Daily on Energy: Biden climate adviser McCarthy lays out case against business-backed carbon tax
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A CLOSER LOOK AT MCCARTHY ON CARBON PRICING: The Biden administration won’t accept a carbon price if it replaces the ability of federal agencies to directly regulate emissions, national climate adviser Gina McCarthy said, teeing up conflict with big business groups coalescing around that approach.
“If you want to put a direct price on carbon through a congressional mandate, we will not appreciate that it ties our hands in other sectors in terms of our ability to more directly regulate,” McCarthy said yesterday during remarks at a virtual forum hosted by Columbia University’s Center on Global Energy Policy.
Her comments were a reference to a carbon pricing scheme the conservative Climate Leadership Council, founded by former GOP secretaries of State James Baker and the late George Schultz, has been pitching to Republicans in Congress. That carbon fee and dividend plan, which would start at $40 per ton, would remove all current carbon regulations, such as limits on power plants and oil and gas facilities, and preempt all future mandates.
The CLC plan has the support of major oil and gas producers such as BP, Shell, and ExxonMobil, as well as major corporations such as Microsoft, JPMorgan, General Motors, and Ford.
McCarthy’s comments are the Biden administration’s most direct rebuke of carbon pricing plans thus far. In the past, McCarthy and other top Biden officials have suggested they wouldn’t be opposed to carbon pricing, but that it wasn’t their priority.
Energy Secretary Jennifer Granholm reiterated that this morning during a hearing before a House Energy and Commerce subcommittee, calling carbon pricing “one of many tools” but noting the administration is focused on passing President Joe Biden’s infrastructure plan. She said the administration has determined a clean electricity standard requiring utilities to achieve carbon-free power by 2035 is the “best” option to tackle emissions.
Biden will regulate no matter what: McCarthy’s remarks, however, show the importance of government mandates in Biden’s plans. Even if Congress passes a clean electricity standard, the EPA would still issue regulations to curb power plant emissions, McCarthy added, calling the mandates a “legal obligation.”
She stressed that regulation is even more important in other sectors of the economy where a carbon price might not prompt deep emissions cuts because their markets are “more elastic.”
“I’m not disputing that a carbon price can be beneficial,” McCarthy said. “I’m just suggesting that there are many ways to put a price on carbon,” including through regulation.
McCarthy’s comments are likely unwelcome news to big business lobbies like the U.S. Chamber of Commerce and the American Petroleum Institute, which have recently expressed support for carbon pricing as their preferred climate policy. Neither group has explicitly backed the CLC plan, but both groups have previously been some of the loudest critics of federal greenhouse gas mandates.
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MORE FROM MCCARTHY: Biden won’t accede to left-wing environmentalist requests to exclude carbon capture and nuclear power from his green infrastructure plans, McCarthy also said yesterday.
McCarthy said that Biden will instead find other ways to address the worries raised by activists that those technologies wouldn’t address the pollution harming poorer and minority regions. For instance, the administration will pursue stricter mandates on air pollution coming from power plant smokestacks.
McCarthy’s comments come in response to concerns raised recently by left-wing climate groups and the White House Environmental Justice Advisory Council that certain low-carbon technologies, including carbon capture, direct air capture, and nuclear power, would not alleviate the pollution burden borne by poorer and minority people. As we wrote about yesterday, those groups and the council are calling on the Biden administration to avoid investing in those technologies.
‘KEEP IT IN THE GROUND’ MOVEMENT BOOSTED BY IEA REPORT: The International Energy Agency’s stark position that new oil and gas development must immediately stop to meet reach net-zero global emissions could boost momentum for governments to restrict fossil fuel production and cause investors to cut off funding for such projects.
“This will strengthen the political argument in many countries for restricting the growth of new oil production,” Bob McNally, president of Rapidan Energy Group and former oil official in the George W. Bush administration, told Josh for a story posted this morning. “It’s going to raise the regulatory risk and scrutiny on oil companies and investors that plan to develop new oil fields.”
