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THE POLITICS AROUND THE CLIMATE DISCLOSURE RULE: Comments on the Securities and Exchange Commission’s climate-related disclosures proposal are due today, and now the five-member body (currently down one member) is charged with crafting a final rule at a time when the global energy crisis and industry pressure is eroding some of the momentum behind aggressive green regulatory policy.
What to look for: SEC has to contend both with the pressures from Democrats and environmental groups to be aggressive on emissions disclosure requirements, and with sharp criticisms of business and energy industry players who say just the proposal is stunting investment in new energy infrastructure, new production, and more refining capacity at a time when the Biden administration has recognized the need for each.
The torrent of criticism of more aggressive climate change-related regulations has already made other regulators take a second look.
The Federal Energy Regulatory Commission dialed back the changes it made to its certificate and greenhouse gas policy statements, which would have more stringently considered climate change when approving pipelines and other infrastructure, and allowed for more public input after industry leaders, Republican lawmakers, Democratic Sen. Joe Manchin, and the two sitting Republicans on the commission campaigned against them.
Comments at a glimpse: SEC dropped its proposed rule on March 21 to the qualified praise of environmental groups, who welcomed the requirements that corporations disclose their emissions footprints but want the commission to be even more aggressive on Scope 3 emissions.
Business groups, and especially the oil and gas industry, came out strongly against the proposed rule, and they took the extension Chairman Gary Gensler announced last month to sharpen their criticisms.
Gensler said the disclosure rule is an extension of what the commission has always done with regard to disclosures.
The Western Energy Alliance, which represents 200 oil and gas companies operating largely on federal lands, argued it’s beyond the commission’s scope and that Congress “has not passed into law legislation granting SEC authority to regulate climate change or compel a noncarbon transition.”
WEA posited that the proposed rule poses a greater risk to pensions and other investments than climate change.
Pennsylvania-based natural gas company CNX Resources commented that the proposal’s emissions disclosure requirements would end up confusing investors. CNX suggested that put in practice, SEC’s definitions for Scope 3 emissions could distort an investor’s understanding of how it compares with something like an electrical vehicle manufacturer.
Meanwhile, opposition to climate-driven investment from GOP has grown: Republicans have also stepped in with legislation to interrupt the wave of green regulations and ESG investment pressures – which SEC just furthered with its proposal to mitigate greenwashing – and Republican-led states, including Texas and West Virginia, have moved to penalize entities that have started severing ties with fossil fuel ventures.
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RUSSIA FURTHER CHOKES OFF GAS TO EUROPE: Russia reduced gas deliveries to Europe following the European Commission’s announcement of approval of Ukraine’s candidacy for EU membership yesterday.
Italian gas supplier Eni said today it only received 50% of the gas it requested from Gazprom. The Russian gas giant also moved to further punish Germany, according to French reports, which said it has halted deliveries to Berlin completely.
The cuts were announced and expanded at a near-breakneck pace this week—with Gazprom announcing a 40% reduction in supplies to Germany, only to reduce them hours later by an additional 20%. It also cut supplies to Italy by 15% on Wednesday, then 35% the following day, before slashing them by half today.
The cuts come one day after German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi traveled to Ukraine to meet with Ukrainian President Volodymyr Zelensky to signal their support for Ukraine, and to discuss Ukraine’s long effort to join the bloc. They were joined in Ukraine by French President Emmanuel Macron, whose country no longer imports any Russian natural gas.
Gazprom has so far declined to provide a reason for their reductions to Italy. But it has sought to blame the German cuts on “technical issues” with an entry point on the Nord Stream 1 pipeline. In a statement, officials blamed Siemens, a German-owned engineering company, which they said failed to return gas-pumping units on time.
But that assertion has been widely rejected by EU leaders, including German Vice-Chancellor Robert Habeck, who accused Moscow of seeking to use gas deliveries—or lack thereof—for political gain.
Berlin has “established, in close consult” with the European Commission, that the maintenance problems were “not related” to the abrupt supply reduction.
Draghi echoed Germany’s assessment that Russia is using the gas cuts as a “political” tool in the ongoing war in Ukraine. “Both we and Germany and others maintain it’s a lie, there’s a political use of gas” by Russia, he told reporters.
