Energy Crisis: Gas Levy Expected To Be Confirmed In Next Two Weeks Despite Rising Prices

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DEMOCRATS RELY ON CARROTS: Democrats are once again showing how difficult it is to restrain fossil fuels, which still largely power the economy, as opposed to boosting clean energy.

Numerous outlets are reporting the Democrats’ sprawling reconciliation package will include a record $500-550 billion for addressing climate change, almost one-third of the total spending in what’s expected to be a roughly $2 trillion bill.

But it remains to be seen if Democrats’ carrots-over-sticks approach, which leans mostly on expanding clean energy tax subsidies in lieu of a carbon tax or other penalties on polluters, meaningfully reduces emissions this decade.

“It’s going to change the trajectory with respect to the clean energy transition,” Sasha Mackler, executive director of the energy project at Bipartisan Policy Center, told Josh. “It is also true this is not the end of the story. We will eventually need some more sticks.”

Not your average tax credits: Environmentalists say the tax subsidies in the emerging package are “supercharged” versions of previous rounds of credits, aimed mainly at wind and solar, that have helped boost renewable deployment.

The tax incentives would remain on the books for a decade, providing certainty to clean energy developers who have faced a series of lapses — and subsequent renewals — for a shorter time frame.

They would also expand to new technologies, such as energy storage and direct air capture, and several of these incentives would be eligible for “direct pay,” a main demand made by clean energy companies, allowing them to monetize credits upfront without relying on banks to finance them. There is also expected to be a first-of-its-kind production tax credit to keep alive existing nuclear reactors, still the largest source of zero-carbon energy on the grid.

“These elements make them really supercharged investments that will put so much more clean energy on the grid,” said Christy Goldfuss, senior vice president for energy and environment policy at the Center for American Progress.

“It doesn’t take time to stand them up, people understand how they work, and industry and developers know how to take advantage of incentives,” Goldfuss told Josh.

Kevin Book, managing director of the nonpartisan research group ClearView Energy Partners, said that “free money and tax credits get things built” and their longer duration can create economies-of-scale to lower deployment costs. But he also warned that without the urgency of quicker expiration, developers might not build as fast, and said he is wary of different zero-carbon technologies competing against each other for credits.

Don’t forget about regulations: Forthcoming Biden administration regulations will put pressure on fossil fuels, as will efforts to make it more expensive to produce oil and gas on public lands.

EPA regulations on methane and SEC risk disclosure requirements have a level of buy-in from the oil and gas and financial sectors, protecting them from pendulum swings between administrations and court losses. The Biden administration has also gotten a head start on its regulatory regime compared to the Obama administration, which waited until late in its second term.

“If you have those three things — standards, government powers, and throw tax credits on top of it — you will get some results,” Book said. “Having time on the clock is a big advantage.”

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.

FATE OF METHANE FEE STILL HANGS IN THE BALANCE: Proponents of a methane fee are hopeful a compromise can be worked out to secure its inclusion in the reconciliation bill.

“Cautiously optimistic,” was how Rep. Jared Huffman, a California Democrat, deemed his outlook in a text to Josh.

But industry groups and Republicans are accelerating their efforts to defeat it, targeting susceptible centrist Democrats from oil and gas states with arguments that it’s a bad time to raise costs on fossil fuel producers when energy prices are surging across the world.

“We drafted this fee on methane in a thoughtful, inclusive way to ensure that would make it into the final bill,” said Sen. Tom Carper of Delaware, chairman of the Environment and Public Works Committee, in a statement.

“I hope that my colleagues recognize the tangible good this provision will do for our planet and economy so we can get it across the finish line,” Carper added, citing a study this week from the nonpartisan research group Energy Innovation that found the methane free would increase U.S. gross domestic product by more than $250 billion and create more than 65,000 jobs.

Lobbying efforts intensify: At the same time, a coalition of natural gas industry groups reiterated calls yesterday for Democrats to withdraw the methane fee, arguing it would be duplicative with new regulations on the potent pollutant expected to be proposed by the EPA as soon as tomorrow.

“Policymakers should focus on effective regulations, furthering innovation, and public-private collaboration—not new taxes—to achieve methane emissions reduction goals,” said the groups, including the American Gas Association, American Petroleum institute, Independent Petroleum Association of America, and Interstate Natural Gas Association of America. Republicans in the Senate and House, meanwhile, are holding a slew of events today to draw attention to Democratic policies that they say will raise energy prices, chiefly the methane fee.

