Daily on Energy: Biden infrastructure plans fall short of marker set by left wing

Biden’s proposal, by contrast, would spend $60 billion to green public transit, according to the Washington Post numbers.

“At this point, Biden should realize that if his proposal is milder than what Joe Manchin is calling for, it does not go far enough,” said Ellen Sciales, press secretary of the youth climate group the Sunrise Movement, noting that Manchin has called for spending $4 trillion on infrastructure.

With the infrastructure bill serving as Biden’s first big legislative initiative on climate change, we’re expecting a fierce push from left-wing activists and lawmakers for the Biden administration to go bigger and more aggressive.

Ocasio-Cortez said that she is encouraged by the outline of Biden’s plans so far, but didn’t outright endorse it.

“One of the big goals we had when we introduced the Green New Deal was to show how people thought about climate change from being a billion dollar problem to a trillion-dollar opportunity,” she told the New York Times. “This infrastructure package generally seems to be shaping up in that kind of framework.”

But Biden will be balancing multiple constituencies: A $3 trillion package would already be orders of magnitude greater than the recovery package the Obama administration put together in 2009, and Republicans will be wary of more massive spending bills, especially after Democrats jammed the $1.9 trillion relief package through with budget reconciliation.

Centrist Democrats, including Manchin, have already indicated they oppose using reconciliation again and Republicans have accused Biden of abandoning the bipartisan approach he was known for as a senator.

Republicans might support the broad outlines of the reported clean energy provisions, especially on R&D, which look similar to a bipartisan clean energy innovation package that Congress passed with the year-end spending bill last year.

But process matters, and will shape the ultimate scope of the package.

“We all hate potholes and we all want fast internet, and reliable, non-polluting energy grids,” Heather Reams, executive director of the conservative group Citizens for Responsible Energy Solutions, told us. ”The Administration and Congress would be wise to give all Americans a voice, and a stake in making that a reality.”

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.

HAPPENING NOW: Nuclear energy is the “key” to making the Biden administration’s carbon reduction targets work, said Maria Korsnick, the CEO of the Nuclear Energy Institute, at the opening of the group’s annual state of the industry event this afternoon.

“Nuclear is the carbon-free source that will make our carbon plans work,” Korsnick said.

Korsnick touted nuclear as the nation’s largest zero-carbon power source, surpassing coal for second place overall last year, and expressed bullishness on the new class of advanced reactors under development.

She called on countries to make specific commitments to develop advanced reactors as part of their emissions reduction plans, and urged the Biden administration to include policies to help nuclear as part of its infrastructure package.

Korsnick also claimed the skills of fossil fuel workers could be easily transferable to the nuclear industry, and said policymakers should provide a “special incentive” for developing advanced reactors in “coal country.”

TAKE-AWAYS FROM OIL INDUSTRY MEETING WITH MCCARTHY: Executives from big oil companies reiterated their compromise negotiating position in a meeting with Biden climate adviser Gina McCarthy, expressing support for putting a price on carbon on imposing federal regulation of methane.

A carbon price, at least initially, could benefit natural gas by pricing coal out of the market.

“An economy-wide price on carbon should allow all resources to compete to reduce carbon and other harmful emissions in a way that doesn’t disadvantage oil and gas producers,” Dan Eberhart, CEO of oil services company Canary and a Republican donor, told Josh.

“A carbon price mechanism can be designed to incentivize companies to invest in low-carbon technologies,” added Eberhart, who was not in the meeting.

The White House and the oil industry described the meeting as cooperative, with areas of common ground discussed including investing in carbon capture technology, but it’s too early to read into that now.

McCarthy “made clear that the Administration is not fighting the oil and gas sector, but fighting to create union jobs, deploy emission reduction technologies, strengthen American manufacturing, and fuel the American economy,” the White House said in a readout of the meeting.

Devil is in the details, as always: It’s one thing for oil and gas companies to broadly support carbon pricing as an alternative to policies they consider more harmful, like sector-by-sector mandates, without a specific details on the table (how high is the price, for example, and what happens to the revenue?).

And it’s unclear what degree of methane regulation industry supports.

“Time will tell if industry support is any more than the political theater of the moment,” Ben Ratner, senior director with the Environmental Defense Fund+Business, told Josh. “It’s one thing to support a concept and quite another to support a bill.”

Industry officials told Josh that companies that have already expressed support for pricing carbon led the charge on that during the meeting, including executives from BP and Shell. Leaders of oil and gas lobbying groups such as the American Petroleum Institute did not explicitly endorse carbon pricing in the meeting, even though that group is considering doing so.

“We are committed to working with the White House to develop effective government policies that help meet the ambitions of the Paris Agreement and support a cleaner future,” said API CEO Mike Sommers in a statement.

Spokespeople for U.S. oil majors Chevron and ExxonMobil, whose CEOs also participated in the meeting, directed Josh to their previous statements broadly supporting carbon pricing.

LONG-TERM CLEAN ENERGY INCENTIVES SLASH POWER EMISSIONS: A big clean energy spending package that includes 10-year, technology-neutral tax credits for clean energy, an extension of tax credits for carbon capture, and incentives to retire existing coal and retain existing nuclear could slash power sector emissions down to at least 66% below 2005 levels, the Rhodium Group finds in new research released this morning.

“A well-crafted spending package can really make more than a downpayment on cutting emissions in the U.S. power sector,” said John Larsen, a lead author on the report and director of Rhodium’s U.S. power sector research. Larsen told Abby he and his team were surprised at how much of a dent such a spending package could make in emissions, given smaller extensions of clean energy tax credits didn’t produce such large effects.

For example, Rhodium found that a climate proposal from House Ways and Means Democrats that offers extensions of only a couple years for wind, solar, and carbon capture tax credits would see almost no change in greenhouse gas emissions through 2026 and only small reductions by 2031.

