Daily on Energy: Coronavirus could flatline US electric car sales

While other countries overall auto sales could see more dramatic downturns (China’s vehicle sales are already down 44%), the U.S. could experience a bigger dip in its electric car market than other nations, according to a new report from BloombergNEF. That’s because the U.S. electric car market is hit with a triple whammy — coronavirus, low gas prices, and policy uncertainty, as the fuel economy standards hang in limbo and federal tax credits start to expire for automakers like Tesla and General Motors.

That combination could flatline U.S. electric car sales in 2020, BNEF says, adding that estimate could even be revised down further.

Policy makes a difference: BNEF says policy incentives and mandates in other countries, like China and those in the European Union, blunt the effect coronavirus and low oil prices will have on electric car sales.

In Europe, for example, electric vehicle sales could still be 50% higher than in 2019, as automakers must comply with strict new carbon regulations, according to BNEF. High fuel taxes in European countries also minimize the impact low fuel prices would have on the electric car market, the report says.

China’s electric car sales are also likely to remain flat this year, according to BNEF, but the report authors expect the Chinese government to try to revive the auto market with a “major stimulus program” that would include building out more EV charging infrastructure. China has a floor on retail fuel prices, meaning “the full drop in underlying oil prices does not get passed on to consumers,” BNEF notes.

How automakers handle low fuel prices also matters: Most auto companies have announced big plans for electric cars in the next decade, but low gas prices make producing more internal combustion engine vehicles more attractive.

Generally, BNEF expects automakers to dramatically cut sales forecasts amid uncertainty over the full impacts of coronavirus. But it isn’t clear whether that also means auto companies will tamp down their ambitions on electric cars, especially since many companies say part of the reason they can’t meet stricter fuel efficiency and greenhouse gas limits is because not enough Americans are buying electric vehicles. In 2019, new plug-in EV sales totaled 326,644, a dip of more than 30,000 from 2018, according to Energy Department data.

One automaker, though, wants everyone to know its electric car plans are still on track.

The oil price drop is “one of those dips that last a month, or some months or maybe a year,” but oil “won’t get cheaper” in the long run, Volkswagen strategy chief Michael Jost told reporters Thursday, according to Bloomberg. “We have a clear commitment to become CO2 neutral by 2050 and there is no alternative to our electric-car strategy to achieve this.”

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SHALE TRADE GROUP FLOATS JONES ACT WAIVER TO STEM PRICE CRASH: The American Exploration and Production Council is encouraging the Trump administration to provide relief from the Jones Act, a century-old law regulating domestic maritime commerce, to allow for easier transport of U.S. produced oil.

AXPC, as the group is known, floated a temporary Jones Act waiver as a “market-based” solution to the oil price crash in a letter to congressional leaders Thursday obtained by Josh.

“We believe a temporary waiver can allow American producers to move domestic products with greater ease within the U.S.,” said Anne Bradbury, CEO of AXPC, which represents large and medium-sized independent oil producers.

That old thing: Enacted in 1920, the Jones Act prohibits tankers from hauling goods and commodities, such as oil or natural gas, between U.S. ports unless the ships are American-made, -owned, and -crewed.

The Jones Act was designed to protect American maritime interests and shipbuilders, and the industry has repeatedly fended off attempts in Congress to repeal it, with coastal lawmakers from states such as Louisiana stepping in to save it. Jones Act boosters warn waivers would harm American jobs.

We need help, but not a ‘bailout’: AXPC, in its letter, said the double whammy of oversupply caused by the Saudi-Russia price dispute, along with slowing demand from coronavirus, has affected the group’s members “most severely.” Most of AXPC’s member companies, which include Pioneer Natural Resources and Chesapeake Energy, have announced capital budget cuts of 30% or more.

“Our industry requires constant capital investment and, at these artificially low prices, our industry cannot work,” Bradbury warned. “Should this continue, American energy independence will be at risk.”

But AXPC, aligning itself with the largest oil and gas trade group API, is “not seeking a bailout from the federal government,” Bradbury wrote.

Rather, it is pushing the Trump administration to seek a “diplomatic solution” to restore a stable market for global oil, along with market-based ideas like suspending sales from the Strategic Oil Reserve, which the Energy Department recently did, and providing Jones Act waivers.

SENATE CONFIRMS DANLY TO FERC: Three Democrats broke with their party Thursday to help confirm James Danly to be a Republican commissioner Federal Energy Regulatory Commission, despite Democratic accusations that the Trump administration politicized the nomination process.

Centrist Democrats — Joe Manchin of West Virginia, Kristen Sinema of Arizona, and Doug Jones of Alabama — joined Republicans to approve Danly in a 52-40 vote.

Danly’s confirmation gives the agency a 3-1 Republican majority, but that is expected to be short-lived with Commissioner Bernard McNamee, another Trump appointee, recently announcing he won’t seek another term after his current one expires at the end of June.

