Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what’s going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!
THE INTEREST IN LOWERING NATURAL GAS METHANE EMISSIONS: The rush for gas around the world is accompanied by a corresponding bid to choke off what inevitably comes with it: fugitive and flared methane.
Environmental advocates, the Biden administration, and a good deal many in the oil and gas industry are going after methane as a threat to climate and easy target for cutting emissions — and an economic opportunity.
The story: Europe and the United States have an ever stronger appetite for gas now in light of the war, but governments maintain their decarbonization and renewable energy targets. The European Commission proposed to strengthen them.
Cracking down on methane was also a significant component of the joint U.S.-EU energy task force, which opened the floodgates to new LNG export authorizations and all the rest.
The Biden administration is finalizing new methane regulations for oil and gas sources as we write. EPA also has new authority from the Inflation Reduction Act to charge operators for excess emissions.
Notwithstanding the tightening rules domestically, buyers across the world are going to increasingly demand gas supplies with lower embodied emissions to meet their climate goals, said Matt Watson, vice president of energy transition at the Environmental Defense Fund.
An environment is coming where more and more buyers, being sensitive to the emissions intensity of their gas supply, sign deals or buy spot gas from Source A because it’s cleaner, even if not more economical, than Source B’s gas.
“The global marketplace is going to start to account for methane intensity, and as we look to phase down the use of gas over time … it’s not going to be just the lowest cost producer who’s the last man standing,” Watson told Jeremy. “Companies are going to have to compete on cost and clean.”
A $ opportunity: EPA published a supplement to its methane rulemaking in November, which estimated the value of captured gas spurred by its regs could equal between $3.3 and $4.6 billion from 2023-2035.
The International Energy Agency estimates more than 200 billion cubic meters of gas are leaked, vented, or flared each year. EDF commissioned its own study that found gas capture revenues would be 140% to 240% higher over the next 10 years than pre-war.
EDF has in recent years announced results of multiple surveys in the Permian showing proliferations of methane from oil and gas sources and is within a year of launching a satellite, MethaneSAT, with capability to monitor the rate of emissions over a given area versus only the concentration.
“For us to be in a position we’re in globally with this energy crunch, and for them to be flaring the quantities of that commodity that their flaring, is unconscionable,” Watson said.
What industry’s saying: Companies ranging in size from BP and Chevron to independents such as Occidental Petroleum and Devon Energy have backed direct regulation of methane, as has the American Petroleum Institute (although it and other groups like the American Exploration and Production Council say EPA’s rule as written is unworkable).
The term “low-hanging fruit” is thrown around in discussions about what the sector can do to quickly and relatively easily address emissions. The chief of one midstream operator reduced fugitive emissions to a mere “plumbing problem.”
“We have got to show that methane cannot and will not hold this industry back,” said Alan Armstrong, president and CEO of pipeline company Williams. “That’s not that complicated of a thing.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). 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.
MANCHIN BLOCKS ANOTHER BIDEN NOMINEE IN DANIEL-DAVIS: Laura Daniel-Davis’s nomination for assistant secretary at Interior is going the way of former FERC chairman Richard Glick’s.
Sen. Joe Manchin said in an op-ed published this morning that he isn’t going to advance her through committee and pointed to the recent revelation about what could have been with the Cook Inlet oil and gas lease sale.
It was to Daniel-Davis that BOEM’s memo on Cook Inlet was addressed, and she as principal deputy assistant secretary for Land and Minerals Management signed off on the final decision to go with a higher royalty option, which was deemed to be the better option for the climate, rather than the lower royalty option, which was deemed to be best for serving energy security needs.
All about the IRA: Cook Inlet was of course revived by the Inflation Reduction Act at Manchin’s insistence. He has been disputing the administration’s messaging around the IRA being a climate law, saying instead that it’s a law serving energy security.
Manchin’s beef with implementation of the law now goes beyond the clean vehicle credit and domestic sourcing.
“The fact is that the IRA was and is shaped to achieve one goal — energy security — by utilizing all our nation’s abundant resources,” he said in the op-ed, adding “The Biden administration must begin to implement the IRA that was passed, not the law they wanted but did not get.”
There was some orchestration around it: Manchin took to the Houston Chronicle to share the news about where he stands on Daniel-Davis’s nomination. He’s in Houston today, along with Sen. Lisa Murkowski, to engage at CERAWeek.
RUBIO BILL WOULD THWART VENTURES LIKE FORD-CATL PLANT: Sen. Marco Rubio introduced legislation seeking to cut off Chinese companies from the benefits of electric vehicle subsidies under the Inflation Reduction Act.
