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TRYING TO GET MANCHIN ON BOARD: The White House this week made it known that it is seeking to accommodate key vote Sen. Joe Manchin in pursuing Democrats’ signature climate policy.
According to reports in Politico and the Washington Post, the Biden administration and Democrats in Congress are willing to make it easier for coal and natural gas plants equipped with carbon capture technology to receive payments under the “Clean Electricity Performance Program,” or CEPP.
That would enable Manchin to assuage his constituents in coal and gas-dependent West Virginia that the program won’t accelerate the demise of fossil fuels too fast.
In its current form, the legislation would require utilities to meet a carbon intensity of 0.10 metric tons of CO2e/MWh to qualify for federal subsidies — such a low level of emissions that perhaps some carbon capture gas plants could make the cut, but certainly not coal.
An outside adviser close to the negotiations confirmed to Josh that Democrats could raise that carbon intensity level, perhaps to 0.17 or 0.20 CO2e/MWh.
But it seems unlikely that’s enough: But, based on speaking with various sources over the last two days, it seems unlikely that would be enough to get Manchin on board.
“My sense is that raising the emissions factor to permit CCS projects to qualify is necessary but not sufficient to earn Manchin’s support,” Sam Thernstrom, Founder and CEO of the Energy Innovation Reform Project, told Josh.
Manchin wants unabated natural gas, meaning existing plants without carbon capture, to receive credit, at least in the early years of the program until renewables are more widely deployed.
Progressives, however, have been clear that natural gas is not a clean energy source and can’t be counted as one.
Liberals would also resist any effort by Manchin to remove the “stick” provision of the program that penalizes utilities that fail to increase the amount of clean electricity they supply by a certain amount per year (the current version sets a 4% clean energy threshold).
“If you take away the stick, you are never going to shut down the coal in West Virginia,” Rep. Sean Casten, an Illinois Democrat, told Josh and co-host Neil Chatterjee for a new episode of the “Plugged In” podcast dropping next Tuesday (stay tuned!).
“That is a good thing to do if you don’t give a rat’s ass about climate,” Casten added. “It’s not scientifically informed.”
Casten, who is skeptical of the financial viability of carbon capture for power plants, said he would nonetheless support more broadly crediting carbon capture as part of CEPP if “it persuades people to sign on.”
Another issue reportedly weighing on Manchin is the current energy crunch, with higher oil and gas prices and natural gas shortages making it trickier for him to support a policy to accelerate the move off fossil fuels.
“We are in the middle of an energy crisis,” Manchin recently told his colleagues, according to CNN.
Activists supporting the CEPP program as central to meeting President Joe Biden’s emissions reduction goals say the fact Democrats are trying to accommodate Manchin’s concerns is a positive signal that he is interested in negotiating.
“It’s great news these discussions are even happening,” Jamal Raad, executive director of Evergreen Action, a group with ties to the White House, told Josh. “It’s a positive development they are trying to come to a solution on this.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Jeremy Beaman (@jeremywbeaman). 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 ROADMAP TO TACKLE ‘SYSTEMIC’ CLIMATE RISK: The Biden administration this morning released a government-wide strategy to mitigate the risks climate change poses to the economy, declaring global warming to present a “systemic” risk to the U.S. financial system.
The strategy essentially promotes various efforts already taken or underway at various agencies and paves the way for potential regulation down the road.
These include:
*Labor Department plans announced this week to allow retirement fund managers to consider climate-related risks.
*A process, also started this week, to amend federal procurement regulations to require agencies to consider a supplier’s greenhouse gas emissions when making purchasing decisions and to favor low-carbon products.
*FEMA is weighing a revision to decades-old minimum floodplain management standards to reflect the latest data on flood risk from climate change.
*HUD is beginning to identify options to consider climate risks in issuing federally-backed mortgages.
*The White House says Biden’s next budget proposal to Congress will include an assessment of the federal government’s climate risk exposure and the effect of global warming on the nation’s long-term budget outlook.