Democrats are floating a compromise to holdouts — Sen. Joe Manchin of West Virginia and Texas centrists led by Rep. Henry Cuellar — that would provide hundreds of millions of dollars in funding that would be rebated to oil and gas producers to help them comply with the fee.

SEN. WHITEHOUSE SAYS CARBON IMPORT FEE IS OFF THE TABLE: Sen. Sheldon Whitehouse of Rhode Island confirmed yesterday that Democrats are going to leave a border carbon adjustment out of their reconciliation package.

That’s not a surprise, since the Democratic proposal, authored by Sen. Chris Coons of Delaware and Rep. Scott Peters of California, would not have been paired with a corresponding domestic system for trading or pricing carbon emissions. Instead, their proposal was designed to match the costs already facing U.S. companies from a hodgepodge of state and federal environmental regulations and policies.

That means it’s questionable whether it would have made it through the budget rules of reconciliation, because the projected revenue generated from it could not be guaranteed.

“It’s hard to get that through a Byrd bath,” Whitehouse previously told Josh and co-host Neil Chatterjee on our “Plugged In” podcast last month.

Whitehouse argued then that President Joe Biden has “very broad tariff authority” to impose a fee on imports of carbon-intensive goods through executive action, a point he raised again yesterday.

“The Biden Administration has broad tariff authority and may be able to act later through executive action,” Whitehouse said in a statement.

MEANWHILE, NEW POLLING SHOWS GOP SUPPORT FOR BCA: The Climate Leadership Council, a GOP-backed group supporting a carbon tax that returns the revenue to taxpayers, is out with polling this morning showing wide-spread support for a border carbon adjustment as a component of a national climate plan.

Their survey of 1,500 voters across five “battleground” Senate states found that 70% of voters support a BCA, spanning ideological and party lines, generating majority support among self-described conservatives, moderates and liberals, as well as Republicans, Democrats and Independent voters.

The Council has argued that U.S. manufacturers could be the big winners from a BCA, backed by research showing that industries, including steel, already have an advantage over China, India, and Europe in producing goods and services at lower rates of carbon emissions.

That means if subject to a U.S. carbon import fee, overseas businesses looking to export their goods here would pay a higher price compared to domestic manufacturers with a smaller pollution footprint.

But the Council’s appeals have not convinced Republican lawmakers to back the policy.

GOP Rep. John Curtis of Utah told Josh and Neil on the latest episode of our podcast that he is not “convinced” a BCA “actually works” and is concerned that countries like China with high carbon-intensity products could cheat the system.

Greg Bertelsen, CEO of the Climate Leadership Council, sought to allay those concerns and challenged Republicans to “write the rules” to ensure fairness.

“If leaders want to appeal to Republican voters on climate policy, a border carbon adjustment is by far the best approach we’ve seen,” Bertelsen told Josh.

WHITE HOUSE: SOLAR DEPLOYMENT AND CHINA POLICY NOT COMPETING: ​​The White House said the Biden administration can stand up to China’s human rights abuses while still pursuing Biden’s solar energy goals, the Washington Examiner’s Katherine Doyle reports.

National security adviser Jake Sullivan told reporters yesterday there is “no reason” the U.S. has to choose between supporting solar deployment and holding China to account for its treatment of Uyghur Muslims in the Xinjiang province, which produces much of the polysilicon put into solar panels around the world — including in the U.S.

Speaking of China and solar: The Solar Energy Industries Association is again pleading with Commerce Secretary Gina Raimondo to reject a petition to levy circumvention tariffs on imports of solar cells and modules from Asia as the department weighs whether to formally take up the case.

As a reminder, an anonymous group of companies identified as American Solar Manufacturers Against Chinese Circumvention filed petitions in August alleging circumvention of anti-dumping and countervailing duties, or AD/CVD, on China by vendors in Malaysia, Vietnam, and Thailand.

Commerce returned to the petitioners for more information — including an explanation as to why petitioners felt the need to remain anonymous — before it makes a decision.

SEIA has asserted new duties would decimate the domestic solar industry and that petitioners have no case, writing in a new letter to Raimondo:

“This case is not about whether the petitioners should remain anonymous, the broader U.S.-China trade conflict, or whether China uses forced labor. Rather, it is solely about whether petitioners have met their burden for initiation. And the Department must conclude that they have not.”

