Daily on Energy: Kerry versus oil CEOS at world’s largest industry conference

“There are some companies moving more aggressively to make that transition,” Kerry said during a virtual appearance at CERAWeek by IHS Markit, the world’s largest annual energy industry confab. “Others continue to fight to hold onto whatever the market share is, which is going to diminish.”

“Where is the revenue going to come from?” Kerry added, saying companies resisting change are waging a “useless” fight and will end up “on the wrong side of this battle.”

Minutes later, Michael Wirth, the CEO of U.S. oil and gas major Chevron, a company that Kerry likely had in mind, delivered a very different message targeted at the Biden administration.

He said that the world will still require oil and gas for decades to come, the resiliency of demand during the pandemic proves that, and policy should focus on reducing emissions, not fossil fuel use.

“We are all looking for gas as an important part of the energy future around the world,” Wirth said. “We need to make sure we are working with the administration to help them understand that.”

Kerry and Wirth, along with other U.S. oil and gas CEOs who addressed CERAWeek, are on the same page in saying the industry will play a crucial role in determining the trajectory of emissions.

“We should not be talking about eliminating fossil fuels, what we should be talking about is eliminating emissions,” said Vicki Hollub, the CEO of Occidental Petroleum, who said her company strives to produce “net-zero carbon oil.”

“We cannot achieve the goals of the Paris Agreement without the oil industry helping in that,” she said.

The Biden administration also shares common goals with industry in expanding use of technologies such as carbon capture and hydrogen that can be delivered by pipeline and compliment gas used in energy-intensive sectors such as manufacturing.

STILL, THERE’S A FUNDAMENTAL TENSION HERE. READ ON BELOW…

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.

…THE UNDERLYING TENSION, CONTINUED: The mostly contrasting messages at CERAWeek demonstrate the fundamental tension between Biden and the oil and gas industry. Biden’s climate goals envision a pace and scale of emissions cuts that simply is not possible to meet without dramatic reductions in oil and gas use.

Darren Woods, the CEO of ExxonMobil, acknowledged the “dual challenge” of his interest in meeting future forecasted growth in oil and gas demand globally, mostly in developing countries, while addressing emissions, given that his company’s products produce emissions.

That’s why, he said, Exxon’s focus is on investing in technologies “associated with use of those products,” such as carbon capture, and limiting leaks of methane.

“Recognizing the difficulty of replacing [oil and gas], let’s focus on emissions.” Woods said.

Kerry suggested that approach won’t cut it.

“This isn’t rocket science. There is still resistance to this transformation [away from fossil fuels]. That is something we can’t really afford anymore,” Kerry said.

IS THERE REALLY ANYTHING NEW WITH API’S CARBON PRICING POSITION? A report by the Wall Street Journal that the American Petroleum Institute is “poised” to endorse setting a price on carbon got a lot of attention last night. We’ll remind you API’s CEO Mike Sommers told Josh in January that API was preparing to endorse a carbon price.

Sommers said at the time the oil lobby group could back a carbon tax that "would fit our principles.”

“We didn't update our position to be able to say no,” Sommers said. “We did it to be able to say yes.”

The new report provides more detail on API’s decision-making process, reporting that API’s executive committee plans to discuss a proposed statement this week, leaked to the Journal, that declares putting a price on carbon would “lead to the most economic paths to achieve the ambitions of the Paris Agreement” compared to mandates and regulations.

API’s executive committee could still reject carbon pricing given the group’s members are divided on the policy, with many smaller companies opposing it.

An API spokesman told Josh the group is continuing to consider carbon pricing among other policies, but has made no decisions yet.

BIDEN WEIGHS CARBON BORDER TAX: The Biden administration formally confirmed yesterday it will consider taxing imports of carbon-intensive goods as part of its climate and trade agenda.

Biden during the campaign proposed imposing a border carbon adjustment as a way to level the playing field to keep U.S. products competitive with those produced in countries that don’t have strong climate policies. If exporters of carbon-intensive goods like steel, aluminum, and cement, have to pay a fee, it would remove the incentive for American companies to move overseas to avoid paying domestic carbon prices.

Economists, however, have warned that a carbon adjustment would be unworkable unless the U.S. imposed a carbon tax on its own domestic goods, still an uncertain proposition with divisions in Congress.

MCKINLEY AND SCHRADER PITCH THEIR CES BILL AS BEST OPTION: GOP Rep. David McKinley and Democratic Rep. Kurt Schrader are arguing their clean electricity standard legislation has the best chance of passing Congress because it is a bipartisan effort, as opposed to the sweeping climate bill being pushed by House Energy and Commerce Committee Democrats.

Legislation coming from House Energy and Commerce Committee Chairman Frank Pallone’s office is “going to push energy in a way that's just simply partisan,” McKinley said during an event hosted by the Bipartisan Policy Center this morning. His and Schrader’s bipartisan bill, which he said they’ve been working on for four years, is “not just a messaging bill to stir up our base.”

McKinley and Schrader formally unveiled their bill in December. The legislation would massively scale up investments in research and development of clean energy technologies, including carbon capture, nuclear energy, wind, solar, and battery storage, through 2030. After that, regulation would kick in, requiring utilities to cut their emissions by 80% by 2050.

Schrader said during this morning’s event that Pallone, despite working on his own bill, sees the value in a bipartisan approach. He added that he and McKinley are willing to have discussions with lawmakers and the power industry to adjust their timeline, to potentially look at setting an earlier emissions reduction deadline.

“We're willing to work with folks, but we want to be realistic,” Schrader said. “We do not want to put people out of work.”

