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MOMENT OF CLARITY: Sen. Kyrsten Sinema of Arizona, a key moderate vote for Democrats, is showing her cards on climate change, citing the issue as a priority that should be central to the party’s attempt at passing a $3.5 trillion reconciliation spending package without any Republican votes.
Sinema, despite representing a fossil fuel-dependent state herself, is not known to be as vocal as her centrist cohort Sen. Joe Manchin of West Virginia on energy and climate issues.
She has instead expressed her concerns about the overall size of the reconciliation bill itself, especially that it could boost already rising inflation.
But in a new interview with the Arizona Republic published yesterday, Sinema sounded downright enthusiastic about the reconciliation bill containing strong climate provisions.
“In Arizona, we’re all too familiar with the impacts of a changing climate … from increasing wildfires to the severe droughts, to shrinking water levels at Lake Mead, damage to critical infrastructure — these are all the things that we’re dealing with in Arizona every day,” Sinema said.
”We know that a changing climate costs Arizonans. And right now, we have the opportunity to pass smart policies to address it — looking forward to that,” she added.
Sinema didn’t divulge which policies in particular she supports.
A twist involving a carbon tax: Another report out this morning, however, claims Democratic leaders are pitching Sinema specifically on supporting a carbon tax as part of the bill.
I reported last week that the Senate Finance Committee is seriously considering including carbon pricing in its reconciliation portion, splitting from House Democrats who see the policy as politically damaging.
Now, the New York Times is filling in some details on the “why” behind that push. In a somewhat bizarre twist, the outlet reports Sinema’s opposition to corporate and income tax rate increases that Democrats are counting on to pay for their reconciliation bill has forced them to consider a carbon tax as an alternative.
The report caveats that Sinema has not personally advocated for a carbon tax, and it’s tough to predict if Democrats can design such a fee to satisfy President Joe Biden’s pledge not to raise taxes on families earning less than $400,000.
One last thing: Sinema’s potential support for climate policies comes after two other key Democratic centrists in the House, Reps. Stephanie Murphy of Florida and Henry Cuellar of Texas, sent Speaker Nancy Pelosi a letter saying climate provisions were the only portion of the reconciliation package that don’t need to be paid for.
As Democrats grapple with bare margins in the House and Senate, that may leave Manchin as the remaining roadblock.
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DEMOCRATS SEEK TO HELP UTILITIES WITH COAL DEBT: Democrats in Congress are looking to help utilities pay off outstanding debt on coal plants to help them retire faster to meet aggressive emissions reduction targets, as I report for a story in our latest magazine.
Coal plants are closing rapidly, primarily for economic reasons due to competition from cheaper natural gas and renewables. But many remaining coal plants, despite being unprofitable, are scheduled to be operational for decades.
That means the cost of retiring a gigawatt of coal today is more than twice what it was in 2005, according to RMI, an environmental group.
Some Republican-led states such as Indiana, Missouri, and Kansas have passed state-level laws this year to make it easier for owners of coal plants to restructure their debt.
The process is known as coal debt securitization: It’s similar to refinancing a mortgage, and it’s being embraced by utilities to help them avoid rate increases on customers as they look to transition off coal for economic and environmental reasons.
Now, House Democrats seek to expand these efforts as part of their $3.5 trillion reconciliation social and climate spending package by including provisions that essentially act as a federal version of coal debt securitization.
“We are recognizing the need to support communities through this transition and deal with the fact we have long-lived, undepreciated fossil fuel assets that are uneconomic, and we’re not actually removing those,” Ben Serrurier, the manager of carbon-free electricity at RMI, told me. “We need to get creative with financing mechanisms.”
Democrats seek to achieve this through two primary ways: The House Energy and Commerce Committee’s portion of the reconciliation spending package allocates $2 billion for an “Energy Community Reinvestment Financing” program implemented through the Energy Department’s Loan Programs Office.
That office is currently used to help commercialize new clean energy technologies. Democrats would also authorize it to take on another role of providing financial support to help utilities retire fossil fuel infrastructure.
Utilities could apply to refinance unrecovered investments in coal plants using low-cost debt, including direct loans, letters of credit, and loan guarantees.
The Agriculture Committee’s section of the reconciliation bill provides $9.7 billion to help electric co-ops pay off debt on coal plants, many of which were funded through loans from the Department of Agriculture’s Rural Utilities Service.
COUNTRIES PLEDGE ‘NO NEW COAL’: Seven nations signed on to a United Nations-initiated pledge to stop building new coal power plants.
Chile, Denmark, France, Germany, Montenegro, Sri Lanka, and the U.K. all signed the “No New Coal” commitment, Bloomberg reported.
China, the world’s top greenhouse gas emitter, made its own pledge to stop building new coal plants abroad but didn’t offer a timeline. It also didn’t commit to ceasing domestic coal plant construction.
