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BIDEN WRESTLES WITH ENERGY ‘CRISIS’: A senior Biden administration official gave a glimpse into how the administration plans to make the case for moving off fossil fuels when countries are grappling with an energy crisis.
A price spike in oil, natural gas and coal, caused by a supply shortage and surging demand, that’s afflicting Europe, Asia, and to a lesser extent, the U.S., looms in the background as President Joe Biden gets set to leave this afternoon for Rome ahead of the U.N. climate conference that starts Sunday in Glasgow, Scotland.
Amos Hochstein, the Biden administration’s senior energy security adviser at the State Department, called the current situation an “energy crisis” at a special event hosted this morning by International Energy Forum, a nonprofit organization that promotes dialogue among oil and gas-producing nations.
“We want to do two things at the same time,” Hochstein said. “The president will say this crisis shows us we need to accelerate the move off fossil fuels…while at the same time ensuring in the period of time it takes to get from here to where we need to go, the market is well supplied.”
The current crisis could make energy costs top-of-mind for people who might not otherwise notice them. That could make it hard to drive momentum for aggressive policies to address climate change at COP26.
Hochstein said a balance can be met: He suggested oil and gas producers, which have held back thanks to shareholder pressure to deliver better financial returns, should be coming off the sidelines to help with near-term supply needs. But he said companies should not be investing in long-term fossil fuel infrastructure that can become “stranded assets” and “take us away from the goal” of mitigating climate change.
“Producers have a responsibility to ensure oil and gas prices are balanced,” Hochstein said.
“Clearly prices today are indicating these companies are capable to continue to operate in a quite healthy manner,” he later added.
He said that ensuring secure natural gas supply is of special importance to countries in Europe and Asia that are coming to rely more on the fuel.
“The energy transition is a necessity and has to be ramped up,” Hochstein said, adding the move off fossil fuels can’t be a “flip of a switch.” It has to be managed in a way so that “we don’t have energy shocks that lead to potential economic shocks,” he said, calling that balance the “challenge of the 21st century.”
Managing Russian influence: Hochstein called out Russia, the top exporter of gas to import-dependent Europe, saying he is “quite disappointed” at Moscow for not shipping as much as would be expected with such high prices, with state-run Gazprom refusing to increase its shipments beyond its long-term contractual commitments.
European natural gas prices tumbled this morning after Russian President Vladmir Putin ordered Gazprom to add more fuel to its storage sites, signaling more supply is on the way.
But Hochstein said Europe is not blameless, calling on the continent to be better prepared against seasonal shortages of natural gas in order to reduce dependence on Russia.
For example, the EU could set common guidelines on minimum levels of gas that needs to be kept in storage, he said.
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.
BREAKING — CHINA AVOIDS NEW EMISSIONS PLEDGE: While Biden desperately tries to advance his agenda ahead of COP26, the world’s top emitter — surely watching U.S. deliberations closely — is standing firm on previous goals, as Josh reports this morning.
China submitted a pledge, known as a Nationally Determined Contribution, to the U.N this morning, vowing to stop increasing its carbon emissions before 2030 and reach carbon neutrality by 2050. President Xi Jinping already announced those goals at the end of last year.
China fell short of expectations from the U.S. and other rich countries that have asked Beijing to reduce its emissions earlier this decade with a new specific date. By not doing so, China is saying its emissions will continue to rise, making it more difficult for the world to meet the goals of the Paris agreement.
“I am sure the U.S. and other countries were hoping to see something new from China going into COP26,” said Joanna Lewis, an associate professor at Georgetown University teaching energy and environment with a focus on China.
During a July speech in London, U.S. climate envoy John Kerry called on China to commit to “sector-specific near-term actions” that would enable “earlier peaking” and the “possibility of rapid reductions afterwards.”
China, though, is ignoring those pleas, at least in part because it is skeptical over the U.S.’s lack of progress in passing domestic legislation to address climate change, Lewis said.
“It’s unfortunate Biden wasn’t able to come to COP with a shiny new infrastructure bill with a huge climate component,” she said.
BIDEN UNVEILS A ‘FRAMEWORK’ OF $555 BILLION IN CLIMATE PROVISIONS: The White House announced a $1.75 trillion framework for his reconciliation spending bill that Biden is pushing Congress to back, and it contains a massive package of carrots to encourage more clean energy development without provisions penalizing the use of fossil fuels.
The framework, which could provide the basis for an agreement among Democrats, provides a record $555 billion devoted to addressing climate change, mostly credits and incentives to boost clean energy, as Jeremy reports.
But it lacks earlier proposed policies aimed at curbing greenhouse gas emissions. For instance, it doesn’t mention a methane fee on oil and gas producers, and it also omits the clean electricity payment program, accompanied by penalties, that key legislators had already rejected.
Details emerge: The framework provides for $320 billion for clean energy tax credits in support of “utility-scale and residential clean energy, transmission and storage, clean passenger and commercial vehicles, and clean energy manufacturing” over 10 years.
It earmarks $110 billion in incentives supporting new domestic supply chains and technologies, including solar, batteries, and advanced materials, and another $105 billion is put toward “investments and incentives to address extreme weather,” pollution, and the creation of a Civilian Climate Corps.
The final $20 billion would provide incentives for government to be a purchaser of new energy technologies, including long-duration storage, small modular reactors, and clean construction materials.
Activists are pleased: Environmentalists that were pushing for the CEPP program as the envisioned centerpiece of the Biden climate agenda nonetheless seem on board with White House claims that the compromise spending package will set the U.S. on a path to meet Biden’s goal of slicing emissions in half by 2030.
