Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what's going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!
BIDEN IN A PICKLE: President Joe Biden’s plea for OPEC and its allies to help fix rising U.S. gasoline prices is pleasing no one politically.
Republicans say it’s pathetic to push for increased global production at the same time the administration is imposing policies to tighten domestic output, while liberals are disturbed Biden is propping up fossil fuels at all when UN-backed scientists just confirmed climate change is bad and getting worse.
Biden’s move demonstrates the challenge of pursuing policies that decarbonize the economy over time while mollifying short-term angst over energy prices.
The Biden administration wants to counter higher gasoline prices because that makes it harder to pursue big climate policies since it reminds people of energy costs and opens up political attacks that the clean energy transition could be expensive.
“To have political support to put in place these policies, you can't have gasoline prices go nuts,” said Bob McNally, president of Rapidan Energy Group.
McNally told me the timing of Biden’s call to OPEC+ is weird in that recent forecasts, including one this week by the International Energy Agency, project oil demand to fall the rest of this year because of the economic fallout from the Delta variant. With OPEC+ already scheduled to restore production this month, prices should come down over time.
Inflation weighs heavy: But Biden’s problem is more immediate -- “the clear and present danger” of inflation -- a growing political problem that opponents are linking to the administration’s big spending proposals.
Centrist Democrats such as Sen. Joe Manchin of West Virginia are citing inflation in calling for their party’s leaders to slice the price tag of its pending $3.5 trillion reconciliation spending package.
“There is no bigger threat than that to the Biden agenda,” said McNally, a former top oil official in the George W. Bush administration.
Wait, shouldn’t Biden be rooting for high gas prices? The conventional wisdom says high gasoline prices should boost his push for 50% of new car sales to be electric by 2030, since it would make alternative vehicles more attractive.
McNally, however, argued environmentalists should be cheering for a sustained period of high oil and gas prices, not a temporary spike caused by the ups-and-downs of a chaotic pandemic.
“EVs would start to fly off the shelves,” McNally said. “That is different than a temporary oil price spike that reverses.”
Fossil fuel products will only be truly priced out of the market when the government invests in new clean energy technologies to make them cheaper, McNally suggested. While that’s already happening, it’s not occurring fast enough even for Biden’s taste, as his aggressive climate spending agenda shows.
“What Biden has to do in the short-term is dampen down oil price spikes, while putting in place policies that can catalyze this miraculous transition,” McNally said.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email firstname.lastname@example.org 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.
THE PUSH FOR ‘RESPONSIBLY SOURCED GAS’: A new class of third-party data providers aims to help natural gas companies measure their emissions and certify gas as being clean, as I report in a story for our magazine published this morning.
Case study: Denver-based startup Project Canary, launched in 2019, scores oil and gas operators based on factors including methane emissions intensity, the level of emissions per unit of economic activity.
The company also provides producers solar-powered devices for continuously monitoring methane emissions that can be installed across the oil and gas supply chain.
Based on the data it helps collect, Project Canary will certify producers as providing “Responsibly Sourced Gas,” a branding that could give operators a leg up in the marketplace.
“Think of it as a credit score,” Project Canary co-founder and CEO Chris Romer told me. “We are like the Moody and S&P of climate ratings.”
Oil and gas producers are especially trying to collect reliable data on releases of methane, a greenhouse gas more potent than carbon, and demonstrate they can reduce these emissions over time.
Romer and many experts consider better-controlling methane leaks to be the “low-hanging fruit” of easy emission reduction efforts since it could have a quicker impact, given its higher warming potential in the short term.
‘Greenwashing’ or valuable? Andrew Baxter, the Environmental Defense Fund's director of energy strategy, said he appreciates the value of third-party certifiers, including Project Canary, in installing ground-based sensors that can continuously monitor methane at oil and gas sites. That can help stop “super emitting” events or large-scale leaks that occur when no one is watching and responsible for a disproportionately high share of methane emissions.
But Baxter said he’s concerned that certifications of “Responsibly Sourced Gas” provided by Project Canary's cannot be independently audited.
