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OIL AND CARBON PRICING: Mike Sommers, CEO of American Petroleum Institute, insists the oil and gas lobby’s newfound support for carbon pricing is genuine, and says he is advocating for the policy even as it has failed to gain traction on Capitol Hill and with the Biden administration.
Sommers is looking to shore up the oil and gas industry’s credibility as a carbon pricing booster as he grapples with the fallout of a senior lobbyist from one of API’s most influential members, ExxonMobil, claiming in a sting video that the company’s support for a carbon tax is only for show.
Sommers, in an interview with me yesterday, claimed the Exxon video hasn’t “undermined” the group’s lobbying efforts for carbon pricing and claimed allies on Capitol Hill and in the Biden administration know API’s support isn’t “fake.”
As evidence, he ticked off recent meetings API officials have had with cabinet officials in which carbon pricing was on the agenda, including with National Climate Adviser Gina McCarthy, Energy Secretary Jennifer Granholm, and EPA Administrator Michael Regan.
“They know what a big deal it is for this industry to come up with a climate plan,” Sommers said, noting API is cooperating with the Biden administration as it devises direct federal regulation of methane from new and existing oil and gas operations.
API’s climate plan: Along with broadly endorsing carbon pricing, API as part of its “Climate Action Framework” released in March also said it supported the federal government regulating methane (pending the details of specific rules of course).
The shift by API disappointed Republican allies, who accused the oil and gas industry of selling out, while failing to appease liberal Democrats who questioned the group’s shift after it helped defeat a 2009 cap-and-trade bill known as Waxman-Markey.
“We have received some criticism from both sides of aisle,” Sommers acknowledged, while touting that API has made “significant advances” on other planks of its climate framework, including by releasing a template for its members to report greenhouse gas emissions, while advocating for measures in the bipartisan infrastructure bill supporting carbon capture, clean hydrogen, and cleanup of abandoned oil and gas wells leaking methane.
More on API and the Exxon incident below…
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Continued from above…the Exxon debacle: But API’s attempt to demonstrate its seriousness was hurt by the Exxon video.
The Exxon lobbyist featured in the video, Keith McCoy, dragged groups like API in the mud by saying the company funded “shadow groups” to undermine climate policies, even as it transformed its public stance on global warming. He appeared to suggest that the company is only publicly supporting a carbon tax to appear to be environmentally friendly with little consequence because it sees the policy as politically impossible to pass.
In recent weeks, Exxon CEO Darren Woods has condemned the lobbyist’s comments and apologized for them while also reassuring that the company is committed to lobbying for carbon pricing.
Sommers defended Exxon, claiming the company was influential in pushing API to come around on carbon pricing.
“Those comments don’t reflect the experience I have had with ExxonMobil,” Sommers said. “I don’t think that lobbyist’s position is reflective of ExxonMobil or how API views this policy and how we will advocate for it going forward.”
No clear path forward for carbon pricing: Sommers admitted Democrats and the Biden administration have “clearly chosen a different path” than carbon pricing as they proceed on advancing a sprawling reconciliation package that favors direct federal spending and tax subsidies for clean energy.
Republicans, meanwhile, are showing no signs of backing carbon pricing despite business groups such as API propping it up as a “market-based approach” to accelerate emissions reductions across the economy.
But API will keep plugging, Sommers said, even if he couldn’t predict a near-term legislative path or coalition that could get it across the finish line.
“We feel a clear price on carbon is the most impactful way we can change the trajectory of climate change,” Sommers said.
BIDEN TAPS THE OPEC+ WELL AGAIN: The Biden administration is calling on OPEC and its allies to pump more oil in order to counter rising gasoline prices that could crimp the global economic recovery from the pandemic.
The White House said today that a deal reached last month by a group of oil producing nations known as OPEC+ to boost production is “simply not enough” during a “critical moment” in the global recovery.
“We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices,” national security adviser Jake Sullivan said in a statement. “Competitive energy markets will ensure reliable and stable energy supplies, and OPEC+ must do more to support the recovery.”
In a separate but related move, President Joe Biden‘s top economic adviser Brian Deese wrote a letter to the Federal Trade Commission encouraging it to use “all available tools’ to monitor the U.S. gasoline market and address “any illegal conduct” that might be leading to high prices.