“Few governments have undertaken anything like this,” White House climate adviser Gina McCarthy told reporters on a call last night. “President Biden really understands climate change is fundamentally a problem of how we protect people, their paychecks and their prosperity. This is essentially a people problem. And money matters.”
Next up: The Financial Stability Oversight Council is expected to release a report as soon as Monday detailing recommendations for how regulators can address climate risk through actions such as requiring financial institutions conduct regular “stress tests” measuring their exposure to climate-related risks and setting disclosure rules on companies.
KERRY IS NOW DOWNPLAYING LEGISLATION: Is your head spinning yet? A day after declaring that Congress failing to pass legislation is akin to former President Donald Trump pulling out of the Paris Agreement, climate envoy John Kerry is downplaying potential failure of the reconciliation bill.
“I just think people are miscalculating if they think that the whole thing depends on one piece of legislation,” Kerry told E&E News in an interview posted this morning. “Is it important as legislation? Yes, unequivocally. But it is not the key to Glasgow, it is not the sole determinant of what is going to unfold.”
That language is consistent with the message of McCarthy, Biden’s top domestic climate adviser, who has argued the administration can still meet its goal of cutting emissions in half by 2030 through regulations and other executive actions.
BUT PELOSI VOWS CLIMATE BILL ‘MUST’ GET DONE: House Speaker Nancy Pelosi, like most of her Democratic colleagues in Congress, is declaring the success of the reconciliation bill essential to achieving U.S. and global climate goals.
“This will get done because it must get done,” Pelosi said at an event in San Francisco yesterday, according to Politico.
Pelosi said that regardless of “modifications” made to the bill, “we have to have in there the ability for us to reach our goals in curbing pollution and the rest.”
“Central to [the reconciliation bill] is the climate piece of this,” Pelosi said. “We have no choice but to make this decision … We will have what we need in terms of the climate provisions.”
API ON BIDEN’S ‘BAFFLING’ APPROACH TO OIL PRICES: The oil and gas industry is disenchanted with the Biden administration, not only for its policies targeting the industry but for turning to OPEC for help on high prices rather than calling on domestic producers.
“It’s sort of baffling to see. For generations, we’ve had bipartisan administrations touting the importance of ‘made in America,’ and we have resources in the United States and the technology and capabilities to be able to access those resources that over time has strengthened America’s energy security and made us a leader in oil and gas production and refining,” Frank Macchiarola, the American Petroleum Institute’s senior vice president of policy, told Jeremy.
“This is really the first administration to openly turn its back on that American oil and gas and energy leadership that’s going to have consequences in the marketplace … and ultimately, that’s going to have an effect on the price that people pay at the pump,” he said.
The entire world is seeing high energy prices right now, to be sure. It’s just basic economics, Macchiarola said, and there’s some consensus that the price of oil and gas is not up to a president or his administration but to market forces.
“Stepping back and looking at commodity prices they are primarily a function of supply and demand. We saw that in 2020,” he said.
But an administration can affect those market forces, especially in terms of investment in fossil fuel production, Macchiarola said, pointing to Democratic proposals to increase fees on oil and gas operations, vehicle mandates, and the clean electricity payment program.
“There’s no question that government action can stifle or incentivize market activity, and I think to some degree, you see that here,” he said.
The energy situation is a precarious one overall for Biden, who said he wanted to “transition away” from the oil industry during the campaign — and who paused new oil and gas leases on federal lands and ended the Keystone XL pipeline permit, among other things, to start achieving that. But he finds himself turning back to it for help, as Jeremy wrote for a story this morning.
REPUBLICAN ATTORNEYS GENERAL TARGET METHANE FEE: A coalition of 19 Republican state attorneys general is urging the Senate’s environmental and energy committees to pull back on Democrats’ proposed methane fee for oil and gas producers.
In a letter led by West Virginia Attorney General Patrick Morrisey, the AGs note the higher costs electricity and gasoline consumers are already projected to face through the winter and argue a methane fee would make things worse.
