Daily on Energy: Democrats scramble to save climate agenda

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DEMOCRATS SCRAMBLE: Don’t say we didn’t warn you. Democrats are likely to cut their signature climate policy from their reconciliation package because of opposition from key centrist vote Sen. Joe Manchin of West Virginia.

That development from the New York Times late Friday came after Josh reported Democrats’ efforts to accommodate Manchin's beef with the Clean Electricity Performance Program were insufficient.

“Sen. Manchin has clearly expressed his concerns about using taxpayer dollars to pay private companies to do things they’re already doing,” his office said in a statement this weekend.

So where does that leave Democrats? Likely depending on expanded and strengthened clean energy tax subsidies as the main vehicle for pursuing President Joe Biden’s emissions reduction goals.

That’s always been the most obvious component of Biden’s reconciliation package to survive, both politically and for procedural reasons. Even if they had the votes, Democrats would have to navigate the tricky budgetary rules of reconciliation to include the novel CEPP program, which was designed to pay utilities to generate more clean power and penalize those that fail to meet certain targets.

“One overall problem with reconciliation (said everyone) is that it makes policy design incredibly difficult,” Shane Skelton, a senior vice president of Boundary Stone Partners, told Josh. “As a result, taxes and tax credits become a far more user friendly tool, and it looks like that is the direction we're heading.”

Carbon pricing to the rescue? Speaking of taxes, proponents of carbon pricing are going to recommit to including the policy in reconciliation, in addition to a new fee on methane emissions.

“If the CEPP has fallen out of the package, that makes the methane and carbon pollution fees even more critical as a pathway to safety,” Sen. Sheldon Whitehouse of Rhode Island told Josh this morning.

Whitehouse and his colleagues on the Finance Committee have pitched a carbon price as complementary to CEPP and a potential backup to it, given its neater fit for reconciliation budget rules.

Whitehouse and other proponents aim to exempt gasoline from the tax to protect consumers already reeling from high prices.

But sources following the negotiations say carbon pricing faces massive political headwinds of its own that are exacerbated by the current energy crunch.

“Right now, I find the politics hard to fathom. It might be a little tone deaf to push hard for a carbon tax at the very time when energy prices are so high,” Scott Segal, a utility industry lobbyist at Bracewell, told Josh.

Manchin has been outspoken about his opposition to carbon taxes and cap-and-trade programs. House Democrats, meanwhile, did not include carbon pricing in their version of the reconciliation package, as the idea has fallen out of favor with progressives.

“I don’t think you can have any carbon pricing bill that you could introduce to the House today that you would get the majority of Democrats,” Rep. Sean Casten, an Illinois Democrat, told Josh and co-host Neil Chatterjee for a new episode of the “Plugged In” podcast dropping tomorrow.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Jeremy Beaman (@jeremywbeaman). Email jsiegel@washingtonexaminer.com or jbeaman@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.

EMISSIONS IMPLICATIONS OF CUTTING CEPP: The clean energy tax credits that would form the muscle of the reconciliation package’s climate provisions if CEPP were to fall out could achieve big emissions reductions, but not at the level needed to meet Biden’s goals.

In that scenario, the share of the clean (zero-carbon) electricity in the U.S. power mix would rise from around 40% today to 61-69% by 2030, according to recent modeling by Energy Innovation, a nonpartisan think tank.

But that falls short of the 80-85% clean power grid achievable if the tax incentives were paired with CEPP. Biden has said he aims to achieve 80% clean electricity by 2030 in order to enable economy-wide emissions to fall in half by then.

The Energy Innovation research shows the CEPP program would be responsible for more than a third of the total emissions reductions from both the bipartisan and reconciliation infrastructure bills.

Disagreement among Democrats: Sen. Ron Wyden of Oregon, the Finance Committee Chairman who has pushed an overhaul of the energy tax code that would replace 44 energy tax breaks and incentives with three technology-neutral emissions-based incentives, claims the majority of emissions reductions would actually come from the tax breaks.

“While I strongly support the Clean Energy Payment Program, it’s important to note that the overwhelming majority of emissions reductions come from the energy tax overhaul in our Clean Energy for America Act,” Wyden said in a statement over the weekend.

But other Democrats, such as Sen. Tina Smith of Minnesota, a leading proponent of CEPP, suggested they won’t support a reconciliation bill without it because Biden would fall short of his Paris Agreement emissions pledge.

“Clean energy tax credits are great, but they can’t do the heavy lifting all by themselves,” Smith tweeted yesterday.

A range of House Democrats warned removing CEPP is intolerable to them, including the entirety of the 96-member Congressional Progressive Caucus and Casten, who tweeted “to take it out is to decide that climate change isn't a problem."

CHINA’S OVERSEAS COAL PLEDGE IS KINDA A BIG DEAL: China’s recent decision to end financial support for building new coal plants abroad could make a major difference in global efforts to limit the use of fossil fuels, the International Energy Agency said as part of an overlooked finding from last week’s World Energy Outlook.

Just how big a punch would it pack? China ending funding for overseas coal, IEA found, could lead to the cancellation of up to 190 gigawatts of coal projects and prevent the emission of as much as 20 billion metric tons of carbon dioxide — roughly the same amount that would be saved by the European Union hitting its goal of net-zero emissions by 2050.

To put that amount in context, a wave of coal plant retirements in the U.S. has cut the country’s coal capacity by 105 gigawatts since 2010, according to Carbon Brief.

Germany, home to the world’s fifth-largest coal fleet, has 44 gigawatts of operating coal plants.

