Daily on Energy: Oil and gas allies rally against Democratic methane fee

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RALLYING AGAINST METHANE FEE: Oil and gas groups and Republicans from fossil fuel states are making a full-court press against Democrats’ proposal to include a fee on methane emissions as part of their reconciliation package.

Industry and their allies are focusing their appeals to centrist Democrats representing oil and gas states such as Sen. Joe Manchin of West Virginia, the powerful Energy Committee chairman whose position on a methane fee could determine if it survives a final package.

In a new letter provided exclusively to me this morning, GOP Sen. Kevin Cramer of North Dakota warns Democratic leaders that charging companies for natural gas that escapes from their operations could lead to increased energy costs for consumers and would penalize companies that are voluntarily moving to reduce methane emissions.

Cramer specifically namechecks Manchin, citing his call for Democrats to pursue a smaller package because of concerns about the soaring national debt and inflation.

More than 100 industry and labor trade groups led by the American Petroleum Institute sent a similar letter to Senate leaders yesterday warning the methane fee “could jeopardize affordable and reliable energy with likely little reduction in greenhouse gas emissions."

Leaning in on regulation instead: Those groups say “cost-effective” regulation of methane emissions from the EPA would be a better policy. If you recall, API and other business groups flipped positions earlier this year, endorsing EPA imposing direct regulation of methane from new and existing oil and gas sources after supporting the Trump administration’s elimination of such rules. But the devil is in the details on what industry would actually support as the agency gets ready to release a proposal later this month.

Last week, meanwhile, the Gas and Oil Association of West Virginia sent a letter to the state's congressional delegation, including Manchin, warning them to oppose a methane fee.

What a methane fee could look like: Senate Democrats included a placeholder for a methane fee as a revenue raiser for their $3.5 trillion infrastructure and social spending reconciliation package, but details are still in flux. It’s expected to be based on legislation introduced in March by Sens. Sheldon Whitehouse, Cory Booker, and Brian Schatz that would direct the Treasury Department to start charging a fee for methane emissions starting in 2023, a step the lawmakers say would essentially end methane emissions from the oil and gas industry.

The senators’ bill suggests a price for methane emissions based on the Obama administration’s social cost of methane, which is set around $1,800 per ton in 2023 and would increase 2% above inflation in the years after. The bill would assess the methane fee on a basin-by-basin basis, an element Cramer took umbrage with because he said it “would penalize all companies in a region, even those with strong emission performance standards.”

But under the bill, individual oil and gas companies would also have an option to offer an alternative method to calculate their methane fee to demonstrate their emissions intensity is lower than the average in the basins where they operate. A company’s emissions rate could be lower if it has, for example, installed technologies to capture methane emissions and reduce flaring.

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.

POWERFUL UNION MAKES CASE FOR NUCLEAR REPLACING FOSSIL FUEL JOBS: The International Brotherhood of Electrical Workers, a construction union allied with the White House, wrote an op-ed today calling on President Joe Biden to build new small nuclear reactors at old coal and gas power plants.

IBEW partnered with the American Nuclear Society on the letter, which makes the case that developing advanced reactors at retired fossil fuel plants could prove the potential of a new breed of carbon-free nuclear power.

The groups cite a study from Princeton University that says building hundreds of nuclear plants, or several thousand small modular reactors, at shuttered and retiring fossil fuel power plants would help the U.S. achieve a carbon-free economy by 2050 using the least amount of land.

That’s because using renewables alone would require the development of massive amounts of land for hosting solar panels and wind turbines.

Natural fit: Retiring coal plants are ideal locations for small nuclear reactors because of their existing grid connections, available water resources, and similar job offerings.

The coal and nuclear industries offer some of the highest-paying jobs in the energy sector, and both industries are highly unionized (also unlike wind and solar).

“In a decarbonizing economy, nuclear energy offers a new career path for the U.S. electric power generation sector’s 210,000 fossil fuel workers,” the groups write. “President Biden can ensure reliable clean energy and high-paying jobs for working families across the country.”

Worth noting: This potential pairing is already on the Biden administration’s radar. Energy Secretary Jennifer Granholm attended an announcement this summer of a new partnership by Bill Gates’s TerraPower and utility PacifiCorp to build an advanced nuclear reactor at a retiring coal plant in Wyoming.

BIDEN ADMINISTRATION SEES MASSIVE SOLAR GROWTH: The Department of Energy released a study this morning projecting that solar energy has the potential to power 40% of the nation’s electricity by 2035 — up from 3% today.

