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THE MANCHIN PITCH: Sen. Joe Manchin, the key Democratic swing (or king?) voter, is making his pitch to get his energy priorities into the bipartisan infrastructure package that seems to be gaining steam by the hour.
The proposal, observers couldn’t help but notice, mirrors some of the clean energy and climate provisions we reported are being discussed as part of the broader bipartisan framework. Manchin’s platter of policies, which avoid thornier issues like direct mandates and clean energy tax credits, seem to reflect what a bipartisan group of 21 senators would come up with.
Ok, so what’s in it? Manchin’s bill would fully fund more than a dozen clean energy demonstration projects originally authorized under the Energy Act of 2020 approved at the end of last year, including for energy storage, advanced nuclear reactors, carbon capture, direct air capture, and renewables.
It creates a $5 billion program to combat methane emissions by employing oil workers to plug leaking “orphan” oil and gas wells whose owners are either unknown or insolvent, which matches one of President Joe Biden’s signature proposals. Other programs would deploy clean energy projects at abandoned mine sites, long a policy priority of Manchin that he can deliver for his home state, West Virginia.
We reported last week that the bipartisan infrastructure group was also discussing ways to keep existing nuclear reactors online — another Biden priority to maintain America’s largest zero-carbon power source.
And Manchin’s proposal aims to do just that by establishing a 4-year credit program providing $1.2 billion annually in subsidies to help financially struggling nuclear plants stay alive.
What Manchin’s involvement means: We always knew Manchin was central to infrastructure talks, but his role seems to be only growing as Biden weighs endorsing the bipartisan package.
Biden met individually yesterday with Manchin and another centrist Democrat, Kyrsten Sinema of Arizona, who is leading bipartisan negotiations. Afterwards, Biden credited Manchin and Sinema for their work investing in "the clean energy economy."
Kevin Book, managing director of research group ClearView Energy, told Josh that Manchin is clearly positioning his energy pitch to be part of the bipartisan negotiating process. But he also notes that Manchin seemed to deliberately design his bill to cover items only within Energy Committee jurisdiction, leaving out some of his other known priorities, such as an enhanced tax credit to encourage clean energy manufacturing.
Following the committee process with the bill would enable it to be passed as part of a larger reconciliation package later on.
“Manchin appears to be grooming these provisions for multiple uses,” Book said. “If you are doing it in your committee jurisdiction, you are also showing Chuck Schumer what your price is.
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DEVON’S NET-ZERO PLEDGE: Devon Energy, a large U.S. independent oil and gas producer, pledged today to reach net-zero emissions for its operations and energy use by 2050.
Devon, which is active in the Permian Basin, joins ConocoPhillips as the only U.S. oil producers to target net-zero emissions.
The Oklahoma City-based company also vowed to cut its overall greenhouse emissions intensity (per unit of output) by 50% by 2030. Devon will reduce its methane intensity 65% by 2030, while eliminating routine flaring by that year.
But Devon’s new targets don’t include anything on indirect (or Scope 3) emissions associated with the use of its products, the largest source of emissions for oil companies. European majors BP and Shell, by contrast, have both pledged to at least partially address the carbon intensity of their products.
“An oil and gas company net zero pledge that leaves out Scope 3 emissions is like a sandwich without bread,” Ben Ratner, a senior director at Environmental Defense Fund+Business, told Josh.
DEMOCRATS PROPOSE TAX CREDITS FOR SOLAR MANUFACTURING: Georgia Sen. Jon Ossoff led the introduction of legislation yesterday that would offer tax incentives across various stages of the solar manufacturing supply chain in an effort to boost domestic production of solar panels.
Ossoff’s bill, also co-sponsored by Sens. Raphael Warnock, Michael Bennet, and Debbie Stabenow, would offer tax credits for individual pieces of the solar manufacturing sector, including the production of solar modules, photovoltaic cells, and solar grade polysilicon. Ossoff’s office said the legislation would create tens of thousands of solar jobs, according to analysis from the National Renewable Energy Laboratory.
Ossoff told Bloomberg that he worked with the Energy Department and solar manufacturers to craft the proposed incentives, and he is aiming to include the legislation in a broader clean energy tax package from Senate Finance Committee Chairman Ron Wyden. That clean energy tax legislation isn’t likely to gain much, if any, Republican support but could be a candidate for inclusion in any climate-focused bill Democrats attempt to pass through reconciliation.
“There is a clear path forward under current Senate rules for the kind of generational investment in infrastructure and clean energy that we need,” Ossoff told Bloomberg. “It will require a combination of bipartisan legislation and the use of the budget reconciliation legislation.”
In response to Ossoff’s bill, the Solar Energy Industries Association unveiled a new target to increase U.S. solar manufacturing capacity by 10-fold in the next decade, to reach 50 gigawatts of annual production capacity by 2030.
