Daily on Energy: Democrats face call for help from electric co-ops

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  • Jim Matheson
    United States Congressman from Utah

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ELECTRIC CO-OPS SEEK AID IN DEMOCRATIC BILL: The group representing electric co-ops is asking Democratic leaders for help in the clean energy infrastructure reconciliation package.

The push by the National Rural Electric Cooperative Association underscores the importance of co-ops if Democrats and President Joe Biden want to meet their clean electricity targets.

Why co-ops matter: U.S. utilities are moving to clean energy, but the shift is happening more slowly at co-ops that service much of rural America. Because they are owned by customers, not shareholders, they can’t raise equity and rely on debt financing. As non-profit businesses, they can’t use renewable tax credits. Co-ops are also often locked into long-term contracts with coal plants.

Sen. Tina Smith of Minnesota recently told me Democrats as part of their reconciliation package are looking to find ways to help co-ops and non investor-owned utilities transition to clean energy. She said various committees could seek to devise ways to assist co-ops, including Energy and Natural Resources, Finance, and Agriculture.

The proposed “Clean Electricity Payment Program” she is working on would assign utilities different clean electricity targets depending on their starting amount, which should ease the burden on utilities in carbon-intensive states to have more time to wean off fossil fuels.

“As we build out the budget resolution, you will see us trying to find ways to help co-ops and non-investor owned utilities being able to take advantage of this and address their structure,” Smith told me. “We have to deal with that fundamental reality they have.”

What co-ops want: But the National Rural Electric Cooperative Association seems skeptical of clean electricity standard-type policies.

In the letter, CEO Jim Matheson said the costs to serve rural America are “significantly higher” than other electric utilities and warned a clean electricity standard could create a “disproportionate burden on millions of low- and moderate-income families and small businesses.”

Instead, Matheson calls for Congress to establish a voluntary financial incentive program, funded at a minimum of $30 billion, to assist in the transition to low carbon electricity that allows each co-op to determine its path forward based on factors such as the needs and desires of its members, the availability of energy resources and technologies, and infrastructure investments.

The $30 billion in grants and loans would support deployment of low-carbon electricity sources and debt relief for premature retirement of fossil fuel plants.

In addition, Matheson seeks a solution to co-ops’ inability to use existing tax subsidies by pushing lawmakers to provide direct-pay tax incentives for developing wind, solar, energy storage, carbon capture, and nuclear.

He also warns clean electricity targets should include “realistic, reasonable, and achievable timelines.”

One more thing: It’s worth noting that Smith and Democratic leaders are pitching their clean electricity payment plan as being different than a traditional clean electricity standard, without it being a binding regulatory mandate.

The program instead would pay utilities to generate a growing percentage of power from carbon-free sources with the end goal of having 80% clean power by 2030, while assessing a fee on utilities that underperform.

We’ll have to see if the co-ops view that compromise as sufficient.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email jsiegel@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.

LATEST ON DEMOCRATS’ INFRASTRUCTURE FIGHT: Democrats’ massive infrastructure and social spending package stalled yesterday after House centrists threatened to vote against part of the deal, the Washington Examiner’s Susan Ferrechio reports.

A group of roughly 10 Democrats engaged in a standoff with top leaders last night over a planned vote to pass a $3.5 trillion budget resolution as early as today.

Speaker Nancy Pelosi, a California Democrat, had offered centrists a deal: She would pledge to take up the bipartisan infrastructure package by October and allow moderates to escape a vote on the budget resolution by allowing it to pass in a procedural vote setting the rules for debate.

Centrists appeared hesitant to accept the deal as of late yesterday, and a plan to vote on a combined rule for both the infrastructure and budget resolution was postponed. But the centrists huddled with Pelosi again this morning and are on the cusp of agreeing to a new Pelosi proposal.

According to reports, the House is planning to vote on a rule this afternoon which would pass the budget resolution teeing up the reconciliation process and establishing that a vote on the Senate's bipartisan infrastructure bill would occur by Sept. 27.

CLIMATE HAWK DEMOCRATS DEMAND ‘IMMEDIATE’ ACTION: Labor and environmental groups flanked a group of House Democrats at a press conference yesterday calling for their colleagues to support a sweeping budget proposal that would accelerate clean energy development and deployment and tackle climate change.

Rep. Kathy Castor of Florida, chair of the House Select Committee on the Climate Crisis, invoked “the grave warnings” from this month’s UN IPCC report, which she said compels Congress to take “immediate, transformational action.”

Other Democrats, including Rep. Debbie Dingell of Michigan, Steven Horsford of Nevada, and Sean Casten of Illinois, noted the extreme weather events afflicting their states and others this summer, including droughts, wildfires, hurricanes, and flash floods.

“From investing in American-made electric vehicles to passing a Clean Electricity Payment Program so that we can get to 100% clean electricity by 2035, we cannot afford to let this once-in-a-generation opportunity to protect families and small businesses, prevent economic catastrophe, create jobs, and grow our economy pass us by,” Casten said.

