Daily on Energy, Presented by Citizens' Climate Lobby: Early aftermath of injunction against Biden leasing pause

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LATEST ON LEASING PAUSE: Interior Secretary Deb Haaland is mum on her agency’s immediate plans after a federal judge wiped out one of President Joe Biden’s signature climate initiatives by blocking his pause on new oil and gas leasing on federal lands and offshore.

"It's a fresh decision," Haaland said in testimony this morning to the Interior and Environment subcommittee of the Senate Appropriations Committee. "Our department is reviewing the judge's opinion as we speak and consulting with [DOJ]. We will respect the judge’s decision. Any other information will be forthcoming."

Oil and gas industry groups and Republicans in Congress from fossil fuel states are calling on Haaland to immediately resume lease sales.

"In light of this very important ruling, I expect to hear your plans to resume implementation of those lease sales,” said Sen. Lisa Murkowski of Alaska, the top Republican of the subcommittee, at the hearing this morning.

But the Interior secretary stopped short of saying that as she readies to release a long-awaited report as soon as this month that will reveal the administration’s plans for the oil and gas leasing program.

If you missed it: Early last evening, Judge Terry Doughty of the U.S. District Court for the Western District of Louisiana granted a preliminary injunction to 13 states that sued the Biden administration over its leasing pause. The order applies nationwide, forcing the administration to end its pause and proceed with offering new leases to drill on federal lands and offshore waters.

The Louisiana judge, a Trump appointee, said the Republican attorneys general sufficiently proved they are suffering harm from the pause on new leasing. He also said only Congress can pause offshore oil and gas leases because the legislative branch originally made federal lands and waters available for leasing.

The court defeat for Biden was a blunt reminder of how hundreds of newly-installed federal judges appointed by Trump pose a huge hurdle to the new administration’s climate agenda, especially when it acts unilaterally.

But the victory may be short-lived: The ruling will remain in effect pending appeals to higher courts, the Louisiana judge said.

“Not only do we expect Interior to appeal the ruling, but we also think the Biden Administration might look to pause leasing via other mechanisms,” the research group ClearView Energy Partners said in a note late last night.

Despite the court ruling, ClearView said the executive branch has “vast” legal discretion over public lands and the Biden administration could still try to stop new leases by declaring a “climate emergency” similar to Trump’s “emergency at the Southern Border.”

Limiting leasing by another name: Interior is also very unlikely to resume leasing at the same tempo when it concludes its review, and has hinted at proposing reforms in conjunction with Democrats in Congress that would limit new drilling without stopping it by raising costs and imposing stricter regulation on oil and gas development.

The Biden administration and Democrats could limit the available acreage offered for lease and reduce the economic desirability of any future sales by raising royalty rates, shortening the length of leases, imposing higher rents, and more significant bonding requirements.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email jsiegel@washingtonexaminer.com or asmith@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.

GOP WARMS TO BIPARTISAN INFRASTRUCTURE PITCH...BUT LIBERALS TRASH IT: Senate Republicans are showing preliminary support for a bipartisan infrastructure framework a small group of lawmakers are drafting, the Washington Examiner’s Susan Ferrechio reports this morning.

But liberal lawmakers dismissed the proposal as far too narrow and cheap without significant climate provisions.

Senate Minority Leader Mitch McConnell told reporters after a closed-door meeting with GOP lawmakers that he is “listening and hopeful” that a bipartisan deal on traditional infrastructure projects can be reached, adding, “I would like to get an outcome on it.”

Senate Minority Whip John Thune, a South Dakota Republican tasked with assessing where the GOP conference stands on legislation, told reporters after the lunch meeting that GOP lawmakers viewed the proposal “favorably,” but had “questions” about the cost, elements and how to pay for it.

“I think our members were very open to it,” Thune said. “There was a lot of pretty good feedback, even from some of our more conservative members.”

On the other side, the response was far more negative. Despite Senate Majority Leader Chuck Schumer telling lawmakers he wants to try to reach a bipartisan deal, liberal Senators said the proposal they have seen so far is insufficient.

And they questioned whether Republicans were earnestly seeking a deal or just dragging out the process to make it more difficult for Democrats to pass a larger infrastructure deal by this summer that would likely include Biden’s bigger climate policies, including electric vehicle rebates and a clean electricity standard.

