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RUSSIAN IMPORT BAN MOMENTUM: The U.S. is moving rapidly toward a ban on Russian oil imports as enthusiasm grows for punishing Russia for Vladimir Putin’s invasion of Ukraine.
President Joe Biden said yesterday that “nothing is off the table.”
Those remarks were echoed several times yesterday from administration officials, including White House principal deputy press secretary Karine Jean-Pierre, who said that “we and our allies and partners have a strong collective interest to degrade Russia’s status as a leading energy supplier over time.”
Though Biden has the authority to block any Russian imports through executive order, support in Congress also appears to be growing — and fast.
Democrats Sens. Joe Manchin and Jon Tester and Republican Lisa Murkowski are planning to file a bill today that would ban imports of Russian crude oil, LNG, and petroleum products.
Democratic Rep. Josh Gottheimer and Republican Rep. Brian Fitzpatrick are also sponsors of the same Banning Russian Energy Imports Act.
According to a one-page draft summary of the bill shared with E&E News, the legislation would declare “a national emergency with respect to Russian aggression against Ukraine and the threat to our national security, foreign policy, and economy and directs the President to [use] the authority he has had since 1917 to prohibit imports of crude oil, petroleum, petroleum products and [LNG] from Russia.”
Asked this morning whether she supports the bill, House Speaker Nancy Pelosi did not mince words. “I’m all for that,” Pelosi said of the proposed legislation. “Ban it. Ban the oil coming from Russia.”
Expect movement soon on this front: Manchin, Murkowski, and other lawmakers are holding a press conference this afternoon to discuss the bipartisan, bicameral effort.
Speaking to reporters yesterday, Murkowski said the U.S. should not be deterred by fear of further price increases. “He [Putin] has used energy as a weapon and we are afraid to have it on the table? I’m sorry, he put it on the table. This is not going to be easy on Europe or the United States. Hopefully it will be most difficult on Russia,” Murkowski told Politico.
The U.S. imported an average of over 600,000 barrels a day of oil products from Russia over the second half of 2021, according to the Energy Information Administration, about 7.4% of all imports in that period.
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RELATED — RUSSIAN OIL GIANT CALLS FOR END TO WAR: Russian oil behemoth Lukoil is reportedly calling for a ceasefire.
The board expressed its “deepest sympathy” to those afflicted by the conflict in Ukraine and called for diplomacy, in a high-profile break from Putin, the Agence France-Presse reported.
Lukoil’s stock value plummeted over 99% in the United Kingdom and over 90% in the United States over the past two weeks.
The London Stock Exchange blocked Lukoil from trading, along with 26 other Russian companies. Yesterday, the city council in Newark, New Jersey voted to suspend licenses for gas stations owned by Lukoil in protest of Russia’s belligerence.
A TURN OF THE TIDES IN EUROPE: Europe is grappling with struggles of its own as leaders break ties with Russia and attempt to secure other, reliable forms of natural gas. Earlier this week, France’s finance minister declared an “all-out economic and financial war” against Russia as a penance for its assault in Ukraine (though he later apologized for his use of the term “war”).
In Europe, which imports 90% of its gas (including roughly 40% from Russia), leaders are scrambling to reduce their energy dependence on Moscow. In preparation for possible gas cutoffs, leaders are “rounding up new supplies of liquefied natural gas — LNG — by ship,” the Associated Press reports.
They’re also “speeding up plans for gas import terminals and pipelines that don’t depend on Russia and talking about allowing coal-fired power plants to keep spewing climate-changing emissions for longer if it means energy independence.”
To that end, Italy’s prime minister said earlier this week that his government is preparing plans to resort to coal or oil power plants in the event of a supply disruption, Reuters reports.
Meanwhile, German Chancellor Olaf Scholz — whose country is the largest European market for Russian coal and relies on Moscow for more than 50% of its gas supply — proposed building two new LNG import terminals earlier this week and announced his government will spend $1.66 billion on the purchase of more LNG.
But the options right now are limited: But if the past seven days serve as any indication, the battle for Ukraine will likely be longer and more painful than Russia — and many Western observers — originally anticipated. This means that volatile energy prices are likely to continue for quite some time.
Traders are “factoring in the rising probability of sanctions on gas for each day the offensive continues,” Kaushal Ramesh, a senior analyst at Rystad Energy, said in a market note yesterday.
The sanctions will inevitably cause further pain to an already-squeezed market. Gas prices on the European benchmark today are more than 10 times as high as they were at the beginning of 2021.
INTRA-FUEL SWITCHING CAN ENABLE EMISSIONS CUTS: REPORT: The U.S. should better market its relatively cleaner fossil fuels and promote “intra-fuel switching,” or exchanging one source of a particular fuel for another lower-emitting one, as a strategy for reducing global greenhouse gas emissions in the immediate term, according to a new white paper out today from conservative policy group CRES Forum.
The paper notes estimates that fossil fuel demand is strong and rising (EIA has fresh estimates out today on this), even while governments try to cut them out of their energy mixes in favor of renewable or other lower-emitting energy sources.