NATIONALIZE TRANSMISSION BUILDOUT, GROUPS ADVISE: Most analyses show that in order for Biden to reach his goals of carbon-free power by 2035 and net-zero emissions across the economy by 2050, we’ll need to double or triple the size of the nation’s electricity transmission system.

Clean Air Task Force and the Niskanen Center released a new report this morning that determines the current piecemeal, project-by-project approach to expanding transmission won’t get us there in time.

The report calls for a new system to rapidly scale capacity — including by potentially establishing a National Transmission Organization that would plan, site, and fund a national grid.

The new entity would create and continually update a national transmission plan with states and other stakeholders, and be provided with funding and permitting authority.

“The fundamental problem is that we are trying to build a patchwork system, project by project, without an overall national plan, and that leads to case-by-case stalemate,” said Clean Air Task Force executive director Armond Cohen. “If there is no national plan perceived as legitimate, every stakeholder can object that this or that transmission line is not needed, is being built only for private profit, or should go ‘somewhere else.’”

The bipartisan infrastructure bill as passed by the Senate would set up a new “Grid Authority” within the Energy Department to speed the approval process, which can take up to a decade, and also gives leeway for DOE to designate corridors of national interest, permitting quicker construction.

METHANE LEAKERS ARE REPEAT OFFENDERS: The Environmental Defense Fund is out with new data showing the most prevalent sources of methane leaks in the prolific Permian oil and gas basin are repeat offenders.

EDF scientist David Lyon presented the data at the EPA’s methane detection tech workshop yesterday, which is meant to highlight evolving science and technology for tracking and measuring methane emissions.

Lyon said EDF conducted surveys over two weeks in late July and early August covering thousands of sites and observed more than 500 emission sources and over 900 methane plumes.

One of the key findings was the prevalence of repeat emissions – EDF found that many of the persistent sources found during this survey were also significant sources from the group’s 2019 surveys.

Additionally, the surveys revealed many large, intermittent emission events that EDF says underscore the need for regulators to require regular monitoring of oil and gas sites.

The survey was part of EDF’s Permian Methane Analysis Project that aims to reveal whose equipment is leaking, and how much, and publish the findings to prod companies and regulators to take action.

EPA is expected to propose federal methane rules for new and existing sources next month.

WEST VIRGINIA...TREASURY POLICY ‘CUTS OFF’ FOSSIL FUELS: Fossil fuel states are not interpreting the Treasury Department’s new guidance for financing through multilateral development banks as being friendly to oil and gas.

West Virginia State Treasurer Riley Moore released a statement yesterday claiming the Biden administration is seeking to “cut off some of the poorest countries in the world from access to cheap, abundant” fossil fuels and to prevent U.S. companies from “investing and doing business in international markets.”

It’s true the guidance from Treasury, the largest shareholder in major development banks such as the World Bank and African Development Bank, opposes all coal and oil projects.

But it also offers “narrow” support for natural gas, as I wrote last week. While the U.S. won’t support any natural gas exploration, it would back some downstream natural gas facilities in poor countries when “there is no economically and technically feasible clean energy alternative” and if energy security would be improved.

The guidance also leaves open the possibility of supporting carbon capture and methane abatement projects.

Moore, however, said he considers those exemptions to be overly constraining.

CENTRAL BANKS PRESSURED TO CLAMP DOWN ON FOSSIL FUELS: Central banks are not using available levers to stem the flow of funds to fossil fuel production, according to a report today from liberal environmental groups.

None of the dozen largest central banks have policies that align with the goals of the Paris Agreement. The analysis from Oil Change International, 350.org, Earthworks, and more, reviews policies and financing of central banks from Canada, China, the European Union, France, Germany, India, Italy, Japan, Russia, Switzerland, the United Kingdom, and the U.S.

Central banks have ignored proposals to use reserves requirements or prudential regulation to restrict fossil fuel finance.

Between 2016 and 2020, central banks have failed to prevent $3.8 trillion of financial flows to fossil fuels from commercial banks, the groups said.

The Rundown

New York Times Climate change contributed to Europe’s deadly floods, scientists find

Washington Post Tennessee floods show a pressing climate danger across America: ‘Walls of water’

Politico Scientists say the world urgently needs to cut methane emissions. The politics aren't as simple.

Calendar

TUESDAY | AUG. 24

4 p.m. A new group, High Schoolers for Carbon Dividends, will hold a launch webinar event featuring remarks from Rep. Scott Peters, Democrat of California, and former GOP Rep. Ryan Costello of Pennsylvania.

MONDAY | AUG. 30

12 p.m. The US-Qatar Business Council will host a webinar event featuring energy experts titled, “How Will LNG Drive a Sustainable Energy World?”

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel

Original Location: Daily on Energy: Democrats face call for help from electric co-ops

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