“Armed with this framework and a path to Congressional passage, America could credibly say it’s back in a position of global leadership after four years of climate denial under Trump,” said Jamal Raad, executive director of Evergreen Action.
What about the methane fee? Don’t rule it out yet. Sources following the negotiations tell Josh that Sen. Tom Carper, chairman of the Environment and Public Works Committee, continues to push for including a compromise 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.
INSIDE THE ROOM WHERE IT HAPPENS: Biden, eager to secure passage of his economic agenda ahead of his trip to Europe, met privately with House Democrats this morning to urge them to support the $1.75 trillion framework, the Washington Examiner’s Susan Ferrechio reports.
“I don’t think it’s hyperbole to say that the House and Senate majorities and my presidency will be determined by what happens in the next week,” Biden said.
Biden huddled with Democrats for about an hour in the Capitol basement, where lawmakers filing into the room expressed a combination of resignation and disappointment that their original $3.5 trillion package had been cut in half.
A group of liberal Democrats is debating how much certainty they’ll need that the Senate will back the framework before they are willing to advance the bipartisan infrastructure package that Speaker Nancy Pelosi hopes to pass by the end of October.
Biden assured House Democrats all 50 Senate Democrats would back the $1.75 trillion spending framework.
“I am back here to tell you that we have a framework that will get 50 votes in the United States Senate,” Biden told them. “We badly need a vote on both of these measures.”
LIBERAL PUSH AGAINST ‘BLUE’ HYDROGEN IN BUILD BACK BETTER: A group of liberal senators and House members are warning Democrats against including subsidies for hydrogen derived from natural gas in their spending bill.
In order to achieve Biden’s emissions reduction pledge, “we must invest in truly clean energy and reject empty promises from the fossil fuel industry,” wrote the lawmakers, led by Sen. Jeff Merkley of Oregon and Rep. Jamie Raskin of Maryland, in a letter to Majority Leader Chuck Schumer and Pelosi.
The liberals decried natural gas-based hydrogen paired with carbon capture and storage as a “false solution,” and argued it could prolong the use of fossil fuels. Questions have been raised about the cleanliness of blue hydrogen, given potential methane leakage from the natural gas used to fuel it.
Jesse Jenkins, a Princeton University professor who advised House Democrats on their Build Back Better Act, noted the lower chamber’s version of the spending bill includes emissions intensity requirements for recipients of production tax credits to develop “clean hydrogen.”
HOUSE DEMOCRATS GRILL OIL EXECS AT ‘DISINFORMATION’ HEARING: Democrats on the House Oversight Committee are hosting executives representing the oil industry’s major players to speak to accusations that they’ve engaged in a decadeslong “campaign to spread disinformation” about the role fossil fuels play in contributing to climate change.
Chairwoman Carolyn Maloney charged in her opening statement that those companies represented, including ExxonMobil, Chevron, BP, and Shell, have orchestrated a “coordinated campaign to mislead the public, hide the dangers of [their] own product, and derail global efforts to reduce greenhouse emissions.”
The various executives in their own statements acknowledged that carbon-intensive industry has an effect on the climate and said their companies are prepared to play ball in the transition to cleaner energy sources, although they maintained that production of fossil fuels must remain an integral part of the energy landscape in the meantime.
“This doesn’t mean BP is getting out of the oil and gas business,” David Lawler, CEO of BP America, said after discussing the company’s investments in renewables and other clean energy technologies. “As we transition, our oil and gas business will continue providing the energy the world needs while funding our investments in wind, solar, and other renewable energy sources.”
GOP GOES ON ENERGY OFFENSIVE: Congressional Republicans engaged in a media blitz yesterday blaming high oil and gas prices on the Biden administration’s climate policies and warning that Democrats’ budget reconciliation package would worsen matters, as Jeremy reported.
“This is an unforced error that we’re experiencing right now in regard to prices,” Rep. Garret Graves of Louisiana said during an energy roundtable, assigning blame to Biden policies such as his revocation of the Keystone XL pipeline and oil and gas leasing moratorium.
Other members expressed frustration about the administration turning to OPEC in hopes of boosting global oil production rather than calling on domestic producers to increase output.
SHELL BEEFS UP EMISSIONS PLEDGE: European oil and gas giant Shell announced plans this morning to reduce its operational emissions (Scope 1 and 2) by 50% by 2030, a step toward becoming net-zero by 2050.
Shell also committed to ending “routine flaring” by 2025, five years earlier than its previous pledge. Flaring primarily emits carbon, but some of the natural gas can escape as more potent methane when it doesn’t function properly.
But Shell doesn’t address Scope 3 emissions coming from the use of its products, by far its largest source of pollution.
IEA ANALYZES CLEAN ENERGY ADVANCES IN COVID-19 RECOVERY: A new Sustainable Recovery Tracker report from the International Energy Agency found that, as of the end of October, governments across the globe have devoted $470 billion to clean energy measures through their economic responses to the COVID-19 pandemic.
That value amounts to 3% of total fiscal support worldwide, IEA said.
Advanced economies “continue to lead in clean energy spending,” while “government spending in emerging and developing economies remains only around one-tenth of the level seen in advanced economies,” a report summary reads.
The Rundown
Wall Street Journal China’s ambitious climate goals collide with reality, hampering global efforts
Washington Post Los Angeles is aiming to be first major carbon-free US city, but obstacles loom
Wall Street Journal Third Point has big Shell stake, urges energy giant to break up
Bloomberg Shell CEO defends strategy against Loeb bid to split company
Bloomberg UK sees no deal coming to eliminate coal at UN climate summit
Calendar
THURSDAY | OCT. 28
9 a.m. The House Oversight Committee is holding 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 are testifying, along with the presidents of the American Petroleum Institute and U.S. Chamber of Commerce.