Biden is in a bit of a political pickle: The White House has been aggressive in trying to limit the political liability of high gas prices as it seeks to address criticism that Biden’s big spending proposals are leading the country into a prolonged inflationary period.
But by pushing for increased global oil production, Biden is in a tricky spot, as he is also at the same time imposing policies to tighten domestic output in an effort to curb greenhouse gas emissions that cause climate change.
Republicans called Biden hypocritical.
“Begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing,” said Sen. John Cornyn of Texas.
SENATE DEMOCRATS PASS BUDGET RESOLUTION: Senate Democrats approved a budget resolution early this morning paving the way for a $3.5 trillion spending package that Republicans won’t be able to filibuster, the Washington Examiner’s Kaelan Deese reports.
In a 50-49 vote, the measure passed after a series of amendment votes, known as “vote-a-rama,” that began yesterday afternoon and extended to about 4:30 a.m. The passage of the resolution unlocks the reconciliation process, which allows for passing legislation with only a simple majority in the Senate.
The package is expected to include a “clean electricity payment program” that would pay utilities to generate a growing percentage of power from carbon-free sources.
It’s also likely to boost and expand clean energy tax credits and offer funding to create a Civilian Climate Corps, modeled off a New Deal-era program, to put people to work weatherizing homes, restoring coastlines, managing forests, and other climate-related projects.
Other measures would give consumers rebates for electrifying homes, electrify the federal vehicle fleet, and impose fees on carbon-intensive products imported from abroad.
Majority Leader Chuck Schumer has said he wants committees to submit their first drafts of the legislation by no later than Sept. 15.
WHAT’S NEXT…DEMOCRATS TRY TO UNITE: Now that the Senate has approved a budget that provides for $3.5 trillion in spending via reconciliation, Democrats face the difficult task of writing actual legislation that can win the support of practically every party lawmaker in both chambers.
It won’t be easy, as the Washington Examiner’s Susan Ferrechio writes.
Shortly after senators voted to approve the budget resolution, Sen. Joe Manchin of West Virginia sent a public reminder to Democratic leaders that he will seek changes to the legislation.
Manchin suggested the $3.5 trillion price tag is far too high.
“I have serious concerns about the grave consequences facing West Virginians and every American family if Congress decides to spend another $3.5 trillion,” Manchin said in a statement.
He’s not the only Democrat who may try to lower the cost.
Sen. Kyrsten Sinema, an Arizona Democrat, told the Arizona Republic last month she has informed Democratic leaders “that while I will support beginning this process, I do not support a bill that costs $3.5 trillion.”
But the legislation will also have to pass the House, where the majority of Democrats are more liberal and want spending to increase.
VOTE-A-RAMA DRAMA: The Senate conducted a 15-hour “vote-a-rama” prior to passage of the Democratic budget resolution with a record 47 amendments.
The amendments are non-binding and thus not practically important. But Republicans won votes on a number of measures touching sensitive political issues that they hope to exploit in the 2022 midterms, including on fracking and the Green New Deal.
Vote-a-rama began with an amendment that would prohibit funding or regulations to establish the Green New Deal, offered by Republican John Barrasso of Wyoming.
The measure passed unanimously.
“I have no problem voting for this amendment, because it has nothing to do with the Green New Deal,” said Sen. Bernie Sanders, liberal of Vermont.
Later, eight Democrats voted for an amendment from GOP Sen. Kevin Cramer of North Dakota aimed at blocking the issuance of rules or regulations barring fracking.
Three Democrats — Senators Mark Kelly of Arizona, plus Manchin and Sinema — supported a successful provision calling for electric vehicle tax credits to be means-tested in order to ensure high-income people do not get government subsidies to buy them.
Biden’s EV plans would allow Americans of any income to access credits.
Sen. Deb Fischer of Nebraska, the Republican who authored the amendment, asked why the government should “subsidize luxury vehicles” for the wealthy.