Rubio’s bill would give the 30D tax credit for consumer clean vehicle another rewrite to restrict the extension of the credit to technologies associated with foreign entities of concern, including a domestic corporation which “relies on technology provided through a licensing agreement with a foreign entity of concern,” as well as a foreign corporation that “is controlled by, operated by, or under the substantial influence of a foreign entity of concern.”
Ford’s recently announced Michigan battery plant, which it plans to operate alongside Chinese battery giant CATL, is just the kind of thing the bill is designed to thwart. Ford said the IRA helped make the plant possible.
CATL is not owned by the Chinese government but could readily be considered under the influence of a foreign entity of concern in the Chinese Communist Party.
Rubio came out against the Ford plant in February and demanded the Biden administration investigate the commercial deal between the legacy automaker and CATL.
HOUSE VOTES TO CANCEL WOTUS: The House voted 227-198 yesterday for a Congressional Review Act resolution to cancel the Biden administration’s definition of “waters of the United States,” which was finalized at the end of December.
Nine Democrats voted with Republicans: Sanford Bishop and David Scott of Georgia, Jim Costa and Jimmy Panetta of California, Angie Craig of Minnesota, Henry Cuellar and Vicente Gonzalez of Texas, Donald Davis of North Carolina, and Jared Golden of Maine.
In the Senate, Manchin has said he will vote with the GOP on the resolution.
Remember that the congressional action related to the rule comes as the Supreme Court is set to decide whether or not to scale back agencies’ power to regulate water bodies under the Clean Water Act.
GOP ENERGY LEGISLATION GAINS MOMENTUM: House Speaker Kevin McCarthy officially introduced his conference’s major energy legislative package Thursday aimed at countering President Joe Biden’s energy agenda and facilitating fossil fuel production.
The bill is the Lower Energy Costs Act and it is H.R. 1 – a designation usually reserved for the top priority, or at least top messaging bill, of the majority in the new Congress.
A vote is expected during the last week of March after committees moved the energy bills yesterday. The package includes bills meant to speed up the federal permitting process, boost U.S. liquefied natural gas exports, and more generally lower energy costs for people.
Read more from Breanne here.
NORFOLK SOUTHERN AND EPA FACE SCRUTINY IN EAST PALESTINE DERAILMENT: Norfolk Southern CEO Alan Shaw appeared before the Senate Environment and Public Works Committee yesterday where he was grilled for nearly three hours over his company’s response to the East Palestine train derailment. Lawmakers also used the hearing to press for bipartisan rail safety legislation.
But it won’t be the last time Shaw, EPA officials, or even transportation safety officials will be summoned to the Hill to testify over the derailment. Yesterday, the Senate Commerce Committee confirmed Shaw will appear again in the chamber for a rail safety hearing on March 22, which will also include testimony from National Transportation Safety Board Chairwoman Jennifer Homendy.
And the House Energy and Commerce Environment, Manufacturing, and Critical Materials Subcommittee, chaired by Ohio Republican Bill Johnson, announced it will also hold a hearing to examine the federal and state response to the East Palestine derailment. Witnesses have yet to be announced, but will include officials from the federal and state EPA, Johnson said in a statement.
…Meanwhile: EPA officials and contractors hired by Norfolk Southern announced yesterday that they will begin soil sampling in the area. The tests will include soil at agricultural, residential, commercial, and recreational properties in both Ohio and Pennsylvania “in the locations most likely to have been affected by the fires at the derailment site and the plume,” the EPA said in a statement, adding that it will work alongside the USDA and state agriculture departments and health agencies to determine results and share them with the community.
AUGUST PFLUGER TAPPED FOR HOUSE CONSERVATIVE ENERGY MESSAGING ROLE: Rep. August Pfluger, who represents parts of the Permian Basin in Texas, will lead a House Energy Action Team, the Republican Study Committee said today.
The team is meant to serve as messengers for “policies that unleash affordable, reliable American energy,” Pfluger said in a press release.
Of the oil and gas industries, large contributors to his election campaign, Pfluger said that Biden has “demonized these very people and this industry in policy and rhetoric.”
MORE ENERGY RATIONING FOR EUROPE: European Union negotiators reached an agreement this morning to cut final energy consumption – use by households and factories, etc. – across the bloc by 11.7% by 2030 in order to address climate change and limit the use of Russian fossil fuels.
“This will mean real change for the benefit of the climate and disadvantage of Putin,” said Niels Fuglsang, a Danish member of the European Parliament and negotiator for the deal, according to Reuters.
Meeting the targets is expected to require the renovation of huge numbers of old, drafty buildings.
The Rundown
Wall Street Journal How Tesla opening its supercharger network alters the EV charging map
Politico EU The chemist vs. the Dutch farmers
Calendar
WEDNESDAY | MARCH 15
10:00 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to examine implementation of the Infrastructure Investment and Jobs Act, focusing on perspectives on the Drinking Water and Wastewater Infrastructure Act.
