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A ‘SMOKESTACK ECONOMY’ FOR NOW: China’s five-year plan released last night offers an early look at whether the world’s largest emitter is serious about getting on a path to reach its eye-popping new goal of reaching carbon neutrality by 2060.
The early returns are underwhelming, as China provided no evidence it plans to reduce its fossil fuel use anytime soon, most importantly coal.
In the next five years, emissions can keep growing in China. There is no absolute cap on carbon emissions by 2025, meaning China for now is not going beyond a pledge it first committed to in 2015 to reach peak emissions before 2030.
“How they plan to get from the peak emissions in 2030 to carbon neutrality in 2060 remains to be a mystery,” Jane Nakano, senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies, told Josh.
China’s long-term goal remains a fantasy until proven otherwise, China-watchers say.
“Without a near-term peak in emissions, it’s hard to understand how China gets to climate neutrality by mid-century,” Kelly Sims Gallagher, who directs the Climate Policy Lab at The Fletcher School at Tufts University, told Josh.
Drilling down on specifics: Lauri Myllyvirta, lead analyst at the Center for Research on Energy and Clean Air, sees a picture of “very gradual progress” set by China.
Over the next five years, China aims to lower energy intensity by 13.5% and carbon emissions intensity by 18%, measures of energy use and emissions relative to GDP.
But carbon intensity already fell by 18.8% from 2015 to 2020, so the new target aims for essentially the same pace of the past.
“The central contradiction between expanding the smokestack economy and promoting green growth appears unresolved,” Myllyvirta wrote in an analysis of the plan.
Is there any good news? Well, China did vow to increase its share of energy from non-fossil fuels to 20% by 2025, up from 15.9% in 2020, according to Myllyvirta.
It also increased its target for nuclear power, shooting for 70 gigawatts in five years from 52 GW currently. No specific targets were set for wind, solar, hydro, coal or other energy sources, though President Xi Jinping previously announced a wind and solar capacity target of 1,200 GW by 2030.
What about coal? The plan also left unanswered the most critical question facing China — its plans for coal. It did not mention a ban on new coal projects. Myllyvirta notes the China Coal Association has indicated coal consumption could finally peak before 2025, but any official details on that would come in an additional energy sector five-year plan expected later this year.
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.
BIDEN’S LEASING FREEZE CHALLENGES DEMOCRATIC GOVERNORS: The Democratic governors of New Mexico and Louisiana, two of the states with the most oil and gas drilling on federal lands and waters, are using much different strategies to cope with President Biden’s leasing pause, Josh reports for a story posted this morning.
Gov. Michelle Lujan Grisham of New Mexico has chosen to accommodate, rather than fight, the leasing pause, forgoing a promise during the 2020 presidential campaign to seek a waiver exempting her state from such a policy. It’s a risky bet.
“When you have to represent the entire state and 45% of the budget comes from oil and gas, and the majority pays for education, there is a lot going on to consider,” said Rep. Angelica Rubio, a Democrat in the state’s House of Representatives.
Another Democratic governor, John Bel Edwards of Louisiana, is responding to a similar fix more forcefully as he looks to stave off Biden’s orders, which also pause oil and gas leasing in federal waters in the Gulf of Mexico. He’s argued Biden’s orders could disrupt his efforts to combat sea level rise by stripping millions of dollars that Louisiana uses from offshore drilling to pay for coastal restoration projects.
Why the different approaches? The Democratic governors’ political incentives aren’t the same.
In a state that’s moved purple, New Mexico’s Lujan Grisham faces pressure from a wave of liberals elected to the state Legislature, including Rubio, who refused to take campaign donations from the fossil fuel industry.
“If we are still reliant on oil and gas revenue, I trust New Mexico voters to elect a different leader,” said Rebecca Sobel, a senior climate and energy campaigner at WildEarth Guardian.
Louisiana’s Edwards, meanwhile, is a conservative Democrat in a safely red state.
“The fact he is a pro-life, pro-Second Amendment, pro-oil and gas Democrat makes him somewhat of a unicorn,” said GOP Rep. Garret Graves of Louisiana.
MURKOWSKI’S GRIPES WITH BIDEN’S ENERGY MOVES: Sen. Lisa Murkowski of Alaska criticized Biden today over his executive orders implicating her state, a large producer of oil on federal lands, and said the president is breaking from his promise of unity.