Danly’s nomination riled most Democrats because the Trump administration has refused to pair him with a Democratic nominee despite there being a second vacancy, as is custom.

His resume and positioning: Danly is a familiar face at the agency, working as its general counsel since 2017. He was previously a lawyer at Skadden, Arps, Slate, Meagher & Flom.

He has sought to present himself as above the political fray to protect himself against accusations that the agency has become politicized in the Trump administration in support of an agenda boosting fossil fuel use and exports. Danly, during his confirmation hearing, said he’d look “to remove barriers to entry that could stifle progress as new technologies are developed.”

He said renewables “undoubtedly” will have a significant role in the future electricity mix, and he said he backs the authority of states to set their own clean energy policies. And Danly said he agreed with FERC’s decision in 2018 to reject the Trump administration’s controversial bid to subsidize struggling coal and nuclear plants.

FERC INSTALLS PROTECTIONS AGAINST CORONAVIRUS: The commission’s Republican chairman Neil Chatterjee tweeted Thursday that FERC’s open meeting scheduled for March 19 won’t be open to the public, following guidance from the Center for Disease Control.

FERC is also doing an agency-wide telework “test” day on Tuesday.

“The Commission is committed to carrying out our important mission while doing our part to promote public safety & health,” Chatterjee tweeted.

DOE MOVES CLOSER TO FILLING ITS NO. 2 SPOT: The White House on Thursday officially sent the nomination of Mark Menezes to the Senate to be the Energy Department’s deputy secretary.

Menezes is currently the undersecretary of DOE, where he oversees policy and technology, so his elevation to the No. 2 spot was expected. He is a former Berkshire Hathaway Energy lobbyist and Republican staffer of the House Energy and Commerce Committee.

“It’s an honor to be nominated by President to serve as the Deputy Secretary of Energy,” Menezes said in a statement. “I look forward to continuing to build the U.S. into an energy powerhouse, boosting our economy and strengthening our energy security.”

SENATE DEMOCRATS’ PLAN TO CLEAN UP ‘FOREVER CHEMICALS’: It involves $20 billion in grants to states over the next decade to address the contaminants in their drinking water and groundwater supplies.

The bill was introduced by 20 Democrats on Thursday, led by New Hampshire’s Jeanne Shaheen, top Environment Committee Democrat Tom Carper, and Minority Leader Chuck Schumer. Presidential contender Bernie Sanders is also a co-sponsor on the bill, known as the PFAS Testing and Treatment Act.

What the bill does: It set up two grant programs to help states clean up the substances, known as per- and polyfluoroalkyl substances, or PFAS. The first expands a program for emerging contaminants in drinking water established under bipartisan defense authorizing legislation last year, bolstering it from $100 million to $1 billion per year. The bill also creates a second grant program under the Clean Water Act for cleanup of groundwater contamination of the two most well-understood PFAS chemicals, PFOA and PFOS.

Does it have a path forward? Right now, there aren’t any Republicans on the bill, though staff from Shaheen’s office told reporters they’re hopeful some of their GOP colleagues will sign on. Nonetheless, even PFAS, which is causing problems for both red and blue states, is caught up in partisan disputes.

Earlier this year, the House passed a largely Democratic bill to address the substances, which Republicans argue goes way too far, the Senate has refused to consider, and the White House has threatened to veto.

CALIFORNIA WINS ROUND ONE IN CARBON TRADING BATTLE: The Golden State now has to defend its signature climate program against two fewer claims by the Trump administration.

A federal district court judge dismissed the two claims in an order Thursday, ruling the program’s link with Quebec isn’t a treaty and doesn’t require congressional approval under the Constitution’s Compact Clause.

It’s a victory for California: But the legal fight isn’t over yet. Two more arguments are pending before the court — that the California and Quebec carbon trading agreement violates the Constitution’s Foreign Affairs Doctrine and Foreign Commerce Clause. Or, in other words, that the agreement infringes on U.S. foreign policy on climate and causes a “substantial and undue burden” on foreign commerce.

One point to note: The Trump administration isn’t challenging California’s entire cap-and-trade program, just its link with Quebec’s similar trading scheme.

In part because a Trump win wouldn’t scrap the entire California program, many Trump critics, including officials in the state, have suggested the lawsuit is politically motivated. The Trump administration has repeatedly gone after California’s climate programs, including eliminating the state’s ability to set its own tailpipe greenhouse gas stronger than federal levels.

The Rundown

Bloomberg Texas shale heartland rattled by coronavirus and oil price war

Wall Street Journal Russia takes aim at US shale oil producers

Washington Post Bernie Sanders’s climate record in Congress: Lots of advocacy, no compromise

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TUESDAY | MARCH 17

House is out. Senate is considering coronavirus legislation.