“The United States doesn’t need to produce every solar component installed domestically, but we do need to fill critical gaps in our supply chain and dramatically expand domestic production capacity,” said Abigail Ross Hopper, SEIA’s president and CEO.
SPEAKING OF SOLAR TAX CREDITS: SEIA helped lead more than 100 clean energy organizations and companies in a letter yesterday calling on Biden and top congressional leaders to pass a 10-year extension of the investment tax credit that supports solar, as well as other energy sources such as geothermal, fuel cells, combined heat and power, and distributed wind energy.
The letter, which included other national groups such as the American Clean Power Association and Advanced Energy Economy, also asks Biden and lawmakers to make the tax incentives available through direct cash payments, a long-time ask of the renewable energy industry.
Extending the investment tax credit and including a “direct pay” option “is going to be critical since in key sectors deployment will need to be 80% higher than currently projected scenario to stay on track with Administration goals,” the letter reads.
RENEWABLES ARE BEATING OUT COAL ON COST: More than half (62%) of the renewable power added in 2020 was cheaper than the lowest-cost fossil fuel option, according to a report released this morning by the International Renewable Energy Agency.
IRENA found the costs of renewable energy continues to rapidly decline. In the last decade, the cost of utility-scale solar has fallen 85%, onshore wind costs have declined 56%, and offshore wind costs have fallen 48%, the report says.
In many cases, IRENA says new renewable power is even cheaper than existing coal power, solidifying the case for retiring those power plants. IRENA finds that 61% of U.S. coal capacity costs more to operate than new renewable electricity. Replacing those existing coal plants with renewables would reduce U.S. emissions from coal by one-third, IRENA says.
“We are far beyond the tipping point of coal,” said Francesco La Camera, IRENA’s director general. “Following the latest commitment by G7 to net-zero and stop global coal funding abroad, it is now for G20 and emerging economies to match these measures.”
CARBON TAX ‘RISK’ ALREADY LOWERING EMISSIONS: The prospect of a carbon tax being enacted in the next year is already driving companies to make decisions that reduce overall capital and emissions, even before the fee is in place.
That is according to research released yesterday by the Federal Reserve Bank of San Francisco, Abby reports this morning. In their report, the researchers found that a 10% chance of the U.S. government adopting a $45-per-ton carbon tax in the next year prompts one-tenth of the emissions reductions the bank would expect to see if the actual carbon fee was enacted.
“Our findings suggest that the risk of the United States adopting a climate policy in the future causes businesses to shift current investment to less carbon-intensive capital and reduce overall investment,” the researchers wrote.
CLEARING THINGS UP: Rep. Kathy Castor of Florida, the Democratic chairman of the Select Climate Committee, introduced legislation today to address backlogged grid interconnection queues which clean energy advocates say are preventing the deployment of hundreds of thousands of megawatts of wind, solar and energy storage.
The Efficient Grid Interconnection Act would ban a type of cost allocation policy that requires generators of renewable projects to pay the cost of upgrades to transmission lines needed to deliver new wind and solar onto the grid. The bill calls that practice, known as participant funding, “unduly discriminatory, harmful to consumers, and not in the public interest.”
Instead, the bill would direct FERC to “equitably” allocate transmission upgrade costs among “all beneficiaries,” including customers that receive the clean power from the renewable projects.
“Today’s grid interconnection policies are largely analogous to requiring the next car entering a crowded highway to pay the entire bill for a needed lane expansion,” said Gregory Wetstone, president and CEO of the American Council on Renewable Energy, who endorsed the bill. “By directing FERC to appropriately allocate interconnection costs across the full universe of beneficiaries, this legislation will help unlock that queue and accelerate the transition to a renewable energy economy.”
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Wall Street Journal Can America’s solar power industry compete with China’s? One firm tries
Washington Post Controversial St. Croix refinery shuts indefinitely given ‘extreme financial constraints’
Reuters OPEC+ discusses further easing of oil cuts from August
WEDNESDAY | JUNE 23
10 a.m. 1324 Longworth. Interior Secretary Deb Haaland will testify before the House Natural Resources Committee about the agency’s fiscal 2022 budget proposal.
10 a.m. SD-192. Energy Secretary Jennifer Granholm will testify before the energy and water development subcommittee of the Senate Appropriations Committee on the agency’s fiscal 2022 budget proposal.
2 p.m. 366 Dirksen. The Senate Energy and Natural Resources Committee’s energy subcommittee will hold a hearing to examine existing programs and future opportunities to ensure access to affordable, reliable, and clean energy for rural and low-income communities.
THURSDAY | JUNE 24
9:30 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine the infrastructure needs of the U.S. energy sector, western water and public lands.
10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold an oversight hearing entitled, “The Role of Natural and Nature-Based Features in Water Resources Projects.”
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Original Author: Josh Siegel, Abby Smith
Original Location: Daily on Energy: Manchin makes his pitch