“It’s substantive and direct when you have a series of executive orders that really threaten our ability to engage in any level of resource development,” Murkowski said in an appearance at the energy industry conference CERAWeek by IHS Markit, adding there was a better way for Biden to start off if “the goal was unity.”
Murkowski’s comments suggest she won’t be a blank check as Biden looks to her as one of the few Republicans willing to cross the aisle on his legislative agenda.
Just yesterday, Murkowski delivered the key vote enabling Biden’s Interior secretary nominee Deb Haaland to advance through the Energy Committee on a bipartisan basis.
Skeptical of Biden’s transition plans: Recounting discussions she’s had with the Biden team, Murkowski said Energy Secretary Jennifer Granholm has argued she could create jobs in clean energy manufacturing to help offset lost fossil fuel work.
Murkowski, however, said that’s unrealistic in a rural, remote state like Alaska known for its extractive industries.
“You can do that in certain areas better than others,” Murkowski said. “In order for those manufacturing states to be able to have something to manufacture you need the base resource. That is what states like Alaska can provide.”
She also said Biden’s leasing pause has immediate impact in Alaska’s North Slope, even if it doesn’t prove to be permanent, since most oil exploration occurs in the winter, when the land is more solid and easier to traverse without disturbing the environment.
“A temporary delay puts us out of season,” Murkowski said.
FERC’S GLICK VOWS TO AVOID ‘MISTAKES’ FROM LAST TEXAS GRID REPORT: FERC Democratic Chairman Richard Glick vowed yesterday to avoid mistakes that led to Texas not following recommendations from a report by federal regulators in 2011 advising the state to winterize its energy system.
FERC and NERC are at work on a new report on the power grid failures that occurred in Texas and other states during the recent cold snap, which Glick said he hopes to be finished by the end of the summer.
“It’s disturbing it didn’t turn into action,” Glick said at CERAWeek, referring to the 2011 report by FERC and NERC after a similar, less severe cold weather event. “We need to make sure we don’t make the same mistake this time.”
Ideas for grid modernization: Glick said a new FERC proceeding on grid resilience he opened last month is intended to “revisit the way we consider reliability” to focus on the risks of climate change and worsening extreme weather.
He noted that had Texas built more energy storage into its system, it could have “alleviated” the shutdown of some generating facilities that were unable to access natural gas because of frozen equipment at production sites. Glick also touted building more transmission lines as a way to enable reliability, and reiterated his interest in exploring ways that FERC can incentivize companies to develop them.
ENERGY DEPARTMENT PRESSES ON INNOVATION: The Energy Department yesterday announced $115 million in funding for small businesses pursuing clean energy R&D projects, including grid modernization, carbon removal, renewables, and energy storage.
“Through this program, DOE can support small businesses with seed money they desperately need to develop and deploy cutting-edge clean energy solutions that will help America fight climate change and create jobs,” Granholm said.
The announcement signals the Biden administration is fulfilling its pledge to pursue innovation policy with an “all of the above” approach to the types of zero-carbon technologies needed to reach its emissions goals.
Related: David Turk, Biden’s nominee to be Granholm’s deputy at DOE, declared at his confirmation hearing yesterday that he is a “firm believer” in innovation. He assured Republicans on the Energy Committee that he is committed to advancing growth in technologies such as carbon capture. “We need to have that full assortment of tools for the toolbelt,” Turk said. “I am a firm believer that energy is good. It’s emissions that are the challenge.”
GOLDMAN SACHS BECOMES LATEST BANK TO COMMIT TO NET-ZERO: The bank said yesterday it is aligning its financing activities with a net-zero emissions by 2050 pathway, becoming the latest big U.S. bank to raise its climate goals in recent months.
Goldman Sachs pledged to unveil interim climate targets by the end of this year, after reviewing its activities and taking steps to “enhance” its climate disclosures. The bank also set a new target to reach net-zero carbon emissions across its supply chain by 2030.
The new commitments from Goldman Sachs follow similar pledges from Citigroup earlier this week. JP Morgan, Morgan Stanley, and Bank of America have also all made commitments to strive to net-zero emissions across their investment portfolios by midcentury, while Wells Fargo remains a holdout.