MEANWHILE...SCHUMER MOVING ON RECONCILIATION: Schumer is meeting today with Senate Budget Committee members to discuss a fiscal blueprint required to proceed to reconciliation.

Democrats need to pass a budget resolution in order to unlock the ability to pass an infrastructure bill using reconciliation.

Schumer is expected to push for the budget to include clean energy tax incentives, consumer rebates for EVs, and funding to help manufacturers and farmers "be part of the solution to reducing emissions,” Axios reported this morning, citing an aide to the Senate majority leader.

US OIL DEMAND SPIKES, AND PRICES KEEP RISING: U.S. oil demand jumped to 20.6 million barrels per day from 17.7 million barrels p/d the week prior, the Energy Information Administration reported this morning.

Gasoline, jet fuel, and diesel consumption are up across the board, while overall oil demand is just 1% below the same week in 2019, before the pandemic.

Oil prices are up again this morning, after surpassing $70 last week for the first time in three years.

The EIA reported a massive crude inventory stock draw of 7.4 million barrels, pushing oil prices towards $75 per barrel.

With higher prices, U.S. producers are drilling more.

U.S. crude production increased to 11.2 million barrels p/d over the last two weeks, the highest total since May 2020, ClearView noted in a report this morning.

NOT JUST TEXAS: California’s grid operator is warning it could ask people to conserve energy this week to avoid the possibility of rolling blackouts as the state and much of the West face blisteringly hot temperatures.

The California Independent System Operator, or CAISO, which oversees the state’s grid, said yesterday that Californians should be prepared to conserve energy as the heat drives up demand for power.

California’s temperatures, expected to reach as high as 115 degrees Fahrenheit, could break records this week. Last August, during an intense heat wave, CAISO was forced to resort to rolling power outages, and California’s top utility officials have already warned extremely hot temperatures this year could put similar pressure on the state’s power grid.

Texans are facing similarly tight grid conditions this week in anticipation of record electricity usage for June amid scorching temperatures, coupled with a number of power plant outages.

NEW FUNDING FOR DIRECT AIR CAPTURE: The Energy Department unveiled $12 million in funding for six new research efforts yesterday aiming to drive down the cost of and improve the technology for direct air capture.

The projects will be managed by the National Energy Technology Laboratory, and three of the six projects are meant to create a direct air capture system that can capture 100,000 tons of carbon dioxide annually, which would be the largest capacity for the technology to date.

“These DOE investments, and the ones we will make with President Biden’s American Jobs Plan, are crucial to advancing technology that will help us avoid the worst effects of climate change and achieve carbon neutrality by 2050,” said Energy Secretary Jennifer Granholm.

DEMOCRATS PUSH BIDEN ON CRITICAL MINERALS MINING: A group of two dozen Democratic House lawmakers are calling on Biden to take “bold action” that supports domestic mining and the production of critical minerals.

In a letter to Biden yesterday, the Democrats encouraged the president to reduce timeframes and streamline permitting associated with mining.

“Reducing timeframes and streamlining permitting efficiencies – without eroding environmental and safety protections – will incentivize greater private investment in all types of domestic infrastructure and manufacturing processes,” wrote the lawmakers, including Reps. Jim Costa of California, Vincente Gonzalez of Texas, and Marcy Kaptur of Ohio.

Granholm yesterday testified to Congress that the Biden administration backs domestic mining to help meet the growing demand for critical minerals that will be created by aggressive adoption of electric vehicles and renewable energy. But a report the administration released last week on supply chain vulnerabilities doesn’t include many recommendations that would help push pending critical minerals projects across the finish line more quickly.

The Rundown

S&P Global Platts Energy major Equinor steps up energy transition targets as part of net-zero goal

Wall Street Journal China nuclear plant under scrutiny was built to showcase nation’s prowess

Reuters GM to boost spending on electric vehicles by 30%

Chicago Tribune Proposals to phase out coal and natural gas plants stall energy talks in Springfield as Senate again leaves town without a deal

Calendar

THURSDAY | JUNE 17

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine Biden’s fiscal 2022 budget request for the U.S. Forest Service.

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel, Abby Smith

Original Location: Daily on Energy, Presented by Citizens' Climate Lobby: Early aftermath of injunction against Biden leasing pause

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