Daily on Energy: Biden to leverage Defense Department supply chains to fight climate change

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CLIMATE AND DEFENSE SUPPLY CHAINS: The Defense Department is seeking input on climate-related disclosures in an effort to boost the transparency of its supply chain, signaling the Biden administration is keen to reduce the emissions embedded in the agency’s massive purchasing power.

Such a step could also allow the Biden administration to direct the Defense Department’s procurement power to cleaner forms of energy, a move that could help drive down costs for those technologies more widely.

In a notice published yesterday, the Defense Department posed a number of questions to companies and other stakeholders about how and whether they report their greenhouse gas emissions, whether they participate in environmental, social, and governance (ESG) reporting, and whether they collect emissions data from their suppliers.

“Greenhouse gas transparency is key to improving the climate performance of the [Defense Department’s] supply chain,” deputy Defense secretary Kathleen Hicks said of the move on Twitter.

What’s next: The Defense Department’s notice doesn’t offer many details about how it intends to act on the information it collects, beyond citing compliance with President Joe Biden’s May executive order directing federal agencies to identify and address financial risks posed by climate change.

Nonetheless, Biden is expected to take much greater advantage of the Defense Department’s purchasing power to promote clean energy than any prior administration, including the Obama administration. In another executive order early in his term, Biden directed federal agencies to purchase an increasing amount of clean electricity and electric vehicles.

Biden also recently tapped Rachel Jacobson, an environmental lawyer who is a veteran of the Defense, Interior, and Justice departments, as assistant secretary of the Army for installations and environment. In the Obama administration, Jacobson served as the Pentagon’s top environmental lawyer and a top appointee in the Interior Department.

The Securities and Exchange Commission is already moving toward establishing requirements for public companies to report their greenhouse gas emissions and climate-related physical risks. The Defense Department, however, is the first agency to move independently on climate-related disclosures.

The significance of the agency’s purchasing power: Clean energy experts have said the Defense Department and other agencies investing in nascent clean energy innovations can help those technologies gain a foothold in the market.

The Defense Department “is getting ready to enlist its huge supply chain in the fight against #climatechange. Very big deal,” tweeted David Hayes, a top White House climate adviser.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email jsiegel@washingtonexaminer.com or asmith@washingtonexaminer.com 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.

Daily on Energy will not publish on Monday, July 12. We’ll be back in your inbox on Tuesday, July 13.

SPECIAL EDITOR’S NOTE — FAREWELL, ABBY: Today is Abby’s last day with the Washington Examiner and last time writing for Daily on Energy.

Abby’s editor — that’s me, Joe Lawler — is sorry to see her go. She’s done great reporting on energy, environmental policy, and climate change, and will take with her a body of work to be proud of. Abby is an exemplary professional, a straight shooter, and a fantastic co-worker. I can speak for myself and Josh in saying that we will miss her but that we look forward to seeing her writing elsewhere.

Please follow Abby to get updates about what she’ll be working on next.

MOVEMENT NEXT WEEK ON ENERGY PIECES OF THE INFRASTRUCTURE DEAL? The Senate Energy Committee could mark up Chairman Joe Manchin’s draft energy legislation, his pitch to get his energy priorities in the bipartisan infrastructure deal, as soon as next week, said Kellie Donnelly, executive vice president and general counsel of Lot Sixteen.

Donnelly, a former chief counsel for the Senate Energy Committee, told an event yesterday hosted by CRES Forum that she believes Manchin’s bill has the support of Sens. Lisa Murkowski and Bill Cassidy, two key Republicans in the bipartisan group that struck the infrastructure deal. Sen. John Barrasso, the top Republican on the Senate Energy Committee, is engaging at the staff level in negotiations over Manchin’s energy provisions, too, Donnelly added.

Should the Senate Energy Committee meet next week on Manchin’s bill, it could tee it up to move with the bipartisan infrastructure deal, which Senate Majority Leader Chuck Schumer is aiming to move on the Senate floor as soon as the week of July 19.

