Daily on Energy: House Democrats take on natural gas

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HOUSE DEMOCRATS VS. NATURAL GAS: House Democrats have decided to keep natural gas out of the “Clean Electricity Payment Program,” the centerpiece climate policy of their reconciliation package, delivering a big win for environmental activists.

As I reported yesterday, natural gas won’t be counted as a clean power source as part of the program, which would pay utilities to generate electricity from clean sources with the end goal of having 80% clean power by 2030.

While a fact sheet from the House Energy and Commerce Committee does not explicitly rule out natural gas as part of the payment program, it says the legislation will require utilities to meet a carbon intensity of 0.10 metric tons of CO2e/MWh to qualify for federal subsidies — such a low level of emissions that gas won’t make the cut.

Utilities would still be able to receive payments if they equip their natural gas plants with carbon capture technology that stops their emissions from entering the atmosphere, although such methods are expensive and unproven.

Manchin under pressure: Now the question is if the more moderate Senate will water it down. After all, the man with the pen is none other than Joe Manchin, the chairman of the Senate Energy Committee tasked with writing the upper chamber’s version of CEPP.

Manchin, of course, represents West Virginia, a top state for natural gas production.

West Virginia also still has eight running coal plants, according to the United Mine Workers of America, whose president Cecil Roberts wrote Manchin last month warning the CEPP plan would “virtually eliminate” the entire fleet while not giving sufficient time for wide-scale carbon capture deployment on coal and gas plants.

Manchin has threatened to oppose policies that are overly prescriptive on curbing fossil fuel use and has touted how the boom in natural gas from the advent of fracking has helped the U.S. reduce emissions more than any other country over the last 15 years.

While natural gas produces half the carbon emissions of coal, the fuel is getting more scrutiny as policymakers look to set more aggressive emissions reduction targets.

Democrats’ pitch: The CEPP program crafted by Democrats differs from a typical clean electricity standard as imposed in several states.

Sen. Tina Smith of Minnesota, a member of the Energy Committee who worked with House Democrats on their CEPP plan, has targeted her appeals toward her colleague, Manchin.

“This is not about eliminating sources of electricity, it is about dramatically reducing greenhouse gas emissions,” Smith said in a statement yesterday in which she vowed to work to pass a version of the program in the Senate Energy Committee.

To distinguish it from a standard, a policy Manchin has expressed doubts about, Democrats are pitching their plan as not being a binding regulatory mandate.

Under the program, an electricity supplier with a smaller starting percentage would not need to reach as high an amount of clean power, enabling utilities in carbon-intensive states to have more time to wean off fossil fuels.

Democrats are also betting that paying utilities to use clean energy will mean that any higher costs are burdened by the federal government rather than passed through to electricity rates, a key consideration for a state such as West Virginia, which has been slow to shift its generation mix.

We’ll know soon if Manchin buys it.

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.

COMMITTEE ADVANCES RECONCILIATION BILL REFORMING OIL AND GAS LEASING: House Democrats are poised to deliver on President Joe Biden’s calls to reform drilling for oil and gas on public lands and waters by raising costs on producers and imposing stricter regulatory requirements.

Democrats on the Natural Resources Committee voted 24-13 to pass their $25.6 billion portion of the party’s $3.5 trillion reconciliation infrastructure and social spending package, as I reported last night.

What’s in the bill: The sprawling bill contains a suite of provisions long-pursued by the committee’s Democrats, led by Chairman Raul Grijalva, to raise royalty rates, rental fees, and minimum bid amounts; strengthen bonding requirements on operators — meaning that when a company goes bankrupt, there is more assurance they could foot the bill to reclaim their wells; and assess a new royalty on all extracted methane from oil and gas operations on public lands and waters.

The bill would also end the practice of “uncompetitive leasing” that allows companies to secure leases unsold at auction without paying a bonus bid.

It would impose a first-ever royalty fee on new and existing hard rock mines on federal lands.

And it would stop drilling in Alaska’s Arctic National Wildlife Refuge by including a provision overturning lease sales approved as part of Republicans’ 2017 tax cut bill.

It would bar oil and gas leasing in the Eastern Gulf of Mexico and in the Atlantic and Pacific ocean, while restoring the Interior Department’s authority to hold offshore wind lease sales in federal waters of the Eastern Gulf and off the coasts of North Carolina, South Carolina, Georgia, and Florida, reversing a ban from former President Donald Trump.

For and against: Committee Democrats say the package of reforms would provide a fairer return to taxpayers and reorient the use of public lands away from fossil fuel production to other practices, such as clean energy development.

But Republicans and some centrist Democrats worry the measures would cause companies to stop drilling for oil and gas on federal lands and waters, depriving fossil fuel-dependent states of revenue.

HOME STRETCH FOR ILLINOIS NUCLEAR RESCUE: Just in the nick of time, Illinois is poised to pass a bill providing nearly $700 million in subsidies to keep alive unprofitable nuclear plants slated to shut down, according to local media reports.

The Illinois House late last night passed an energy policy overhaul by a wide margin, 83-33, that includes a “carbon mitigation credit program” providing financial support to Chicago-based utility Exelon’s Byron, Dresden, and Braidwood nuclear power plants.

The state Senate is slated to vote on the measure Monday, and Democratic governor J.B Pritzker said that he will sign it “as soon as possible, because our planet and the people of Illinois ought not wait any longer.”