The study, prepared by DOE’s National Renewable Energy Laboratory, shows that solar, already the fastest-growing source of energy on the grid, could produce enough electricity to power all of the homes in the U.S. by 2035 and employ as many as 1.5 million people in the process.

To achieve that level of penetration, the U.S. would need to quadruple its yearly solar capacity additions and add 1,000 gigawatts of solar power to the grid by 2035.

For context, the U.S. installed a record amount of solar last year —15 gigawatts — bringing the current total to 76 GW.

Granholm said this potential could only be fulfilled if Congress passes the bipartisan infrastructure bill and Democrat-only reconciliation package.

“Achieving this bright future requires a massive and equitable deployment of renewable energy and strong decarbonization policies,” she said.

BIDEN LOBBIES FOR CLIMATE AGENDA DURING NORTHEAST VISIT: Biden visited storm-battered New York yesterday where he surveyed flood damage from Tropical Storm Ida and blamed its lethality on climate change.

“The evidence is clear: Climate change poses an existential threat to our lives, to our economy. And the threat is here; it's not going to get any better,” Biden said during a press conference in Queens.

“We can stop it from getting worse,” he went on to say in a pitch for Democrats’ $3.5 trillion reconciliation bill, which looks to devote hundreds of billions to efforts aimed at mitigating the effects of climate change by cutting emissions and doing things like storm-proofing the electricity grid.

RELATED...WHITE HOUSE FUNDING ASK FOR DISASTER RELIEF: The Biden administration is calling on Congress to allocate $24 billion in aid for natural disaster relief, including $14 billion for pre-Hurricane Ida storms and wildfires and up to $10 billion to address damage along the Gulf and North Atlantic coasts caused by Ida.

Senior administration officials briefed reporters on the request, presented in the form of a new continuing resolution, yesterday afternoon, the Washington Examiner’s Christian Datoc reports.

The continuing resolution comes less than a month before the end of fiscal year 2021.

EXXON JOINS PUSH TO ‘CERTIFY’ CLEAN NATURAL GAS: ExxonMobil announced yesterday it is partnering with independent nonprofit MiQ to certify and grade its performance on methane emission leaks for a portion of the natural gas it produces in the Permian Basin.

“We are reducing methane emissions responsibly and economically, and by working with MiQ, we can provide our customers with credible third-party validation of those efforts,” said Bart Cahir, a senior Exxon executive, in a statement.

Reading between the lines: Natural gas producers are facing growing pressure from investors and customers to demonstrate their fuel is cleaner than competitors.

But the industry has long struggled to collect and provide accurate data to prove gas is clean.

A new class of third-party data providers such as MiQ aims to change that by helping companies measure their emissions and certify gas as being clean, as I recently reported.

About 200 million cubic feet per day of gas produced from Exxon’s Poker Lake development in New Mexico will be graded by MiQ, a partnership between Systemiq, and RMI, formerly the nonprofit Rocky Mountain Institute. That’s about 7% of Exxon’s total U.S. gas output, according to Bloomberg. Exxon’s certified gas could be available by the fourth quarter of this year.

GREEN GROUPS PITCH FUNDING LEVELS FOR RECONCILIATION BILL: Twenty environmental and liberal groups are laying out a vision of how Democrats must structure their reconciliation bill in order to reach a target of cutting emissions in half by 2030.

The groups, which include the Center for American Progress, Audubon Society, and Sierra Club, released a policy outline yesterday envisioning between $191 billion and $265 billion over 10 years in direct-pay clean energy tax credits to developers to incentivize generation of new solar and wind energy projects, as well between $37 billion and $120 billion in refundable tax credits for car buyers who purchase electric vehicles.

They call for a minimum $150 billion to enact the Democrats’ “clean electricity payment program,” which seeks to pay utilities to use more carbon-free power in search of reaching 80% clean electricity by 2030.

The groups also support raising revenue by levying fees on the oil and gas industry for any methane released during production. They estimate some $20 billion could be raised through methane fees, which would also reduce emissions 2% from 2005 levels by 2030.

Ending fossil fuel subsidies could provide up to $35 billion, amounting to only 0.8% emissions reductions.

The Rundown

Washington Post Activists push for delay of U.N. climate summit, as heads of churches issue unprecedented joint statement

New York Times Biden’s electric car plan plans hinge on having enough chargers

Washington Post Oil spill in Gulf of Mexico is one of more than 2,000 reports of water pollution after Ida

E&E News House centrists: Only climate can get deficit spending

Chicago Tribune With clock ticking on Exelon’s threat to shutter Byron nuclear plant, Illinois House returns Thursday to take up energy proposal

Calendar

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

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