Daily on Energy: Granholm’s untested assumptions about green infrastructure politics

Here’s what Granholm said yesterday on CNN in discussing passing the $2.3 trillion infrastructure proposal through reconciliation, enabling passage through the split Senate with a simple majority instead of 60 vote:

“As he has said, he was sent to the presidency to do a job for America. And if the vast majority of Americans, Democrats and Republicans, across the country support spending on our country and not allowing us to lose the race globally, then he’s going to do that,” said Granholm, who Biden recently named as one of five surrogates to sell the plan.

Other Biden administration officials yesterday made the same argument, which they also used to justify his first COVID-19 relief package that was passed without any Republican votes.

What’s different: While it’s true that package did prove popular (it was headlined by providing large checks to most Americans), the context and content aren’t the same.

For one, it will harder for Biden to justify a Depression-era style big spending jobs push as the economy continues to improve. The economy beat expectations by adding 916,000 new jobs in March while the unemployment rate dropped to 6% as businesses recover from the COVID-19 pandemic, the Bureau of Labor Statistics reported Friday.

Second, while it’s true investing in infrastructure and clean energy are popular ideas on their own, Republicans are hinting they will define the package as being mostly a liberal wishlist unrelated to traditional infrastructure

Republican Sen. Roy Blunt told Fox News that Biden could secure an “easy win” if he stripped the package of everything unrelated to roads and bridges.

“Obviously Democrats have figured out that infrastructure is something we need and something that’s popular,” Blunt said. “So they’re trying to take 70% of this bill and call it infrastructure in a new way than we’ve ever talked about infrastructure before — and that means you’re looking at another partisan package just like we had with COVID.”

Joseph Majkut, a climate scientist with the Niskanen Center, counts $1 trillion on climate and clean energy spending as being part of the Biden administration jobs plan.

Democrats argue that projects to scale up electric vehicles, public transit, transmission lines, carbon capture technologies, and more are relevant to infrastructure and that the U.S. should be looking to “build back better” by spurring new industries of the future, while moving people to cleaner forms of transportation.

What we don’t know is whether a plan that opponents can plausibly describe as being mostly motivated by addressing climate change will prove popular with Republican voters, who have historically been skeptical of the federal government’s role in addressing the problem.

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.

HOW OIL WORKERS WOULD PLUG WELLS UNDER BIDEN PLAN: Biden’s green infrastructure includes $16 billion to help states plug “orphan” oil and gas wells whose owners are either unknown or insolvent.

But how big is the problem and could there actually be enough opportunity to employ fossil fuel workers who lost jobs during the pandemic, and who face more risk from Biden’s push for cleaner energy?

Josh explains in a story posted this morning.

It’s a big problem: There are 56,600 orphan wells across the U.S., which can leak methane and contaminate nearby groundwater. But there is a larger category of unplugged abandoned wells, likely amounting to millions, that have sat unused possibly back to the late 1800s, for which no permits and records exist because there was no regulatory oversight at the time.

“The documented orphan wells are a concern, but the bigger concern is the hundreds of thousands of undocumented wells,” said Daniel Raimi, a fellow at Resources for the Future who studies oil and gas regulation.

The main hurdles? Finding out where these wells are and a funding shortfall to plug them.

States and the federal government require oil and gas companies to post bonds or other forms of financial assurance as a down payment in case firms go bankrupt before plugging wells. But the payments are often insufficient to cover the cost, sometimes because of weak state policies.

Biden could condition some of the federal funding on states reforming their policies.

“Because the bonding amounts are insufficient, this leaves the burden on taxpayers to clean up,” Democrat Rep. Alan Lowenthal of California told Josh.

Jobs, jobs, jobs: A program to plug all of the certified 56,600 orphan wells could create up to 11,000 jobs and as many as 120,000 jobs if it were scaled up to identify and plug 500,000 wells, according to a study last year by Resources for the Future and Columbia University’s Center on Global Energy Policy.

THE BACKUP PLAN IN DEMOCRATS’ CLIMATE BILL: Top House Democrats’ plan to eliminate carbon emissions from the power sector by 2035 includes a provision that would delay requirements to purchase more clean electricity if compliance costs become too high.

The provision, which has been called a “decelerator,” is tucked into the clean electricity standard top Democrats on the House Energy and Commerce Committee proposed in sweeping climate legislation last month. It could serve as an olive branch to the utility industry, which has raised concerns companies wouldn’t be able to meet a 2035 timeline.

Some environmentalists also say the provision is an acknowledgment of the immense transformation the power sector would need to undergo to reach 100% carbon-free power in the next 15 years.

Biden has also proposed to include a clean electricity standard in his big infrastructure package, which would make significant investments in curbing climate change, including a 10-year extension of wind and solar tax credits.

If Biden’s infrastructure plans are advanced through budget reconciliation, however, a “decelerator” provision like that in Democrats’ bill likely wouldn’t be applicable. Qualifying spending legislation under those technical legislative rules can only cover a 10-year period, stopping short of the 2035 deadline utilities are worried about.

More in Abby’s story posted over the weekend.

RENEWABLES BLEW PAST EXPECTATIONS LAST YEAR: The world added more renewable energy than ever last year (more than 260 gigawatts), even despite the pandemic and economic slowdown, the International Renewable Energy Agency said in a new report released this morning.

In total, more than 80% of all new power capacity added in 2020 was renewable energy, with the majority of that wind and solar, IRENA said.

China and the U.S. led the pack. China, the world’s largest market for renewables, added 136 GW of renewable energy last year, according to the IRENA data. The U.S. added 29 GW, split nearly evenly between solar and wind, an amount almost 80% higher than the renewables it added in 2019.