For that, CRES Forum argues western nations like the U.S. that produce coal, oil, and gas should encourage replacement of higher-emitting fuels, say natural gas from Russia, with gas from the U.S. or other nations who produce it with fewer emissions. That strategy enables immediate reductions in emissions while renewables and other lower-carbon technologies are being developed and deployed, said Dave Banks, a co-author of the paper and former official in the Trump White House.
“The world is going to demand a substantial amount of fossil fuels. You want to make sure that the fossil fuels that are used are the most efficient, cleanest fossil fuels available in the market,” Banks told Jeremy.
Banks said the Intergovernmental Panel on Climate Change acknowledges intra-fuel switching can be employed to cut emissions but that it’s being underestimated as an option.
“You have this narrative out there now that the only way that we’re going to prevent these worst-case climate scenarios is to keep fossil fuels in the ground, and that’s just not what the science says,” Banks said.
The geopolitical angle: The recommendations coincide with talk across political lines about how to clip Russia’s reach in the global energy market, something both American and European officials had been gameplanning even before Putin moved forces into Ukraine.
Banks said fuel switching could achieve emissions reductions while also favoring growth in freer Western nations instead of enabling Russian or Chinese hegemony.
“Cleaner economies typically are democracies, have representative governments, have a high degree of economic prosperity,” Banks explained. “If you compare the United States, the EU, Japan, Canada, with Russia, China, and other big, centrally-planned economies, you’ll find that, you know, our GHG intensity for products, just cutting across all major economic sectors, is done in a cleaner fashion.”
The green counter: The Biden administration has postured so as to avoid embracing domestic oil and gas production amid higher energy prices, and environmentalist groups have steadfastly pressured it from doing so with litigation and other advocacy activities.
Today, Friends of the Earth and Dutch-based Transnational Institute published a report criticizing giant asset managers, including BlackRock, for maintaining investments in fossil fuel ventures and “bankrolling the climate emergency.”
A FERC FACE-OFF ON PIPELINE POLICIES: All five FERC commissioners appeared before the Senate Energy and Natural Resources Committee this morning to field questions about the commission’s new gas infrastructure policies, of which Republicans and Democratic committee chairman Manchin have been very critical.
The hearing further demonstrated deep ideological divisions between the Democratic and Republican commissioners over the breadth of agency legal authority at the nexus of fossil fuels and climate change mitigation.
FERC Chairman Richard Glick emphasized that the commission’s decision to begin more rigorously considering projects’ effects to climate change and environmental justice communities, or those defined as being especially subject to pollution and other adverse effects of fossil fuels, was driven by recent court recent court decisions ruling that FERC had inadequately considered such effects during several pipeline approvals.
Glick also disputed that the policies would be extremely disruptive to its certification of projects and make energy more expensive.
“A conclusion that the impact is significant is just the beginning of the inquiry,” he told lawmakers. “The Commission often finds the particular impact will be significant, but still concludes that the benefits of the project outweigh any adverse impact.”
The commission’s two Republican commissioners demurred on the commission majority’s legal interpretations and said the new policies would be prohibitive for project developers.
“We rely on private investment in order to deliver this absolutely strategically important and economically fundamental infrastructure,” Commissioner James Danly said. “Private investment is impossible when the investors are unable to assess risk premiums, and uncertainty is what drives risk premiums up. The uncertainty that is caused by these pipelines certificate policy statements is profound.”
The new FERC policies stand among a suite of regulatory proposals Democrats and agencies, including Interior, the Securities and Exchange Commission, and the Treasury Department are pursuing to counter climate change beyond what would be authorized by Biden’s legislative agenda.
MANCHIN — ‘THE SPENDING IS GOING TO BE CLIMATE’: Joe Manchin is keeping Democratic hopes alive for a climate bill with comments yesterday outlining a deal on reconciliation that would trade revenue-raising measures for spending.
“If you do that, the revenue producing [measures] would be taxes and drugs. The spending is going to be climate,” the West Virginian said yesterday in comments reported by Politico. “Drugs” would be provisions regulating prescription drug prices.
Manchin’s floated versions of similar deals before after killing the $2.4 trillion Build Back Better legislative package. The deal would entail the rest of the party giving up on all the other big-ticket items they’d hope to pass via reconciliation. They “know where I am. They just basically think that I’m going to change,” Manchin said.
The Rundown
Politico Putin withstood sanctions before. The West came back with a better plan.
E&E News War threatens supply of ‘green’ aluminum for cars, beer cans
Washington Post U.N. adopts historic resolution aimed at ending plastic pollution
Calendar
THURSDAY | MARCH 3
10:00 am The Senate Energy and Natural Resources Committee will hold a hearing to review FERC’s recent guidance on permitting construction and operation of interstate natural gas pipelines and other natural gas infrastructure projects.
FRIDAY| MARCH 4
11:00 a.m. The Wilson Center hosts a book launch for “Partial Hegemony: Oil Politics and International Order” by Dr. Jeff Colgan, which unpacks the role that oil politics has played in the world order. The event will include remarks from BP chief of international affairs Robert Scher, and Elizabeth Saunders, a professor at Georgetown University’s School of Foreign Service. Register here.