Climate activists interpreted the surprising statement from the IEA, a Paris-based group with a conservative reputation, as an endorsement of its longtime “keep it in the ground” mantra.
The oil and gas industry warned that reducing fossil fuel supply would pose problems for developing countries demanding more energy.
Experts told Josh that IEA’s scenario would likely mean no new investments in fields where oil and gas exploration or drilling has not yet occurred but allow for continuing to dig up fossil fuels in fields already in production. IEA acknowledged that “continued investment in existing sources of oil production are needed.”
It projected that if investment were to continue in currently producing fields but no new fields were developed, then the average annual loss of oil supply would be around 4.5%.
Arvind Ravikumar, an assistant professor of energy engineering at the Harrisburg University of Science and Technology, said annual loss of production of 4.5% is “a big deal” because the reduction is nearly 3 times faster than the rate at which production had grown over the last two decades.
GASOLINE CONSUMPTION JUMPED DURING COLONIAL SHUTDOWN: U.S. oil demand rose last week as drivers rushed to the pumps after the cyberattack shutdown of the Colonial Pipeline, increasing to 19.2 million barrels per day from 17.5 million barrels p/d the previous week, which had been the lowest level since September.
The main cause of the increase was a jump in gasoline demand, which reached 9.2 million barrels p/d compared to 8.8 million barrels p/d the week prior, the Energy Information Administration reported this morning. That’s the highest level of gasoline consumption since March 2020, according to research group ClearView Energy.
Oil prices, however, are down this morning after the EIA reported a crude inventory build of 1.3 million barrels.
GRANHOLM…VOLUNTARY CYBERSECURITY STANDARDS ‘INADEQUATE’: Granholm this morning dipped her toes into backing Congress imposing mandatory cybersecurity standards on pipelines, similar to requirements enforced on the electricity sector.
“One wonders whether it’s time we match what we are doing on the electric side with what we are doing on the pipeline side,” Granholm said during a House Energy and Commerce Committee hearing on DOE’s 2022 budget request.
Granholm added the current framework of voluntary guidelines provided by the TSA is “inadequate” although she said she’s not sure mandatory rules would have prevented the ransomware attack on the Colonial Pipeline.
“It’s an important consideration for this committee for sure,” Granholm said.
Committee Chairman Frank Pallone, a Democrat of New Jersey, agreed there is a “big gap” between what is required of the electricity sector and pipelines.
“It’s time we consider mandatory, enforceable reliability standards for our nation’s pipeline network,” Pallone said.
In addition to possible new standards, Granholm suggested Congress should consider including investments in forthcoming infrastructure legislation to boost cybersecurity of pipelines.
“The question is who pays for that? Are there incentives that can be considered by this Congress to have private companies up their games?” she said.
BIDEN INCHING TOWARD GERMANS IN NORD STREAM 2 DISPUTE: The State Department is reportedly set to waive sanctions on the company and CEO in charge of building the Russian Nord Stream 2 natural gas pipeline into Germany.
The decision underscores the importance the Biden administration places on rehabbing the U.S. relationship with Europe and Germany, even at the risk of being perceived as soft on Russia by Republicans and hawkish Democrats. Germany Chancellor Angela Merkel and other Western European leaders have bristled at U.S. sanctions as interference with its sovereignty, viewing the pipeline as a commercial project.
The State Department, in a 90-day mandatory report it will submit to Congress as soon as today, will say that the corporate entity in charge of the project (Nord Stream 2 AG) and its CEO (Matthias Warnig) are engaged in sanctionable activities, according to Axios. But it will waive applying sanctions to them, citing U.S. national security. Instead, the administration will sanction ships involved in the building of Nord Stream 2.
It would be more aggressive than previous stance: That would go farther to appease Republicans who were upset with the Biden team’s handling of a previous report that identified only a single Russian ship, called Fortuna, and its owner as being in violation of U.S. sanctions. But it doesn’t appear to be enough. Conservative Sen. Ted Cruz of Texas, a vocal critic of the pipeline, accused Biden yesterday of “actively helping Putin build his pipeline.”
