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DEMOCRATS STRUGGLE TO REPLACE CLEAN ELECTRICITY PROGRAM: Don’t expect one single proposal to emerge for Democrats eager to replace the emissions gap left by the demise of the Clean Electricity Performance Program, the novel concept that would have paid utilities that increase their share of clean energy while penalizing those that don’t.
The remaining provisions in Democrats’ reconciliation bill won’t enable President Joe Biden to meet his goal of cutting U.S. emissions in half by 2030, as evidenced by new research highlighted below.
Some Democrats have floated creating a new CEPP-like program to replace it, or are hoping that a carbon price can ride to the rescue, but those face the same political math problems.
According to various sources Josh has spoken to over the past few days, the most likely outcome is that lawmakers and the White House deploy a mix of smaller policies to augment a huge package of clean energy tax credits that forms the core piece certain to remain in the bill.
“No one thing will replace CEPP,” said Leah Stokes, a professor on climate and energy policy at University of California Santa Barbara who advised Democrats crafting that program. “I don’t think that’s possible or what people are trying to do. Congress has to deliver a package that meets President Biden’s climate goals.”
Stokes told Josh Democrats are looking to re-deploy the $150 billion earmarked for CEPP into a bevy of policies.
Rep. Jared Huffman, a California Democrat, agreed multiple options are on the table, rather than one overriding policy.
“The emission reductions from CEPP are irreplaceable,” Huffman told Josh. “I don’t want to say there wouldn’t be room for a combination of smaller initiatives. But it can’t be window dressing.”
What about block grants? Sen. Tina Smith, a Minnesota Democrat and main architect of CEPP, joined a call at the invite of the House Progressive Caucus yesterday in which she floated an idea of providing block grants to states that generate more clean electricity.
Smith’s office confirmed the call to Josh. But block grants would not really operate as a replacement for CEPP, whose real power was to push utilities to retire coal and natural gas plants, not just add new clean electricity. If block grants are included in the bill, they would likely be offered to states for multiple purposes, not just to add clean electricity (that concept might violate Sen. Joe Manchin’s argument about paying utilities for something they are already doing).
It might look something like a provision of Biden’s original “American Jobs Plan” that proposed block grants that can be used to “support clean energy, worker empowerment, and environmental justice.”
More options: Other potential policy supplements, according to an outside Democratic source following the negotiations, are increased investments in transmission lines and cutting emissions from industrial sources.
The White House is also floating a voluntary cap-and-trade program for aluminum, steel, cement and chemicals manufacturers, in which there would be a five-year delay before any cap on emissions is imposed.
But at least some lawmakers question the purpose of that idea.
“We can’t just throw money at some voluntary trading scheme and pretend it achieves the same emission reductions [as CEPP],” Huffman said. “Let’s not pretend that’s something that can be the breakthrough here.”
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.
NO CEPP = FAILURE ON BIDEN EMISSIONS PLEDGE: The U.S. will fall short of Biden’s pledge to cut emissions in half by 2030 if Democrats pass a reconciliation bill that does not include the Clean Electricity Performance Program, according to new modeling by the REPEAT Project, a initiative of Princeton University.
The modeling evaluates the House version of the Build Back Better Act without CEPP, including policies such as expanding and extending clean energy tax credits, a methane fee, energy efficiency provisions, and more. It finds that the package will reduce emissions significantly, but leave the U.S. short of meeting Biden’s target by about 330 million metric tons of emissions, or 5%.
Passing that package in addition to the bipartisan infrastructure bill delivers an additional 107 million metric tons of emissions reductions.
But passage of the bipartisan Infrastructure bill on its own would barely impact U.S. emissions. That legislation, which the Senate already approved, contains investments in climate resilience, transmission, EV charging, clean energy demonstration projects, and a credit program to help existing nuclear plants. But it cuts carbon emissions only 60 million tons this decade on its own, the modeling found.
One more thing: Interestingly, one of the biggest power sector impacts in the model when CEPP is excluded from the reconciliation package is there would be more rapid retirement of existing nuclear reactors.
While CEPP is intended to increase the growth of wind, solar, and other zero-carbon resources, it could also prevent existing carbon-free facilities, like at-risk nuclear plants, from closing prematurely.
NEW INVESTOR TOOL RANKS PERFORMANCE ON FLARING: U.S. oil and gas companies ExxonMobil and Hess, along with China’s state-owned CNOOC and Russia’s Rosneft, are among the worst performers on addressing emissions from flaring.
That’s according to a new report today from the Environmental Defense Fund that evaluated the flaring performance of 20 big oil and gas companies. It’s part of a new research platform the environmental group is launching, called ESG By EDF, that is meant to equip investors with insights into how carbon-intensive industries are addressing their emissions.
It finds that the worst performers have failed to endorse a pledge to end routine flaring or set a flaring intensity target, among other things.
How about the better performing companies? Among the nine companies with lower rates of flaring, most are moving toward ending routine flaring at their facilities and making progress in the disclosure of flaring data, including European majors Shell, BP, and Equinor, and U.S. independents Devon, EOG, Occidental Petroleum, and Pioneer. Flaring happens when companies burn extra unwanted natural gas as a waste that is produced in the course of drilling for oil.