“The pledge on overseas coal is globally significant,” said Justin Guay, director of global climate strategy at the Sunrise Project, an environmental group. “If we can take off Germany’s coal fleet four or five times over, that is going to help bend the curve on emissions.”

To be sure, China’s pledge is vague and incomplete, and its effect is dependent on how it defines the policy, to say nothing of its inaction on curbing domestic coal use.

But Guay found IEA’s analysis noteworthy because the agency is historically considered conservative in its analysis.

“It's not like Greenpeace put that out there,” Guay told Josh. “There was definitely thought and data that went into producing that number.”

COAL-FIRED POWER UP FOR FIRST TIME IN SEVEN YEARS: U.S. coal-fired electricity generation is projected to rise by 22% over last year, making for the first increase since 2014, the Energy Information Administration said in a note this morning.

“The U.S. electric power sector has been generating more electricity from coal-fired power plants this year as a result of significantly higher natural gas prices and relatively stable coal prices,” EIA said. “This year, 2021, will yield the first year-over-year increase in coal generation in the United States since 2014.”

EIA noted the increase in coal generation is not likely to continue and predicted a 5% decline in 2022, citing both the retirement of about 30% of the power sector’s coal plant generating capacity over the last decade and continuing retirements, as well as more competition from natural gas.

EPA ANNOUNCES STRATEGY ON ‘FOREVER CHEMICALS’: EPA announced a plan today to crack down on PFAS chemicals, which are used in products like cookware and firefighting foam and can contaminate drinking water to post detrimental health effects.

The agency’s “strategic roadmap” lays out limits for the level of PFAS in drinking water and an initiative to designate PFAS as a hazardous substance under federal law, thereby allowing companies to be held financially responsible for pollution.

The plan also intends to target sites particularly vulnerable to PFAS pollution for cleanup operations.

“For far too long, families across America – especially those in underserved communities – have suffered from PFAS in their water, their air, or in the land their children play on,” Administrator Michael Regan said. “This comprehensive, national PFAS strategy will deliver protections to people who are hurting, by advancing bold and concrete actions that address the full lifecycle of these chemicals. Let there be no doubt that EPA is listening, we have your back, and we are laser focused on protecting people from pollution and holding polluters accountable.”

LONDON FINANCIAL BODY LAYS OUT NET-ZERO ASSET PLAN: The City of London Corporation, the governing body for the city’s financial district, detailed a new plan today to cut emissions associated with its 3 billion-pound (or $4.1 billion) asset portfolio to become net zero by 2040.

The plan commits the corporation to reducing the emissions intensity of its investments by 24% over the next four years. Investment managers will also be required to comply with a series of climate investor expectations, and all investee companies must set “science-based decarbonization targets.”

“Financial services must play a key role in the fight against climate change and we at the City Corporation are committed to working with the industry to accelerate progress on the race to zero,” said Catherine McGuinness, policy chair at the City of London Corporation.

COAST GUARD IDENTIFIES SHIP OF INTEREST IN OIL SPILL: The U.S. Coast Guard has identified and boarded a ship it believes may be responsible for the oil spill off the coast of California, the Washington Examiner’s Virginia Aabram reports.

The Coast Guard boarded the MSC DANIT Saturday while it was at the Port of Long Beach. The ship is owned by Dordellas Finance Corporation and operated by the Mediterranean Shipping Company. It allegedly dragged its anchor during heavy weather in January on the seafloor near the pipeline, causing damage resulting in an oil spill on Oct. 2.

MICHIGAN BATTERY MANUFACTURER EXPANDING: American Battery Solutions announced that it will grow its Lake Orion, Michigan, Innovation Center facility by three-fold and hire 75 new employees to support its lithium-ion battery manufacturing operations.

“ABS has seen continued growth despite the Covid-19 pandemic and needs to expand our Lake Orion facility and staff to support our growing customer base and line of advanced modular battery packs based on our proprietary technology,” Subhash Dhar, founder, chairman & CEO of American Battery Solutions, said in a statement. “This expansion of the Michigan Innovation Center reflects the success of our mission to pursue business opportunities in underserved and emerging market segments.”

The expanded facility will house additional engineering test labs, a Hardware-in-the-Loop BMS development lab, and an advanced prototype battery pack assembly line, the company said.

The Rundown

Associated Press Harris to discuss drought, climate change at Lake Mead

Bloomberg Google’s biggest moonshot is its search for a carbon-free future

Wall Street Journal Some investors say bank pledges to cut funding for Arctic drilling contain loopholes

New York Times Can a carbon-emitting iron ore tycoon save the planet?

The Economic Times India set to update 2030 climate targets under Paris Agreement

Calendar

TUESDAY | OCT. 19

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to consider the nominations of Willie Phillips to be a member of the Federal Energy Regulatory Commission, Brad Crabtree to be an Assistant Secretary of Energy for fossil energy and carbon management, and Charles Sams III to be director of the National Park Service.

WEDNESDAY | OCT. 20

1:30 p.m. 210 Cannon. The House Select Committee on the Climate Crisis will hold a hybrid hearing titled, “Good For Business: Private Sector Perspectives on Climate Action.”

THURSDAY | OCT. 21

10 a.m. A subcommittee of the House Foreign Affairs Committee will hold a remote hearing titled, “Preparing for COP26: United States Strategy to Combat Climate Change through International Development.”

10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee’s Energy Subcommittee will hold a hearing on offshore wind.

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel

Original Location: Daily on Energy: Democrats scramble to save climate agenda

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