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GOP SPR LEGISLATION: Republicans are pushing companion bills in the House and Senate this week that would put new strictures on the use of the Strategic Petroleum Reserve.
The GOP effort gets at two of the party’s objections to President Joe Biden’s energy policy in his utilization of the SPR to reduce fuel prices and his administration’s policies restricting new leasing for oil and gas.
Both bills would effectively prohibit the secretary of energy from opening the reserve, except in the case of a presidentially determined severe energy supply interruption, until the secretary of the interior issues a plan to increase oil and gas production on federal lands and in federal waters.
The House will begin consideration of the Strategic Production Response Act, Energy and Commerce Chair Cathy McMorris Rodgers’ version, tomorrow and vote on it Friday, according to a House source.
Why is Granholm complaining about this: Energy Secretary Jennifer Granholm said this week the administration opposes the Republican effort because it would crimp its ability to draw down reserve oil “quickly.”
Officials said repeatedly throughout the year, including after Biden’s March 31 announcement that approximately 180 barrels would be released, that it may turn to the reserve again, although its focus has turned to refilling the reserve.
The big exception: Republicans have been arguing the high oil prices that began rising before the war in Ukraine began, but which accelerated thereafter, were driven not by a proper supply interruption but by factors other than the war, including Biden’s energy policies.
Neither GOP bill would amend the definition of a “severe energy supply interruption,” the requisite for emergency drawdowns as provided by the Energy Policy and Conservation Act.
This is worth noting because the Republican proposals ostensibly would block Biden from again going the route he did with his inaugural gas price-related SPR drawdown before the war began unless the administration produces a compensating production plan, but would not stop Biden from ordering another emergency drawdown from the reserve as he did after the war began. (Senior Republican Energy and Commerce Committee officials have debated this, however, telling reporters on a recent call that they believe Biden has been ambiguous as to which authority he relied on in ordering the 180 million barrel release, and “didn’t identify a severe supply interruption as required by the law.”)
Unambiguously, the administration would be required to open more federal lands for drilling either way.
Biden’s orders: Biden’s price-related SPR releases began in November 2021 when he announced that up to 50 million barrels would be made available. Some were released on exchange while the rest were drawn down on order from Congress, both of which are procedures that would be subjected to the GOP oil and gas production plan to move forward.
The lion’s share of barrels to be released were ordered drawn down after Biden found a severe supply interruption to exist.
One more thing to note: Congress in December, at the request of the Department of Energy which said it shouldn’t be drawing down barrels while it’s trying to refill the reserve, canceled congressionally mandated SPR sales for fiscal years 2024-2027, but it left the administration on the hook for the scheduled sale of 26 million barrels by the end of this fiscal year.
Officials reportedly also want this obligation canceled.
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MANCHIN PUSHING ON ELECTRIC VEHICLE RULES: Sen. Joe Manchin introduced legislation this morning to stop the issuance of consumer clean vehicle tax credits for any models that don’t meet the Inflation Reduction Act’s battery requirements.
The bill would prohibit the Treasury Department from giving out credits to vehicles that don’t meet the requirements by striking language in the law tying the applicability of the requirements to the issuance of guidance from the Treasury, which has yet to be published. It follows up on a promise Manchin made in December to introduce legislation that “further clarifies the original intent of the law.”
Treasury has stressed in multiple communications that the battery requirements don’t take effect until it issues guidance, while other changes to the law, including the North American assembly requirement, have taken effect. The department intends to issue proposed guidance on the battery requirements in March.
The bill would apply retroactively to Jan. 1, according to a Democratic Energy and Natural Resources Committee aide, which was the intended date for the battery component and critical mineral requirements, Manchin has said.
Manchin’s bill reflects the troubled implementation of the revamped consumer tax credit, which he’s felt compelled to revisit just five months after it became law. Beyond his concerns, Democrats are counting on the credit to boost EV demand, but it also remains the subject of strong opposition from trade partners.
Not his only problem: Manchin opposed earlier versions of the EV tax credit rewrite during the days of Build Back Better because said he didn’t want to strengthen competitors’ advantage in the sector, especially China’s, and he’s pushing for a strict application of the law’s requirements in opposition to trade partners’ request for liberalization of the standards.