A decision from Commerce on whether to take up the petitions is expected by Nov. 29.

EPA MAKING MOVES ON PFAS: The EPA announced two new rulemakings yesterday targeting water and other resource contamination from perfluoroalkyl and polyfluoroalkyl, or PFAS — also known as “forever chemicals.”

The agency said it will begin the process to propose adding four PFAS chemicals — perfluorooctanoic acid, perfluorooctane sulfonic acid, perfluorobutane sulfonic acid, and GenX — to the list of hazardous constituents under the Resource Conservation and Recovery Act. Adding the chemicals “would ensure they are subject to corrective action requirements and would be a necessary building block for future work to regulate PFAS as a listed hazardous waste,” EPA said.

The second rulemaking initiative seeks to change regulations to ensure the same RCRA law’s Corrective Action Program “has the authority to require investigation and cleanup for wastes that meet the statutory definition of hazardous waste,” including PFAS.

Both rulemakings were undertaken in response to a petition by New Mexico Gov. Michelle Lujan Grisham for EPA to regulate PFAS more tightly, and they build on the agency’s recently announced “strategic roadmap” to crack down on the chemicals.

FWS AND NOAA PROPOSE RECISSION OF TRUMP-ERA HABITAT REGS: The Biden administration is moving to rescind Trump-era changes to the definition of “habitat” under a section of the Endangered Species Act that governs critical habitat exclusions.

The U.S. Fish and Wildlife Service and the National Marine Fisheries Service at NOAA proposed returning to the agencies’ previous approach to the exclusion process, which enables the determination of whether a certain area qualifies as a habitat for a particular species.

FWS said in a news release the Trump-era rule could “have unintended consequences for the designation of critical habitat under the ESA because it excludes from consideration degraded areas that do not currently support species.”

The agency added, “The ESA is clear that such areas, some of which may be essential for the conservation of a species, could be considered ‘habitat.’”

US OIL DEMAND FALLS BACK: U.S. oil demand fell significantly last week, the Energy Information Administration said in its Weekly Petroleum Status report this morning.

Demand dropped from 21.8 million barrels per day to 19.8 million barrels p/d, thanks to reductions in gasoline and diesel consumption.

Oil prices are down after days of increases as the EIA also reported a build in U.S. crude inventories of 4.3 million barrels from the previous week, signaling relief from tight supply.

OH, RATS! RODENTS AND LABOR STRIKE THREAT PLAGUE COP26: Glasgow is suffering from rats, labor issues, and an upcoming train strike ahead of the COP26 climate change summit, the Washington Examiner’s Christopher Hutton reports.

“Our members are coming across rats every single day,” said Chris Mitchell, a general trade union representative for the city’s cleaning staff. “People walking about the streets are seeing rats in back gardens and going into houses; they are absolutely everywhere.”

Beyond the rats, workers at ScotRail, the national train operating company in Scotland, are expected to go on strike during the summit, which will leave the majority of trains inoperable. Company leadership attempted to provide a last-minute pay offer to stop the strike, only to be rejected.

QUEEN ELIZABETH COPS OUT: Queen Elizabeth II has canceled her planned appearance at a reception at the COP26 climate change summit as doctors advise her to rest following a recent hospitalization, the Washington Examiner’s Misty Severi reports.

The queen will instead deliver an address to the assembled delegates via a recorded video message, Buckingham Palace said.

The Rundown

Reuters Investors on board as US oil majors dismiss wind and solar projects

Wall Street Journal Europe’s push to loosen Russian influence on gas prices bites back

Washington Post Big insurance companies struggle over climate approach

Bloomberg China agrees on plan to cap coal price to ease power crisis

New York Times Britain moves to attract financing for nuclear plants



1 p.m. The House Natural Resources Committee’s Subcommittee on Energy and Mineral Resources will host a remote oversight hearing focused on the federal coal program.


9 a.m. The House Oversight Committee will hold a hearing to “Examine the Role of the Fossil Fuel Industry in Spreading Climate Disinformation and Heating the Planet.” The CEOs of ExxonMobil, Chevron, BP America, and Shell will testify, along with the presidents of the American Petroleum Institute and U.S. Chamber of Commerce.

10:30 a.m. 210 Cannon. The House Select Climate Committee will hold a hearing titled, “International Climate Challenges and Opportunities.”

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Original Author: Josh Siegel

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