SEC SIGNALS BACKING FOR MANDATORY CLIMATE DISCLOSURE: Allison Herren Lee, acting chairwoman of the Securities and Exchange Commission, strongly suggested she'll push for mandatory climate disclosure from corporations, Abby reported in a story yesterday.

She argued, during remarks at CERAWeek, that there are shortcomings “inherent in a voluntary framework,” such as significant gaps in the information companies choose to report and inconsistencies that make it difficult for investors to compare across companies.

Lee’s remarks follow her public statement last week directing the SEC to review whether and how companies are complying with 2010 guidance on climate-related disclosure. Many environmentalists and sustainable investment groups are anticipating the SEC’s forthcoming review would lead to mandatory disclosure requirements, which would also be welcomed by many big investors.

“The SEC is largely playing catch-up to where the U.S. corporate activity already has come,” Brian O’Hanlon, executive director of RMI’s Center for Climate-Aligned Finance, told Abby. Commitments from big U.S. banks to strive for net-zero financed emissions by 2050 rely on consistent reporting from the corporations they invest in, and without mandatory disclosure, financial institutions have been in “murky waters,” he added.

RELATED…TREASURY ANNOUNCES TOP CLIMATE HIRE: The Biden administration announced this morning it is appointing Catherine Wolfram to lead the Treasury Department’s work on climate finance.

Treasury Secretary Janet Yellen has pledged to create a climate hub within the agency. Wolfram will serve as deputy assistant secretary for climate and energy economics in the Treasury’s Office of Economic Policy.

Most recently, Wolfram has served as associate dean at UC Berkeley’s Haas School of Business, and she has also previously led the environmental and energy economics group at the National Bureau of Economic Research.

PANDEMIC EMISSIONS DIP DIDN’T LAST, IEA SAYS: The coronavirus pandemic prompted energy-related carbon emissions to fall 5.8%, the largest decline since World War II, but emissions have already begun to rebound, the International Energy Agency said in new data this morning.

In the second half of 2020, global emissions steadily rebounded, reaching a level 2% higher in December 2020 than in that month the year prior, the IEA said.

Sectors of the economy reacted differently to the pandemic, however, signaling challenges for cutting emissions going forward. The pandemic appeared to help accelerate decarbonization in the power sector — as renewables actually grew as a share of electricity during the pandemic. Much of the decline in transportation emissions, meanwhile, was due simply to lockdowns that halted travel.

HAALAND VOTE SCHEDULED: The Senate Energy and Natural Resources Committee will vote Thursday morning on the nomination of Deb Haaland to be Interior secretary.

Chairman Joe Manchin has eliminated suspense in what has been one of Biden’s toughest confirmation fights by vowing to vote for her, enabling Democrats to push Haaland through to the Senate floor even in the event of a tie.

It remains to be seen if any Republicans vote for Haaland, who sought in her confirmation hearing to moderate her views on the role of fossil fuels.

DEMOCRATIC ATTORNEYS GENERAL PRESS EPA TO REVERSE TRUMP POLICIES: Sixteen attorneys general are asking the Biden EPA to reconsider the Trump administration's decision to keep smog standards at current levels, rather than tighten them as the attorneys general say the science requires.

The attorneys general have already sued over the Trump administration’s decision, but the reconsideration petition, filed with the EPA yesterday, gives the Biden team an opportunity to more quickly take up the decision and seek to tighten ozone standards.

In addition, 10 attorneys general — from nine states and D.C. — sued the EPA yesterday over the Trump administration’s revisions to a decades-old regulation targeting lead in drinking water. The attorneys general argue any changes that tighten existing regulations were overshadowed by revisions weakening requirements, including by allowing more time for water utilities to replace their lead pipes.

EPA DEPUTIES BACK MCCABE: Nine former EPA deputy administrators, including four from Republican administrations, are lending support to Janet McCabe’s nomination to the EPA’s No. 2 post, praising her past experience overseeing air policy at the agency and leading the air program in Indiana’s Department of Environmental Management.

The former deputy administrators lauded McCabe’s “integrity, her strong work ethic, her empathy, and her interest in diverse points of view” in a letter yesterday to the Senate Environment Committee. A separate letter to the committee from 220 former EPA staffers from administrations in both parties also backed McCabe. The Senate Environment committee is holding a nomination hearing for McCabe tomorrow.

McCabe would be returning to the EPA, where she served in the air office, eventually as its top official, during the Obama administration’s second term. Some Republican senators, however, have already expressed some concerns with McCabe’s nomination, given her close involvement in crafting the Obama administration’s climate mandates, including the Clean Power Plan.

The Rundown

Wall Street Journal South Korean battery makers pitch White House about disputed Georgia factory

Bloomberg Shale’s private army ramping up means supply wild card for OPEC

Houston Chronicle Top Texas utility regulator DeAnn Walker resigns following calls to step down

New York Times Protests by Native Americans lead to a delay in Arizona copper mine project

Reuters Mining magnets: Arctic island finds green power can be a curse

Bloomberg Better cables could halve US grid emissions by 2030, Gates-led group says

Calendar

WEDNESDAY | MARCH 3

10 a.m. 562 Dirksen. The Senate Environment and Public Works Committee will hold a hearing on the nominations of Brenda Mallory to be chair of the White House Council on Environmental Quality and Janet McCabe to be deputy EPA administrator.

THURSDAY | MARCH 4

10 a.m. SD-366 Dirksen. The Senate Energy and Natural Resources Committee will hold a business meeting to consider the nomination of Deb Haaland to be Interior secretary.

10 a.m. SD-366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing on the nomination of David Turk to be deputy Energy secretary.