What’s in the spending package Rhodium modeled: Rhodium’s proposal would fully fund clean energy tax credits, extend them for 10 years, and make them technology-neutral, meaning fossil fuel plants with carbon capture could also earn the credit. Clean energy developers would also be able to choose whether they want to earn the production tax credit or the investment tax credit.

The investment package would extend the deadline for carbon capture tax credits out to 2031. It would also offer a boost to existing nuclear plants, the largest zero-carbon energy source in the U.S. right now, similar to a bipartisan proposal last Congress from Sens. John Barrasso and Sheldon Whitehouse.

Larsen said keeping a significant amount of existing nuclear plants online is critical to driving emissions down. Without the support for existing nuclear in the proposed investment package, emissions would be roughly 200 million metric tons higher, he added.

The last piece of Rhodium’s proposed investment package would offer incentives to rural cooperatives to help them retire their coal plants.

The investment package doesn’t get to carbon-free power, though: Paired with greenhouse gas regulations for power plants, Rhodium finds power sector emissions could fall as low as 69% to 76% by 2031. The Biden administration and lawmakers will need to look at other policies, however, such as a carbon price or a clean electricity standard, to get all the way to 100%.

KERRY TO TEST WATERS WITH CHINA? Biden climate envoy John Kerry got his first chance today to test his chemistry with his Chinese counterpart, Xie Zhenhua, during a virtual climate conference.

Kerry and Xie both appeared at the Ministerial on Climate Action, an annual meeting of major economies that China, the EU, and Canada set up after the Trump administration removed the U.S. from the Paris Agreement.

There was no one-on-one scheduled between Kerry and Xie, Politico reported, but there might have been cross-talk between them (a State Department read-out of Kerry’s remarks did not mention China).

Xie led China in global climate negotiations from 2007 and 2018, a period that included talks with Kerry when he was secretary of state in the Obama administration that set the table for the Paris Agreement.

What to watch for: U.S.-China relations are off to a rough start after a tense meeting between diplomats in Alaska last week, where climate was discussed but details were murky.

The Biden administration is pushing for China to offer stronger emissions reductions commitments for 2030, ahead of a climate summit meeting the U.S. is hosting next month.

REPUBLICANS CHIDE INTERIOR OVER LEASING FORUM: Senate Republicans say the Interior Department is not giving voice to governors from fossil fuel states as part of a forum the agency will hold Thursday to discuss the future of the oil and gas leasing program.

In a letter to Interior Secretary Deb Haaland, Republicans on the Senate Energy Committee accused the agency of “intentionally” limiting the “right for the public to participate, including state-wide elected officials, namely the governors of our states.”

The senators, led by Barrasso, accuse Interior of overstating the emissions associated with fossil fuel extraction on public lands.

They also take exception to Interior’s characterization that the oil and gas industry has been “stockpiling” permit approvals for existing leases, and thus has little demand for new leases.

They argue there’s still a need for new leases.

“A reliable and consistent federal leasing and permitting process would result in increased production on leased federal acreage,” the Republican senators wrote.

Interior’s forum is set to include the perspective of the oil and gas industry. Among the scheduled speakers are representatives from the American Petroleum Institute and National Ocean Industries Association, along with officials from unions, tribal, and environmental groups.

CALL IT A COMEBACK…SORT OF: Oil and gas drilling activity across the globe is set for two consecutive years of growth as demand for fuels recovers, the research group Rystad Energy projects in a new analysis this morning.

Rystad expects around 54,000 wells to be drilled worldwide in 2021, a 12% increase from 2020 levels. In 2022, drilling will increase even more, by another 19% year-on-year to about 64,500 wells.

But that growth still lags the amount of drilling activity pre-pandemic, which reached 73,000 wells in 2019.

Also, the biggest drivers of growth over the next two years will be the Middle East and offshore in South America, in contrast to previous recoveries when the U.S shale industry led production growth.

NEW YORK GETS FEDERAL $ FOR CLEAN ENERGY JOB TRAINING: The Treasury and Labor departments announced yesterday they are awarding up to $8.2 million to the New York State Energy Research and Development Authority for clean energy job training as the first stint of funding through the Social Impact Partnership to Pay for Results Act, a provision of the 2018 bipartisan spending bill.

The Rundown

Washington Post Biden faces ‘moment of truth’ as he weighs key U.S. climate promise

Politico White House yanks Interior nominee after Murkowski opposition

Bloomberg Russia wants to use a forest bigger than India to offset carbon

E&E News Biden’s climate deputy has fossil fuel ties

Wall Street Journal Are electric vehicles really better for the environment?

Calendar

WEDNESDAY | MARCH 24

9:30 a.m. G50 Dirksen. The Senate Environment Committee will hold a business meeting to consider the nominations of Brenda Mallory to be chair of the White House Council on Environmental Quality and Janet McCabe to be deputy EPA administrator.

11:30 a.m. The House Energy and Commerce Committee’s subcommittee on oversight and investigations will hold a virtual hearing titled, “Power Struggle: Examining the 2021 Texas Grid Failure.”

12 p.m. The American Conservation Coalition will hold a virtual event with Sen. Steve Daines titled “Stand Up for Sportsmen.”

2 p.m. The House Energy and Commerce Committee’s subcommittee on energy will hold a legislative hearing on the CLEAN Future Act.

THURSDAY | MARCH 25

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine ways to maintain and expand the use of nuclear energy in the United States and abroad.

1:30 p.m. RENEWPR will hold a virtual event titled “The Business Perspective on Decarbonization Policies,” featuring remarks from three CEOs.

MONDAY | MARCH 31

12 p.m. CRES Forum will hold a virtual event titled “Driving Innovation: How can private and public sectors speed EV deployment.”