Why Biden is in a pickle: Biden, like the Trump administration, has emphasized he opposes Nord Stream 2 for its potential to increase Europe’s reliance on Moscow for energy.
But the reality is Nord Stream 2 is 95% built, and it progressed during the Trump administration, putting Biden in a tough spot with the pipeline mostly finished before he took office.
GOP COMPROMISING ON ELECTRIC VEHICLES? Senate Republicans and the White House still can’t agree on how to define infrastructure, despite what both sides said was another set of productive talks yesterday.
Sen. Shelley Moore Capito of West Virginia, the top GOP negotiator and ranking member of the Environment and Public Works Committee, told reporters that Republicans and the administration are “closing in on” the parameters for what includes infrastructure.
But, she said, “their view is still a lot broader than ours in what constitutes infrastructure.”
Still, Senate Republicans’ counteroffer includes some spending on electric vehicles, according to the New York Times, which has been one of the most hotly disputed areas. But the GOP’s offer does not include anything near the $174 billion Biden has proposed.
Democrat Sen. Tom Carper of Delaware, the chairman of the Environment and Public Works Committee, has been pressing the Biden administration to not scale back its climate-related proposals, Punchbowl News reported this morning.
‘THIS SUCKER’S QUICK’: Biden test-drove Ford’s new electric pickup yesterday and shared details about its attributes ahead of the automaker’s official unveiling of the F-150 Lightning tonight.
“This sucker’s quick,” he told reporters after speaking at a Detroit factory where Ford is building the electric version of the F-150, the top selling vehicle in the U.S. Biden revealed the Lightning goes 0 to 60 mph in about 4.4 seconds.
During his earlier remarks at the plant, Biden declared himself to be a “car guy” and challenged China to out-compete the U.S. in the EV market as he sells his $2.3 trillion infrastructure spending proposal.
“They think they’re going to win,” Biden said. “But I got news for them: They won’t win this race. We have to move fast. That’s what we’re doing here.”
Biden’s plans aim to lower the cost of EVs through subsidies and rebates, incentivize U.S. manufacturing of key parts like batteries, build 500,000 charging stations to reduce range anxiety, and scale up R&D for advanced longer-duration batteries.
SENATE DEMOCRATS BACK CARBON-FREE POWER BY 2035: Sixteen Senate Democrats, led by Sen. Martin Heinrich and including the chamber’s No. 2 Democrat Sen. Dick Durbin, are backing Biden’s goal of eliminating carbon from the power sector by 2035.
A new resolution introduced yesterday by the Democratic senators also calls for rapid electrification of buildings, transportation, and industry. The resolution doesn’t set a deadline for electrifying those sectors, but it lends support to policies incentivizing electric appliances for buildings, supporting public electric vehicle charging infrastructure, encouraging electrification of public transit, and improving permitting processes for zero-emissions energy.
The resolution is backed by several environmental groups, including the Environmental Defense Fund, Evergreen Action, the Natural Resources Defense Council, and Sierra Club.
TEXAS OIL COMMISSIONER PUSHES RESOLUTIONS REJECTING CLIMATE MANDATES: The Interstate Oil and Gas Compact Commission, a group of more than two dozen oil and gas producing states, passed resolutions during its annual meeting this week opposing the sweeping climate bill from House Democrats and calling on the government to not discriminate against oil and gas companies in climate disclosure rules.
The resolutions were authored by Texas Railroad Commissioner Wayne Christian, who serves as the vice-chairman of the oil and gas state group. Christian also authored a resolution promoting the development of carbon capture technologies, which the commission approved.
Christian, in a statement, called the comprehensive climate bill pushed by top Democrats on the House Energy and Commerce Committee “nothing more than the Green New Deal in lipstick.” That bill would, among other things, set requirements for utilities to reach carbon-free power by 2035, in line with the Biden administration’s goal.