MORE REPUBLICAN RESPONSES TO IPCC REPORT: Congressional Republicans are suggesting they won’t support aggressive government intervention to address climate change in response to this week’s dramatic report from the U.N. IPCC, which states the problem of extreme weather events will become significantly worse without dramatic emissions cuts.
Sen. Shelley Moore Capito of West Virginia, the ranking member of the Environment and Public Works Committee, told me the U.S. “must remain the world’s leader of developing innovative technologies to address a changing climate.”
She warned against Democratic policies “imposing higher costs on American households or job losses on American workers.”
Capito also touted emissions declines from U.S. natural gas, but the conservative group ClearPath Foundation recently warned the winning formula over the last 15 years of coal being mostly replaced by gas along with renewables cannot be relied upon going forward.
Rep. John Curtis of Utah, the leader of the new Conservative Climate Caucus, told me the IPCC report is “another reminder of the importance of reducing worldwide greenhouse gas emissions while investing in adaptation and resiliency.”
He touted the existing Republican formula of developing and exporting U.S. clean energy technologies by supporting private-sector innovation.
CONSERVATIVES PUSH BACK AGAINST DEMOCRATS’ CARBON TARIFFS: A coalition of conservative groups led by Koch-backed Americans for Prosperity is pressing Congress to reject Democrats’ gambit to impose a tax on imports of carbon-intensive goods as part of their reconciliation package.
Sen. Chris Coons of Delaware and Rep. Scott Peters of California say their legislation is intended to protect the competitiveness of U.S. industries exposed to domestic climate rules, and that could be further strained as the Biden administration develops more aggressive policies. They hope the bill, the FAIR Transition and Competition Act, is attached to Senate Democrats’ $3.5 trillion tax and spending infrastructure proposal, and will serve as a revenue source for the package.
But the conservative groups, which also include Club for Growth, American for Tax Reform, and more, argue in a letter yesterday that the measure would “intensify” a trade war with allied countries and violate World Trade Organization rules. They also say a U.S. border carbon tax would hike prices at a time when Americans “can least afford it” while “disrupting” supply chains.
George David Banks, a former international energy adviser in the Trump administration who supports the concept of Democrats’ proposal, told me the conservative groups have it all wrong.
“It’s fascinating how conservative groups have embraced globalism, the WTO, and China’s exploitation of the United States,” Banks said, suggesting a U.S. border fee would remove the incentive for domestic companies to import dirtier products from places, such as China, with weaker environmental rules.
EMISSIONS SPIKE IS COMING: Increased economic activity will lead to a significant increase in energy-related carbon emissions this year, the Energy Information Administration said yesterday in its latest Short-Term Energy Outlook.
After decreasing by 11% in 2020 because of the pandemic, carbon emissions will increase by 7% to reach 4.9 billion metric tons this year.
Coal-related emissions will rise by 17% in 2021 because the share of U.S. electricity generated by coal has increased due to high natural gas prices.
OIL DEMAND SPEED BUMP: U.S. oil demand dropped around 8% last week after steadily rising over the last month, the EIA said today in its Weekly Petroleum Status report.
Oil consumption fell to 19.5 million barrels per day from 21.2 million barrels p/d the week prior.
Consumption of gasoline saw a 4% drop to 9.4 million barrels p/d, while jet fuel demand also fell from 1.6 million barrels p/d to 1.3 million barrels p/d.
EIA also reported a crude oil inventory draw of 0.4 million barrels after a stock increase last week, forcing oil prices lower this morning.
The Rundown
Wall Street Journal How much carbon comes from a liter of coke? Companies grapple with climate change math
Reuters Billionaire-backed mining firm to seek electric vehicle metals in Greenland
Reuters US weighs 2050 target in bid to wean airlines off fossil fuels
Calendar
WEDNESDAY | AUG. 11
12 p.m. CRES Forum will hold a virtual event titled, “Resiliency & Clean Energy: Keeping the Lights on While Reducing Emissions.” FERC Commissioner Neil Chatterjee will deliver a keynote address.
2 p.m. League of Conservation Voters will hold a virtual conversation with Energy Secretary Jennifer Granholm on “building the clean energy future.”
TUESDAY | AUG. 17
10 a.m. ConservAmerica will hold a webinar exploring a federal Clean Energy Standard.
