax credit expanded. The current credit phases out as the number of vehicles sold by each automaker moves closer to 200,000 units.

GM and Tesla credits have been halved from $7,500 to just around $3,750 as their sales of electric cars have grown to around 100,000. But a bill making its way through Congress would reboot the subsidy at $7,000 per vehicle with a target of 400,000 vehicles.

US SURPASSES 2 MILLION SOLAR INSTALLATIONS: There are now more than 2 million solar installations in the U.S., according to a report released Thursday by Wood Mackenzie and the Solar Energy Industries Association.

The 2 million residential, commercial, and utility-scale solar installations produce enough electricity each year to power more than 12 million homes.

Solar achieved this milestone just three years after reaching 1 million installations, a level that took 40 years to accomplish.

The report projects solar installations to double by 2023. The price of solar energy is 38 times lower than it was in 2010, although solar generated just 1.6% of U.S. electricity last year.

“The rapid growth in the solar industry has completely reshaped the energy conversation in this country,” said Abigail Ross-Hopper, SEIA’s president and CEO.

California leads the nation in solar installations, driven by the residential sector. Other fast-growing states over the last three years include South Carolina, Texas, Utah, Florida, Rhode Island, and Maryland.

EXXON TEAMS UP WITH FEDERAL LABS ON CARBON CAPTURE: Exxon Mobil, the biggest private oil company in the world, announced Wednesday one of the largest deals with the Trump administration meant to make low-emission technology a commercial reality in the next decade.

The oil company will invest $100 million over 10 years to advance the technology in collaboration with the two largest federal energy technology labs overseen by the Energy Department: the Colorado-based National Renewable Energy Laboratory and the West Virginia-based National Energy Technology Lab.

The announcement comes as the company has faced increasing calls by shareholders to be transparent about its greenhouse gas emissions and set carbon pollution reduction targets. It has also faced legal scrutiny by New York’s attorney general over allegations it tried to hide the true cost of climate change.

BERNHARDT POURS FUNDS INTO PROTECTING WETLANDS: Interior Secretary David Bernhardt on Wednesday demonstrated his support for protecting coastal wetlands awarding over $20 million to 11 states through a federal conservation program for protecting coastal habitats for birds and other animals. The timing of the announcement followed his first appearance on Tuesday before House appropriators, where Democrats thrashed the wildlife protections part of his budget.

“Through the National Coastal Wetlands Conservation Grant Program, we are demonstrating our commitment to promoting coastal sustainability with healthy ecosystems, vibrant economies and resilient communities,” Bernhardt said in releasing the funds.

States will match the $20 million federal grant with about $26 million in additional funding, he said.

The Rundown

Chron.com Chevron bows out; Oxy wins Anadarko

New York Times EPA leaders disregarded agency’s experts in issuing asbestos rule, memos show

Reuters New Colorado environmental law stalls oil investment

Associated Press UN chief says ‘total disaster’ if warming not stopped

Texas Tribune Renewable energy proponents brace for last-minute attack on tax breaks for wind and solar

Calendar

FRIDAY | May 10

8:30 a.m., 500 Fifth Street NW. The National Academy of Sciences holds a workshop on “Closing the Loop on the Plastics Dilemma.” Eugene Chen, chair in chemistry at Colorado State University, delivers remarks on “Infinitely Recyclable Plastics”

9:15 a.m., 1155 15th Street NW. Inter-American Dialogue holds a discussion entitled: “Prospects for Energy Resource Development in Latin America.”