“Moving away from coal is not a death knell for industrialization, but rather a much better opportunity for green jobs,” said Damilola Ogunbiyi, chief executive officer of the U.N. partner Sustainable Energy for All.
POLAND CONSIDERS REPLACING COAL WITH SMALL NUCLEAR REACTORS: NuScale has reached an agreement with two companies to explore the possibility of deploying small nuclear reactors to replace coal plants in Poland, one of the top remaining users of the dirtiest fossil fuel.
Under a MOU announced yesterday, NuScale will support Oklahoma-based Getka and Poland-based UNIMOT to examine whether using small nuclear reactors could be used “as a coal-repurposing solution for existing coal-fired power plants in Poland.”
The deal shows how developers of small nuclear reactors such as NuScale, a startup based in Oregon, are looking to demonstrate the unique role small nuclear reactors could play in the clean energy transition by creating a credible alternative for coal plants and their workers in a way that wind and solar can’t.
The Biden administration is bullish on the potential of small nuclear reactors being built at coal plants as it looks to make the case that fossil fuel-dependent areas won’t be left behind as part of its aggressive clean energy push. Energy Secretary Jennifer Granholm recently touted a first-of-its-kind small nuclear reactor demonstration project at a retiring coal plant in Wyoming.
EXTREME DROUGHT IS CRIMPING US HYDROPOWER: Hydropower generation in the U.S. is set to decline 14% in 2021 as a result of extreme drought conditions affecting California and the Pacific Northwest, the Energy Information Administration said in a note yesterday.
The drought is crimping the amount of water used to generate hydropower, a dominant clean energy source in that part of the country.
The dry conditions have reduced reservoir storage levels in some Columbia River Basin states, including Oregon and idaho.
METHANE EMISSIONS STEADY IN THE PERMIAN BASIN: A new survey of oil and gas facilities in the Texas-New Mexico Permian Basin detected more than 900 plumes of methane over an 11-day period.
Data gathered by aircraft and published by the Environmental Defense Fund found that midstream facilities, or those responsible for gathering and treating gas, were responsible for about 50% of detected emissions. Surveyors detected nearly 50 plumes emitting at least one metric ton of methane an hour over multiple days.
Reducing methane emissions is a key target of the Biden administration, whose EPA is expected to release rules regulating the short-lived greenhouse gas in the coming weeks.
The White House and European officials also recently pledged to cut methane 30% by the decade’s end and are looking to secure commitments from other nations at the Glasgow summit.
BIDEN’S NOMINEE FOR TOP BANK REGULATOR HAS BIG CLIMATE ROLE: Biden’s new nominee announced yesterday to lead the Office of the Comptroller of the Currency, a regulator overseeing the largest U.S. banks, is considered a progressive climate hawk.
Saule Omarova, a Cornell law professor, is “someone who isn’t afraid to take on Wall Street and has supported bold, federal clean energy investments on climate,” said Jamal Raad, executive director of Evergreen Action.
In her role overseeing the nation’s banks, Omarova would have a large say in the Treasury Department’s efforts to protect the economy from climate risk.
Omarova was previously a policy adviser at the Treasury Department under President George W. Bush.
CHINA BANS TRADING OF CRYPTO: The People’s Bank of China declared all cryptocurrency transactions illegal today, saying the ban was issued to ensure national security and stability, the Washington Examiner’s Zachary Halaschak reports.
Bitcoin has since plunged more than 6%, dropping to about $41,000 as of this morning. Ethereum shed nearly 9% of its value, dropping to below $2,800, and Ripple retreated by more than 8%.
The ban could affect China’s emissions where outright commitments to cutting them are lacking in ambition: Cryptocurrency uses a significant amount of energy.
Bitcoin’s total estimated annualized carbon footprint of 78.41 Mt of CO2 puts it on par with the total CO2 footprint of Oman, per the Bitcoin Energy Consumption Index, which is managed by tech trend watchdog Digiconomist.
The Rundown
Bloomberg Biden nearing methane crackdown dreaded (and dodged) by industry
New York Times The cost of insuring expensive waterfront homes is about to skyrocket
Washington Post Australia, a climate laggard, leans toward 2050 net-zero target as election looms
Calendar
TUESDAY | SEP. 28
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to review the administration of laws under the jurisdiction of the Federal Energy Regulatory Commission.
WEDNESDAY | SEP. 29
10 a.m. SVC-217. The Senate Foreign Relations Committee will hold a closed hearing with Amos Hochstein, the State Department’s senior adviser for energy security, for an update on the Biden administration’s efforts “Regarding Energy Security Including Nord Stream 2.”
10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee will hold an oversight hearing on the Chemical Safety Board.