Exelon has said it plans to shut down its Byron nuclear plant in northern Illinois — one of the nation’s largest — next week without state action.

Dresden is not scheduled to close until November, providing a longer runway for action, while the Braidwood plant is not currently scheduled to retire but Exelon claims it is also “at risk” later in the future due to low power prices as a result of competition from cheaper natural gas and renewables — the same factors imperiling Byron and Dresden.

The nuclear aid is part of a larger clean energy bill putting Illinois on the path to zero-carbon emissions by 2045, one of the fastest timelines in the nation.

Keeping the nuclear plants online is considered crucial to meeting that target, since shutting them down would initially lead to coal and natural gas plants in Illinois to run more frequently, increasing carbon emissions.

HARVARD TO DIVEST FROM FOSSIL FUELS: Harvard President Lawrence Bacow said university endowment investments in the fossil fuel industry are in runoff mode and will not be expanded as its asset management company looks to invest more in green energy.

Bacow called climate change the “most consequential threat facing humanity” in a letter yesterday to the university community and said current investments will be liquidated. Those investments are all indirect and involve private equity funds with holdings in the oil and gas industry and amount to less than 2% of the total endowment, Bacow said.

The school’s student and alumni-driven fossil fuel divestment initiative, Fossil Fuel Divest Harvard, hailed the announcement and touted its activism, which included demonstrators storming the field during the 2019 football game against Yale.

“It shouldn’t have taken a decade for Harvard to catch up with climate reality,” the group said. “Harvard's intransigence represents a fundamental failure of transparency, governance, and accountability — failings that Harvard must resolve if it wants to rise to the challenges of the future.”

2021 TIES 1936 DUST BOWL SUMMER FOR HOTTEST ON RECORD: The continental United States experienced temperatures 2.6 degrees above average between June and August, tying 2021 with the 1936 Dust Bowl summer for the warmest season on record, per an NOAA climate assessment.

Total summer precipitation was also up 1.16 inches above average, making it the eighth rainiest summer on record.

The rain triggered significant flooding in the northeast and southeast, and with 35 flood-related fatalities in August, the month was the deadliest for flooding across the country since Hurricane Harvey in 2017.

TAKE ME HIGHER: The Biden administration is setting a goal of replacing all jet fuel with sustainable alternatives by 2050.

The White House announced a series of initiatives to boost use of fuels made from waste or plants that it says could cut emissions from flying 20% by the end of this decade.

Aviation is one of the trickiest sectors to decarbonize due to the lack of easy alternatives to jet fuel, representing 11% of U.S. transportation-related emissions, a portion that will likely increase as more people and goods fly.

Among other things, the new initiatives include a Sustainable Aviation Fuel Grand Challenge to increase the production of sustainable aviation fuels to at least 3 billion gallons per year by 2030; $4.3 billion in funding opportunities to support sustainable aviation fuel projects; and enhanced R&D to demonstrate new technologies that can achieve at least a 30% improvement in aircraft fuel efficiency.

WHAT IN THE WORLD IS IN THAT NDC? Republicans are seeking “transparency” from the Biden administration justifying its strengthened pledge under the Paris Agreement to cut U.S. emissions in half by 2030.

“Despite promises of transparency, administration officials have dodged our continued requests during the past months in hearings, letters, calls, and questions for the record. We have yet to be provided with any data or any analysis used or generated to inform the NDC target,” wrote Sens. Shelley Moore Capito of West Virginia and Jim Inhofe of Oklahoma, along with Reps. Cathy McMorris Rodgers of Washington and David McKinley of West Virginia, in a letter to Biden yesterday.

Capito and McMorris Rodgers are the top Republicans on the Senate Environment and Public Works and House Energy and Commerce committees, respectively.

EPA TO PURSUE BLOCKAGE OF ALASKA’S PEBBLE MINE: The agency said yesterday it intends to initiate a review of the Pebble Mine project near Alaska’s Bristol Bay, something Biden and environmental groups are pursuing in hopes of stopping the harvesting of cold and copper near the bay’s vibrant fishing waters, the Washington Examiner’s Jeremy Beaman reports.

The Trump administration supported the mine, withdrawing an Obama-era decision to block its development. But the Army Corps of Engineers declined to permit the mine late last year, determining that it did not comply with the Clean Water Act guidelines.

Pebble Limited Partnership, the project’s developer, said such mining is critical to the administration’s goal of expanding renewable energy.

“As the Biden Administration seeks lower carbon emissions for energy production, they should recognize that such change will require significantly more mineral production — notably copper,” Mike Heatwole, spokesman for Pebble Limited, told the Washington Post yesterday. “The Pebble Project remains an important domestic source for the minerals necessary for the administration to reach its green energy goals.”

The Rundown

New York Times New Orleans built a power plant to prepare for storms. It sat dark for 2 days.

Bloomberg Kerry will visit India to push for stronger efforts on climate

Bloomberg Chevron aims to burnish green credential before investor day

Calendar

MONDAY | SEP. 13

11 a.m. 2123 Rayburn. The House Energy and Commerce Committee will hold a markup on its portion of reconciliation bill.

WEDNESDAY | SEP. 15

9:30 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a business meeting and hearing on EPA nominees.

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel

Original Location: Daily on Energy: House Democrats take on natural gas

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