Companies generally resort to flaring when there is insufficient pipeline or other infrastructure to transport the natural gas for use. Flaring primarily emits carbon, but some of the natural gas can escape as more potent methane when it doesn’t function properly.
CHINA AND INDIA REBUKE RICH COUNTRIES ON NET-ZERO PLEDGES: Tensions are high among major developing countries and leading western nations ahead of the U.N. climate summit in Glasgow where they are all expected to boost emissions reduction pledges to keep alive the goals of the Paris Agreement.
In a scathing statement yesterday, countries led by China, the top global emitter, along with India and Indonesia, accuse major developed nations such as the U.S. and EU of “shifting the goal posts” by pushing for net-zero emissions pledges by 2050.
They criticize developed nations for failing to meet earlier commitments on emissions reductions and providing climate finance to developing countries.
“Demands for ‘Net zero’ emissions for all countries by 2050 will exacerbate further the existing inequities between developed and developing countries,” the nations wrote as part of a collective known as Like-Minded Developing Countries, or LMDC.
China and India have not pledged to achieve net-zero emissions by 2050, considered essential to hold warming to 1.5 degrees. Both nations have also not submitted new national pledges, known as Nationally Determined Contributions (NDCs), ahead of COP26, on plans for reducing emissions this decade.
US ‘ABUNDANCE’ WILL SHIELD AGAINST PRICE SPIKES: INDUSTRY: Oil and gas industry groups are projecting confidence that having plentiful untapped natural gas supply will protect the U.S. from dramatic price spikes as seen in Europe and Asia.
A new assessment from the Potential Gas Committee found the U.S. has a total of 3,368 trillion cubic feet worth of technically recoverable resources, or those in the ground that have not yet been recovered, and a record 3,863 Tcf of future natural gas supply (a figure that also includes reserves).
“Natural gas prices will fluctuate depending on weather and other factors,” said Fred Hutchison, president of LNG Allies, during a webinar yesterday focused on the report. “Given the massive amount of gas here available at low cost, there is every reason to expect U.S. natural gas prices will remain far below gas prices prevalent in Europe and Asia.”
The problem, of course, is that oil and gas producers limited their drilling activity during the pandemic as demand took a nosedive, and have not rushed to come back as investors preach discipline from years of poor returns. It’s unclear if they will emerge from the sidelines now that demand has picked up and prices are higher.
BIDEN ADMINISTRATION IDENTIFIES CLIMATE CHANGE-MIGRATION LINK: The White House released an analysis this morning linking climate change to migration patterns, claiming it poses a national security challenge as the Biden administration itself struggles to manage historically high apprehensions at the southern border.
The report found climate change can drive resource scarcity and estimated that tens of millions of people will likely migrate over the next few decades “due in large measure to climate change impacts,” threatening stability among neighbors and allies.
“As costs of migrating increase and high income countries implement increasingly restrictive policies to deter migration, middle-income countries with fewer resources will become relatively more attractive alternative destinations,” the report said. “This has implications for political instability in a larger set of countries that may already be struggling to provide services to their citizens.”
The climate migration report is the first of its kind and one of four developed by government agencies and the National Security Council to look at the effects of climate change on security.
The Department of Defense developed a Climate Risk Analysis evaluating climate change’s effect on military strategy, and a separate national intelligence assessment from the Office of the Director of National Intelligence identifies climate change as a risk to security as countries argue over who should be taking more action to affect global temperatures. A fourth report from DHS outlines the department’s role in protecting the homeland from climate emergencies.
BIDEN GOES HOME TO PITCH AGENDA: Biden visited his native Scranton yesterday to make the case for Democrats’ budget reconciliation package and the bipartisan infrastructure bill, boasting especially about the jobs that would be created as part of the Build Back Better agenda’s goal of transitioning away from fossil fuels — resources on which Pennsylvania has been historically reliant.
“Coal built this town and this part of the country, but we got to provide other avenues for people to make the same of kind of living they used to be able to make,” he said during a speech.
Pennsylvania still has more than 200 coal mines, the majority of them active, per data from the Energy Information Administration. The state produced more than 50 million short tons of coal in 2019, ranking it third in the country behind neighboring West Virginia and Wyoming.
COMPANIES URGE CONGRESS FOR MORE ON HYDROGEN: A group of more than 30 companies, including oil giants Shell and BP America, non-profits, and labor unions are urging Democratic leaders in Congress to support provisions encouraging development of clean hydrogen in the pending partisan budget and bipartisan infrastructure legislation.
The companies tell Senate Finance Committee Chairman Ron Wyden and House Ways and Means Chairman Richard Neal, as well as Majority Leader Chuck Schumer and Speaker Nancy Pelosi, that Congress must enact federal policy that lowers the cost of and expands incentives for production of the carbon-free fuel.
The Rundown
Wall Street Journal Exxon debates abandoning some of its biggest oil and gas projects
Reuters US slows down oil and gas mergers
E&E News US delays global plan to deliver $100B in climate finance
Reuters G20 split over coal, 1.5 degree climate limit ahead of Rome summit
New York Times Tesla’s quarterly profit nearly quintuples to $1.6 billion as car sales surge
Calendar
THURSDAY | OCT. 21
10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee’s Energy Subcommittee will hold a hearing on offshore wind.