“The proposed tax is neither necessary nor appropriate,” the letter says. “We support reasonable and lawful measures to reduce methane emissions. But a de facto tax administered through an onerous administrative regime is not that.”
The actual effect on oil and gas prices of the proposed methane fee is uncertain and under dispute.
What isn’t disputed: Democrats are aggressively targeting the potent greenhouse gas. The Biden administration has committed the US to reducing methane by 30% by 2030, and a series of nations have agreed to do the same. The administration estimates broad adoption of the pledge would reduce warming by at least 0.2 degrees Celsius by 2050.
NJ DELEGATION ASKS FOR PROTECTION OF STATE’S REFINERS: New Jersey’s mostly Democratic congressional delegation is asking EPA for relief on meeting Renewable Fuel Standard obligations for constituent oil refiners.
In particular, the delegation asks EPA to address the high price of renewable identification numbers — the credit purchase mechanism by which refiners who are unable to independently meet the RFS’s requirements for ethanol-gasoline blending can comply with the standard.
“Since RINs are traded in a marketplace that can be prone to speculation, prices have recently shifted from under ten cents per gallon in 2020 to one dollar and ninety-eight cents per gallon – an increase of over 1800%,” the delegation tells EPA Administrator Michael Regan. “However, the current RFS structure has not increased the amount of ethanol blended into the gasoline supply, even though RINs prices have skyrocketed.”
“Independent refineries report that paying for RINs now exceeds operational costs, and they state they are having to make hard choices such as reducing the workforce and production,” the letter says.
The members emphasize their support for the clean energy transition but say they “must highlight the need to protect against market disruptions that threaten the livelihoods of workers.”
EDF MAPS ORPHAN WELLS: A new Environmental Defense Fund project maps the locations of some 80,000 unsealed but abandoned oil and gas wells across the country, something the Biden administration and the bipartisan REGROW Act seek to remedy through funding for plugging operations.
“These unplugged wells can leak oil and other toxic chemicals, endanger water sources, lower property values and emit methane – a powerful greenhouse gas,” said Adam Peltz, senior attorney for EDF’s Energy program. “This issue has flown under the radar for decades, in part, because the public could not visualize the extent of the problem.”
QUEEN FED UP WITH TOP EMITTERS: Queen Elizabeth says she’s annoyed that countries like China and Russia haven’t committed to participating in the upcoming COP26 climate conference in Glasgow.
“I’ve been hearing all about COP, [we] still don’t know who is coming, no idea,” she said.
“We only know about people who are not coming and it’s really irritating when they talk, but they don’t do.”
Biden has plans to attend the summit alongside multiple of his Cabinet secretaries, including Secretary of State Tony Blinken, Transportation Secretary Pete Buttigieg, Energy Secretary Jennifer Granholm, and Regan.
GLOBAL ENERGY SHORTAGES DENTING EMISSIONS GROWTH: Countries across the globe are experiencing an energy crunch that is stressing reserves and boosting prices. Although the power shortages aren’t expected to translate into deep cuts in emissions, they will get dented, as Jeremy reports in our latest magazine.
The strained electricity supply and steep and rising costs for fossil fuels are already interrupting emissions growth as some countries, especially the No. 1 global emitter, China, turn to electricity rationing to manage shortages.
The Rundown
New York Times As Western oil giants gut production, state-owned companies step up
Reuters China looks to lock in US LNG as energy crunch raises concerns
Bloomberg How the IEA embraced its role as an energy oracle in the climate transition
Calendar
TUESDAY | OCT. 19
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to consider the nominations of Willie Phillips to be a member of the Federal Energy Regulatory Commission, Brad Crabtree to be an Assistant Secretary of Energy for fossil energy and carbon management, and Charles Sams III to be director of the National Park Service.
THURSDAY | OCT. 21
10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee’s Energy Subcommittee will hold a hearing on offshore wind.