Christian also criticized the environmental, social, and governance (or ESG) investing movement, echoing concerns from Republican politicians in D.C. that requirements for climate disclosures would force divestment of fossil fuels and expressing a desire to put ESG “in check.”
SMALL NUCLEAR ADVOCATES LOOK FOR SPEEDIER APPROVALS: The Nuclear Innovation Alliance released a report today calling for Congress to reform the Nuclear Regulatory Commission’s model of charging hourly fees on applicants for new designs, which it says is slowing the progress of approving small advanced nuclear reactors.
“This is an important moment to reconsider how we fund licensing new nuclear power technologies, especially in light of the imperatives of climate mitigation. Changing the fee model to reduce or eliminate fees will speed up the rate of private sector innovation,” said NIA Executive Director Judi Greenwald.
Under the current system, license applicants must pay the NRC fees before they begin earning revenues. That is particularly burdensome, the NIA said, for a new breed of companies developing smaller reactors, many of them start-ups with limited capital who are pursuing new customers like small towns, rural communities, and industrial users. NIA calls on Congress to eliminate or reduce fees for new license applicants, or alternatively to consider imposing a maximum cap on fees or defer collection until a plant is operating.
HOW CLIMATE CHANGE MADE SUPERSTORM SANDY’S DAMAGES WORSE: Roughly 13% of the total losses incurred by New York, New Jersey, and Connecticut from Hurricane Sandy in 2012 were a result of sea level rise caused by climate change, researchers from Climate Central, Rutgers University, and the Stevens Institute of Technology found in a study published yesterday in Nature Communications.
Climate change drove New York-area sea levels around four inches higher over the century before the storm, increasing the damages caused by Sandy’s storm surge to affect 36,000 more homes and 71,000 more people, the researchers found. In total, the sea level rise accounted for $8.1 billion in losses in the study’s midpoint case, though the researchers found the losses linkable to climate change could be as much as $14 billion.
The study is the latest development in what is known as “climate attribution” research, in which scientists work to determine how much more severe a natural disaster is due to warming temperatures, sea level rise, and other climate change effects. Similar studies have been conducted for Hurricane Harvey, showing climate change intensified the storm’s extreme rainfall, though this is the first study to examine the effects of sea level rise.
“Our approach can be applied to other past or future storms or even just the high tide flooding that’s becoming so common around the world,” said Benjamin Strauss, chief scientist and CEO of Climate Central and the lead author on the study. “The costs of climate change are likely much greater than we appreciate today.”
NEW CRITICAL MINERALS INITIATIVE: Securing America’s Future Energy announced yesterday it has hired Abigail Wulf, previously with NASA, to lead the group’s new Center for Critical Minerals Strategy.
The new center will work to promote development of critical minerals in the U.S. and steer away from supply chains that rely heavily on China, according to a news release. It will also develop a “new social compact for responsible mineral production and processing.”
Wulf served as senior science communicator for research within NASA’s earth science division, and she previously worked as a policy manager for the American Geosciences Institute, where she co-led a coalition representing all aspects of the critical minerals supply chain.
SAFE also announced the hire of Jeffrey Jeb Nadaner to lead the group’s Commanding Heights of Global Transportation initiative. Nadaner previously was deputy assistant secretary of defense for industrial policy at the Pentagon.
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WEDNESDAY | MAY 19
2 p.m. Green 2.0 will host a virtual discussion with Asian-American and Pacific Islander leaders on the future of the environmental movement.
THURSDAY | MAY 20
9:30 a.m. The House Select Committee on the Climate Crisis will hold a remote hearing titled, “Powering Up Clean Energy: Investments to Modernize and Expand the Electric Grid.”
9:30 a.m. The Senate Committee on Agriculture, Nutrition, and Forestry will hold a hearing titled, “Federal, State, and Private Forestlands: Opportunities for Addressing Climate Change.”