He questioned whether Project Canary represents a conflict of interest by leasing its detection equipment to producers while also certifying their gas as low emissions.
“Data quality is the elephant in the room,” Baxter said.
CLEARING MY NOTEBOOK...API ON CARBON ‘TARIFFS’: Earlier this week, I interviewed Mike Sommers, CEO of the American Petroleum Institute, about how the oil and gas lobby is looking to shore up its credibility as a carbon pricing supporter after some choppy waters.
Democrats, of course, are skipping over passing a domestic carbon price while levying a fee on imports, and instead designing their policy to match the costs already facing U.S. companies from a hodgepodge of state and federal environmental regulations and policies.
Sommers, however, argued Democrats can’t have it both ways.
“You can’t have one without the other,” he told me. “If you just propose a border adjustment without a carbon price, that’s called a tariff.”
Sommers said API supports imposing a border carbon adjustment if the U.S. ever did pass a carbon price, so “as not to disadvantage American energy on the world stage.”
But without a domestic carbon price, “we don’t think it’s appropriate for the U.S. to start a trade war with other countries while still recovering from the economic impacts of COVID-19.”
CHINA RAMPS UP COAL IN STEEL-MAKING: China is planning a surge of new coal and carbon-intensive steel projects in the first half of 2021, new research this morning shows.
China, the world’s top coal user and emitter, announced 18 new blast furnace projects -- steelmaking powered by coal -- and 43 new coal-fired power plant units, according to an analysis by the Centre for Research on Energy and Clean Air and Global Energy Monitor.
If approved and built, those projects will emit an estimated 150 million tonnes of carbon a year, the groups say.
China’s state-owned power and steel firms have continued to build and announce new coal projects, even as Beijing has pledged to aim for carbon neutrality by 2060 and called for strictly controlling “high-energy, high-emission” projects.
But China’s ability to curb its emissions growth -- it aims to reach peak emissions before 2030 -- depends on permanently shifting investments in the power and steel sectors away from coal to low-carbon steel and green hydrogen production, the groups warn.
BUT CHINESE COAL COMPANIES ARE HURTING: China’s coal electricity companies are underperforming both economically and financially, an analysis from London-based Transition Zero found yesterday.
Two-thirds of the coal operating fleet may be struggling to cover their operating costs and the vast majority of operating coal could be shut and replaced at a saving to consumers, the group determined.
The problem is domestic fuel prices are surging in 2021.
Domestic thermal coal prices have rallied 30% since January.
That has led utility companies to temporarily close for maintenance, since shutting down helps recoup financial losses, leading to frequent blackouts and brownouts this year.
TransitionZero says the fuel price volatility highlights the “urgent need for reform” of China’s electricity market. Electric reliability problems, the group argues, will complicate China’s transition to a carbon neutral economy.
ENERGY JOBS ON THE MEND, BUT NOT BACK TO FULL HEALTH: The energy sector added jobs for the 5th straight month in July, but employment is still down nearly 11% since the onset of the pandemic in March 2020, according to a new analysis.
There were 6,082 jobs added in fields involving energy technology and services last month, the Energy Workforce & Technology Council said, citing Bureau of Labor Statistics data.
The biggest gains were in Texas, Louisiana, and Oklahoma, big oil- and gas-producing states.
Over the past five months, the sector has scored a net increase of around 38,255 jobs.
The Council estimates a peak of more than 115,000 pandemic-related job losses, of which 38,300 positions have been restored.
Reuters Droughts shrink hydropower, pose risk to global push to clean energy
Los Angeles Times Biden wants to create clean energy jobs. Here’s what they might look like
New York Times Oil turns a rural county into a boomtown
TUESDAY | AUG. 17
10 a.m. ConservAmerica will hold a webinar exploring a federal Clean Energy Standard.
Washington Examiner Videos
Original Author: Josh Siegel
Original Location: Daily on Energy: Biden scrambling on gas prices despite climate agenda