His bill does not touch on the Inflation Reduction Act’s separate commercial clean vehicle credit, a subsidy Manchin warned could become a “loophole” (depending on how it’s implemented) that manufacturers seek to utilize to sell their vehicles rather than move their operations to comply with the assembly and battery requirements.
…Meanwhile, Treasury Secretary Janet Yellen said in an interview yesterday that she expects Japan and the EU will need to negotiate new trade agreements with the U.S. in order to qualify for the consumer EV tax credits included in the law.
In a white paper published last month, the Treasury Department said Congress failed to define what constitutes a free-trade agreement under the Inflation Reduction Act, prompting it to set the aforementioned March 1 deadline to issue new guidance. The delay had heartened some European and Asian leaders, who suggested that the Treasury’s lack of a formal definition meant the EU and Japan could be considered as having met the definition.
But Yellen dismissed that idea.
“We don’t have something with Europe and Japan that we consider right now to be a free-trade area, but we could negotiate an agreement,” Yellen told the Wall Street Journal. “For example, there could be some agreement that has to do with trade in minerals and critical minerals and so forth.”
U.S. GRANTS LICENSE TO TRINIDAD AND TOBAGO TO DEVELOP VENEZUELA OFFSHORE GAS FIELD: The Biden administration granted a license to Trinidad and Tobago to develop a major offshore gas field located in Venezuelan territorial waters, officials said, marking a further easing of some U.S. sanctions in the country and helping offset the Caribbean’s reliance on other countries for energy supplies.
The license, issued by the Treasury Department at the request of the island nation, will grant it access to an estimated 350 million cubic feet of gas per day, and will allow it to do business with the Dragon gas field alongside PDVSA, Venezuela’s heavily sanctioned state-owned oil company.
Trinidad and Tobago Prime Minister Keith Rowley said he applied for the license mid-2022. One U.S. official described the decision to Reuters as the result of intense diplomacy between Vice President Kamala Harris and Caribbean leaders to help offset the region’s dependence on other energy suppliers, including Russia.
The U.S. official added that “the Maduro regime will not be permitted to receive any cash payments from this project” and stressed that all remaining U.S. sanctions would be unchanged and enforced. Read more on the effort here.
HOUSE DEMOCRATS LAUNCH GREEN INVESTMENT CAUCUS: Democratic Reps. Sean Casten and Juan Vargas are launching a new Congressional Sustainable Investment Caucus today.
The caucus will be a forum for members to hear from experts in order to better understand sustainable investing and “inform policy making that provides investor protections and transparency of information to market participants,” according to an announcement.
Casten, before he was elected to Congress, was himself a clean energy consultant and served as chief executive of an energy waste recycling company.
TESLA TO INVEST $3.6 BILLION TO EXPAND NEVADA GIGAFACTORY: Tesla announced yesterday that it is preparing to invest $3.6 billion to expand its “Gigafactory” plant in Nevada, including the hiring of an additional 3,000 workers, as it seeks to ramp up production and meet its goals of selling 20 million new vehicles per year by 2030.
According to a statement from the EV maker, the investment will include the construction of two new factories at the sprawling Nevada facility. One is a battery manufacturing facility tasked with production of batteries for its light-duty vehicles, while the other will be the first high-volume production facility for Tesla’s Semi, its fully electric combination truck that finally began deliveries last month after years of delay.
On Twitter, Tesla said the investment will add an estimated four million square feet to its manufacturing footprint at the Nevada facility. Read more on the planned expansion here.
The Rundown
Bloomberg A class-action wave is coming for ESG claims
New York Times The Sierra Club tries to move past John Muir, George Floyd and #MeToo
Washington Post Dead whales and tough economics bedevil Biden’s massive wind energy push
Calendar
WEDNESDAY | JANUARY 25
2:00 p.m. Brookings Institution. The Brookings Institute will host an event exploring ways to accelerate federal, state, and local investments in the U.S. infrastructure workforce. Register to attend in-person or watch online here.