BUTTIGIEG HINTS FUEL ECONOMY STANDARDS WILL BE AMBITIOUS: Transportation Secretary Pete Buttigieg stressed the importance of strict fuel economy standards to clean up the transportation sector because, even as the U.S. shifts to more electric vehicles, gas-powered cars will still be on the roads for some time.

“No matter how good we get at” making electric cars affordable, there will still be gas-powered cars on the roads for a long time “even when no gas cars are being sold,” Buttigieg said.

Buttigieg, speaking at an event yesterday hosted by the Bipartisan Policy Center, didn’t offer many specifics about the administration’s fuel economy proposal, due out sometime this month, but he said that the statute directs the Transportation Department “to be ambitious.” The agency works with the EPA to set fuel economy and tailpipe emissions standards for passenger cars, an important administrative lever to drive emissions reductions in the transportation sector.

“We’re seeking to be as straightforward as we possibly can about the policy goals,” Buttigieg said, adding that the statute directs the Transportation Department to set standards at a “maximum feasible” level. The Biden administration undoubtedly has a very different view about what automakers can achieve than the Trump administration, which drastically weakened the standards.

HEAT WAVES AND OTHER EXTREMES STRAIN THE POWER GRID: The U.S. power grid isn't prepared for severe weather, a vulnerability that will become more acute as climate change worsens extremes and if the grid doesn't adjust to managing more renewable energy.

This summer is already reflective of the tensions extreme weather is bringing to bear on the electricity system. Last month, grid operators in both Texas and California asked people to conserve power, fearful of having to impose outages on high-demand hot summer days.

The pleas from California and Texas regulators came less than a year after those states experienced blackouts — California last summer during wildfire season and Texas in February during a rare cold snap. Recent unprecedented heat in the Pacific Northwest is putting a strain on the electricity grid, too.

Climate and weather "is the most influential and impactful force that grid planners and operators have to deal with," said John Moura, director of reliability assessment and performance analysis for the North American Electric Reliability Corporation, or NERC, a regulatory agency focused on grid stability and security.

Recently, though, "the grid has more than ever been exposed to these extreme conditions," such as heat waves, drought, flooding, and prolonged freezing temperatures, he added.

More on why these extremes place such stress on the grid, and how to alleviate the strain, in Abby’s story for next week’s Washington Examiner magazine.

NORTH DAKOTA SUES OVER CANCELED OIL AND GAS LEASE SALES: North Dakota is suing the Biden administration for blocking oil and gas production by canceling lease sales, taking another shot at one of Biden’s central day-one climate policies to pause oil and gas leasing on federal lands.

The state’s lawsuit takes aim at the Biden administration for its cancellation of individual lease sales in March and June that the state says were required by law. It follows a ruling from a federal judge last month blocking Biden’s leasing pause.

North Dakota says in its lawsuit that the canceled lease sales will cost the state, the nation’s second-largest oil and gas producer, more than $80 million. That could balloon to billions in lost revenue if the Bureau of Land Management doesn’t begin holding lease sales again, the state claims.

The Biden administration hasn’t said yet how it will approach future oil and gas leasing or whether it will deliver on Biden’s campaign promise to ban new leases altogether on federal lands.

HOW TO MAXIMIZE CLEAN ENERGY TAX CREDITS: Policymakers should offer long-term, full-value, flexible tax credits that allow developers to claim the incentives as direct payments and extend to cover all clean energy resources, the Rhodium Group said in a new report yesterday evaluating how to maximize the potential of clean energy incentives.

Enacting those incentives could slash power sector carbon emissions to between 64% and 73% below 2005 levels in 2031, up to eight times more reductions than would be achieved by a simple extension of existing tax credits, Rhodium finds.

Extending and restoring the credits to their full value alone would achieve between 54 and 117 million metric tons in emissions reductions over current policy in 2031, the report says. Making the incentives flexible — or breaking down the rigid barriers that allow solar to only qualify for an investment tax credit and wind to only qualify for a production tax credit — would further double the effectiveness of the incentives, the report adds.