Though Italy has been looking to reduce its deep dependence on Russian gas supplies and secure alternative suppliers, Draghi added that the squeeze will still have “consequences” for the bloc—”not immediately on consumption,” but on stockpiling ahead of the winter months. EU gas reserves currently stand at just 51%, posing a potential supply crisis for the bloc unless and until it can replace the offset from Russian supply.
Why it matters: Italy is the second-largest consumer of Russian gas, just behind Germany, and both countries agreed to comply with Moscow’s demands earlier this year to pay for their gas supplies in rubles.
MEANWHILE, IN HUNGARY: Hungary is placing price caps on fuel costs and certain food prices for nationals living in the country—an effort that comes as nationalist Prime Minister Viktor Orban seeks to tamp a global surge in prices and inflation rates not seen in more than two decades.
Hungary has drawn strong opposition to a new requirement introduced in May that offers discounted fuel to drivers with Hungarian license plates, the Associated Press reports. Though this requirement “significantly” lowered prices for local drivers, the policy also forced those with foreign plates to pay market prices, which could cost foreign drivers as much as 60% more.
BIDEN BACK ON THE CLIMATE BEAT TO ASK FOR MORE ACTION: President Joe Biden urged outstanding nations to set 2030-focused emissions reduction targets this morning and announced a “global methane pledge pathway” to encourage more capturing of the greenhouse gas.
Biden said during the White House-hosted Major Economies Forum on Energy and Climate that nations that haven’t set GHG reduction targets should do so in anticipation of COP27, the UN’s upcoming climate conference in November, while saying the motivation behind the methane pledge pathway is to encourage nations to capture oil and gas sector methane that would otherwise be leaked or flared and send it to nations in need of gas.
“We flare enough gas to offset nearly all of the EU’s gas imports from Russia,” he said, adding that capturing and providing the gas to those countries that need it solves two problems at once.
TIM RYAN BILL WOULD ENCOURAGE MORE US-MADE SOLAR PURCHASES: Rep. Tim Ryan of Ohio introduced legislation yesterday designed to ensure that more of the solar power the federal government purchases is generated from products made in America.
The bill from Ryan, who is running against Republican J.D. Vance for Senate in Ohio, would expand “Buy American” rules so they apply to solar purchase power agreements, where they don’t currently, according to an announcement from his office.
Ryan’s announcement criticized Biden’s declaration of emergency to exempt Asian solar imports from antidumping/countervailing duties for 24 months, reiterating the criticism that manufacturing interests have made that it will allow the Chinese to continue to dump products without consequence.
Whether Chinese companies are circumventing tariffs and dumping solar products is the highly disputed question which the Commerce Department is currently investigating, and which Biden got out in front of at the beckoning of solar developers.
Several members of the Ohio delegation, including both Republican Sen. Rob Portman and Democratic Sen. Sherrod Brown, have thrown their support behind the anti-circumvention investigation on behalf of manufacturers, even saying that those opposing the investigation have promoted “mass hysteria” by arguing the investigation is hampering the industry. Ohio is home to several solar factories.
MAJORITY SUPPORT ACTION TO STEM POWER PLANT CLOSURES: POLL: A new poll commissioned by the National Mining Association, a trade group representing coal and other mineral interests, found bipartisan worry about the risks of blackouts and support for government action to stem premature power plant closures.
Nearly 8 in 10 voters, including a majority of Democrats, Republicans, and Independents, support government action to prevent premature plant closures until replacement generating capacity is built and online.
Grid operators and the North American Electric Reliability Corporation have warned about higher risk of outages this summer due to forecasts of a hot summer ahead, coupled with a shortage of reserve electricity generating capacity — something blamed in part on premature coal plant retirements.
Coal retirements have especially strapped the Midcontinent Independent System Operator, which oversees grid ops in all or parts of 14 other states. MISO earlier this week issued a capacity advisory warning, saying it expected tight generating capacity conditions that would become “increasingly tighter” through Wednesday.
NERC’s warning in particular caught Biden’s attention: He cited it as a motivation behind his emergency declaration to preempt new solar tariffs.
The Rundown
Washington Post Soaring gas prices lead White House aides back to brainstorming
Euractiv Rising gas cost could spell more coal use as spread narrows
Wall Street Journal Energy inflation derails Biden’s climate agenda
Calendar
TUESDAY | JUNE 21
2:00 p.m. The Wilson Center will hold an event titled “Seabed Mining, International Law, and the United States.”