The data from IRENA serves as yet another example of renewable energy’s resilience to the pandemic, with the sector beating out growth expectations as costs continue to decline and demand for clean energy increases. IRENA also notes that fossil fuels continue to shutter in Europe and North America, as well as parts of Eurasia last year, with total fossil fuel additions falling 4 GW from 2019.

THE COMPANY RACING TO FREE US FROM RELIANCE ON CHINA FOR ELECTRIC VEHICLES: One company sees a business opportunity in the U.S.’ reliance on China for rare earth elements. Demand for the metals is only growing as clean energy products such as wind turbines and electric cars, which use the metals, become more popular. UCore aims to rip that hegemony away from China, the Washington Examiner’s Zachary Halaschak reports for a story posted this past weekend.

“It’s a pretty dangerous spot to be in,” said UCore interim CEO Pat Ryan. “It’s quite an imbalance, and it’s got to be corrected, or the technology will continue to evolve with control by China.”

Ryan, who called rare earths “the new oil,” highlighted the anticipated explosion of growth in the electric vehicle industry over the next decade.

What the company is doing: UCore is aiming to build one of the first U.S. rare earth separation facilities and plans to do so in Ketchikan, Alaska. The facility will use cutting-edge technology to separate out the critical elements from feedstock shipped in from U.S.-allied countries. Once UCore is bringing in revenue, it plans to open its nearby Bokan-Dotson Ridge mine and use ore from there to form a completely domestic supply chain. The initial throughput of the facility could supply enough dysprosium for 1 million electric vehicles and, at peak, something like 3 million electric vehicles, the CEO said.

JAPANESE COMPANY TO PARTNER WITH NUSCALE: A Japanese company will assist Oregon-based NuScale in construction management of small modular nuclear reactor power plants.

JGC Holdings, a Tokyo-based engineering firm, has also invested $40 million to take a 3% stake in NuScale, which announced the agreement in a press release today.

“JGC HD’s investment and partnership with NuScale Power is a welcome endorsement of our SMR technology and its international viability,” said NuScale chairman and CEO John Hopkins.

NuScale is racing to be the first company in the U.S. to operate a small nuclear reactor, which supporters are counting on as a key potential carbon-free tool to address climate change.

The new investment comes as NuScale has faced questions from customers about the high cost of the project. NuScale plans to operate its first reactor late this decade, lining up the Utah Associated Municipal Power Systems, a group of small, community-owned utilities, as its first customer.

What’s in it for Japan? NuScale also hopes to export its reactors, which it says will be on the market for sale by 2027.

Japan has said it is considering using small reactors as it seeks to restart its nuclear power program in the aftermath of the Fukushima disaster in order to meet its goal of economy-wide carbon neutrality by 2050.

The partnership could also enable Japan to gain knowledge of small reactors to develop them itself, Bloomberg reporter Stephen Stapczynski noted.

ELECTRICITY BILLS WENT UP NEARLY 4% DURING PANDEMIC: The average U.S. household monthly electricity bill was 3.9% higher from April through December of last year amid the pandemic lockdowns, with Americans spending in total $7.5 billion more on electricity during those months last year than the year prior, according to a report this morning from the home value data firm Ownerly.

The firm compared Energy Information Administration data from April through December of 2020 and 2019. Ownerly found that overall, residential electricity usage during the pandemic was 44 billion kilowatt hours higher (roughly the annual output of 19 million wind turbines) in those months last year than in 2019.

California, Vermont, New Mexico, Arizona, and Michigan saw the highest increases percentage-wise in their electricity bills from the year prior, Ownerly found. Bills didn’t go up everywhere, however. Several states, including South Carolina, Louisiana, and Tennessee, saw their average electricity bills decrease compared to 2019.

2020 SAW LARGEST ANNUAL DECLINE IN US ENERGY CONSUMPTION: U.S. energy consumption fell a record 7% last year, largely due to the pandemic lockdowns, the largest annual decline by percentage and in absolute terms since 1949, when the EIA’s data on consumption begins.

Not surprisingly, energy consumption fell most dramatically in the transportation sector, decreasing 15% as travel was restricted and petroleum use declined. In the residential sector, by contrast, energy consumption fell just 1%, while stay-at-home orders drove residential electricity sales up slightly (by 2%).

Prior to last year, the economic recession in 2008 and 2009 had driven the largest annual decrease in energy consumption, of 5%, the EIA said.

COUNTRIES VOW TO TOUGHEN PARIS TARGETS: The participants in a regional climate discussion this past weekend between U.S. climate envoy John Kerry and countries in the Middle East and North Africa issued a statement reiterating their call for nations to submit “enhanced” updated pledges, or Nationally Determined Contributions, for emissions cuts by 2030 under the Paris Agreement.

Kerry attended the UAE Regional Dialogue for Climate Action in Abu Dhabi yesterday as he tries to build momentum ahead of a climate summit the U.S. is hosting on Earth Day, April 22, with the leaders of top emitting countries.

The Rundown

New York Times America has long favored cars over trains and buses. Can Biden change that?

Washington Post Biden’s plan to rev up the electric car market is complicated by battery supplies

Wall Street Journal As Texas freeze gas bills come due, cue up the lawsuits

Calendar

TUESDAY | APRIL 6

1 p.m. The National Association of State Energy Officials, Energy Futures Initiative, and BW Research Partnership will hold a virtual event to present supplemental analysis to the 2020 U.S. Energy and Employment Report.