Offering a direct pay option, long sought after by clean energy groups, ensures there are no potential bottlenecks as renewable energy costs continue to decline and developers look to take greater advantage of the tax credits, Rhodium says. Finally, allowing other clean energy resources, such as nuclear energy and hydropower, to also qualify for the tax incentives helps to push more fossil fuels out of the generation mix, the report concludes.

RELATED...SOLAR INDUSTRY’S TAX POLICY ASKS: The main solar industry lobby is calling on Congress to significantly bolster tax credits for its industry, including by extending the incentives by 10 years, restoring them to their full value, and allowing developers to claim them as direct cash payments.

The Solar Energy Industries Association laid out their requests in a letter yesterday to House Ways and Means Chairman Richard Neal. The group is also asking lawmakers to add energy storage to the solar tax credits, as well as offer tax support for clean energy manufacturing and electricity grid upgrades.

“The fact is, despite our industry’s tremendous growth, solar comprises just over 3% of electricity generation nationwide,” wrote Abigail Ross Hopper, SEIA’s president and CEO, in the letter. She noted to reach Biden’s climate goals, solar must reach 20% of the electricity mix by the end of this decade. “That means quadrupling our current pace of installations by 2030. We are in a race against time” she added.

LAWMAKERS PUSH TO BOOST HYDROPOWER: A group of Democratic lawmakers, led by New Hampshire Rep. Annie Kuster, unveiled new legislation today to invest $25.8 billion in hydropower, including funds to enhance the safety of existing dams and remove dams that are past their lifetime.

The United States has more than 90,000 dams, and roughly 6,000 of those have been deemed “high-hazard” in need of repair or removal. Sen. Diane Feinstein plans to introduce the companion bill in the Senate later this month.

Many of the elements of the legislation track closely with a deal the hydropower industry and environmental groups struck in May to propose a $63 billion infrastructure proposal to support hydropower. In late June, Sens. Maria Cantwell and Lisa Murkowski unveiled a separate bill to enact tax credits to support hydropower upgrades and the removal of obsolete dams.

EPA STOPS SALE OF ‘LONG-LASTING’ COVID DISINFECTANT: The EPA announced yesterday it had ordered Allied BioScience to stop selling SurfaceWise2, which the company had billed as a long-lasting disinfectant that could continually kill the coronavirus on surfaces for seven days.

During the Trump administration, the EPA had approved SurfaceWise2 for emergency use in Arkansas, Oklahoma, and Texas as part of an effort to get more disinfectants that could kill the coronavirus out to businesses. American Airlines had been approved to spray SurfaceWise2 to disinfect their planes and facilities in Texas.

Now, however, the Biden EPA says its investigations found Allied BioScience “was marketing, selling, and distributing SurfaceWise2 in ways that were inconsistent” with pesticide laws and regulations, ordering the company to immediately stop selling the product.

“Pesticides can cause serious harm to human health and the environment, which is why EPA requires their registration before being distributed for use,” said Larry Starfield, EPA’s acting enforcement chief, in a statement. “EPA is committed to holding companies accountable for not adhering to federal environmental laws.”

The Rundown

Financial Times Biden faces green dilemma in push to build US rare earths capacity

Wall Street Journal American frackers show restraint as oil tops $70

CBS News House progressives demand climate action be included in infrastructure deal

Reuters US's Yellen urges better coordination on carbon policy

Calendar

WEDNESDAY | JULY 14

9:45 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a business meeting to consider the nominations of Alejandra Castillo to be assistant secretary for economic development at the Commerce Department, Jane Nishida to be EPA’s assistant administrator for international and tribal affairs, and Jeffrey Prieto to be EPA’s general counsel. Immediately following, the committee will hold a hearing on the nomination of Michael Connor to be assistant secretary of the Army for civil works.

11:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee’s environment and climate change subcommittee will hold an oversight hearing on the Nuclear Regulatory Commission.

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel, Abby Smith

Original Location: Daily on Energy: Biden to leverage Defense Department supply chains to fight climate change

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