SEC CREATES NEW CLIMATE TASK FORCE: The Securities and Exchange Commission announced a new task force within its enforcement division focused on climate and environmental, social, and governance (or ESG) issues that will seek to identify gaps or misstatements from companies disclosing their climate risks.
“Climate risks and sustainability are critical issues for the investing public and our capital markets,” said Allison Herren Lee, the SEC’s acting chair, in a statement. Kelly Gibson, acting deputy director of enforcement, will lead the task force, which will include 22 members across the agency.
The new task force in the latest in a series of actions the SEC has taken recently to bolster its focus on climate risk disclosures. Earlier this week, Lee suggested in remarks to CERAWeek that she’ll push to require companies to disclose their greenhouse gas emissions and the risks their business faces both from climate change effects and policies to curb emissions.
Last week, Lee directed the SEC’s Division of Corporation Finance to review whether and how companies are complying with 2010 guidance on climate-related disclosure. Many environmentalists and sustainable investment groups anticipate that forthcoming review would lead to mandatory disclosure requirements.
RELATED… DEMOCRATS SEEK TO BOOST GOVERNMENT ATTENTION TO CLIMATE RISK: Legislation introduced yesterday by Rep. Sean Casten of Illinois and Sen. Diane Feinstein of California would build out the federal government’s capacity to assess the risks climate change poses to the financial system, including by establishing a permanent committee of climate experts on the Financial Stability Oversight Council.
CHEVRON AND MICROSOFT PARTNER ON CARBON REMOVAL PROJECT: The oil major and tech giant, along with Schlumberger and Clean Energy Systems, unveiled plans yesterday to work on a project that will burn agricultural waste biomass for power, while capturing and storing nearly all of the carbon emitted through that process.
The companies say the project, located in California, would remove around 300,000 tons of carbon dioxide each year when completed. A final investment decision on the project is expected next year, according to a news release.
NEW DEEP SEA MINERALS VENTURE: Sustainable Opportunities Acquisition Corporation, a special purpose acquisition company focused on environmental issues, has acquired DeepGreen Metals to boost the company’s efforts to mine critical minerals used in electric car batteries from the Pacific Ocean floor. The newly acquired company was renamed The Metals Company.
DeepGreen Metals and its subsidiaries hold exploration contracts for mineral resources on the seafloor estimated to be enough to help power 280 million electric cars, according to a news release.
“The reality is that the clean energy transition is not possible without taking billions of tons of metal from the planet,” said Gerard Barron, DeepGreen chairman and CEO. “Seafloor nodules offer a way to dramatically reduce the environmental bill of this extraction.”
Scientists, however, have said mining the deep seabed could cause irreversible damage to ocean ecosystems, raising questions as to whether the seafloor’s wealth of critical minerals is worth the risk.
WHITE HOUSE ADDS TO CLIMATE STAFF: Philip Giudice has joined the Domestic Policy Council as a special assistant to the president for climate policy, the White House announced this morning.
Giudice has held a variety of state-level energy posts, including undersecretary of energy in Massachusetts and treasurer and vice chair of the Regional Greenhouse Gas Initiative. He has also served on Energy Department and EPA advisory boards focused on energy efficiency and renewable energy policies.
The Rundown
Wall Street Journal Wind power was thriving in Texas. Then came the freeze.
Bloomberg Texas watchdog says grid operator made $16 billion error
E&E News Biden’s promise to unions: ‘I’m all for natural gas’
Politico Granholm: DOE’s big clean energy spending to come with strings attached
Calendar
TUESDAY | MARCH 9
12 p.m. The House Natural Resources Committee’s energy and mineral resources subcommittee will hold a remote hearing on fossil fuel industry reform bills.
WEDNESDAY | MARCH 10
10 a.m. G-50 Dirksen. The Senate Environment and Public Works Committee will hold a hearing titled, “Building Back Better: Addressing Climate Change in the Electricity Sector and Fostering Economic Growth.”
10:30 a.m. The House Energy and Commerce Committee’s oversight and investigations subcommittee will hold a remote hearing titled, “The Path Forward: Restoring the Vital Mission of EPA.”
THURSDAY | MARCH 11
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine the reliability, resiliency, and affordability of electric service in the United States amid the changing energy mix and extreme weather events.
