Daily on Energy, Presented by Citizens' Climate Lobby: G7 agreement on coal puts new pressure on China

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NEW PRESSURE ON CHINA: Most of the media is portraying the G7 meeting that ended this weekend as a failure because the most advanced countries in the world did not agree to set an end-date to coal use for electricity.

But that understates the gravity of what the G7 did do — banning new government financing by the end of this year for coal plants abroad without carbon capture and storage, and committing $2 billion to help nations pivot away from fossil fuels.

Japan, the only G7 member still financing overseas coal plants, immediately announced it would stop to comply with the new G7 policy. That leaves China isolated as the only backers of coal globally, and applies new pressure on Beijing to curb coal financing as part of its Belt and Road initiative that supports infrastructure in developing countries.

“While there is much more to be done to curb domestic coal development particularly in emerging economies, the G7 announcement now leaves China as an outlier in its continued financing of coal plants overseas,” Joanna Lewis, an associate professor of energy and environment at Georgetown University who focuses on China, told Josh.

China off the hook on coal use? But climate activists are worried that the inability of the G7 nations to agree on a timeframe to end coal consumption means world powers have lost leverage to convince China to reduce its own appetite. China generated 53% of the world’s total coal power in 2020, making it the only G20 nation to significantly increase its coal-fired generation last year.

China’s Xi Jinping, at President Joe Biden’s climate summit, said publicly for the first time that the world’s top emitter plans to phase down its coal use in the second half of this decade, still a long time from now.

Nat Keohane, senior vice president of climate at the Environmental Defense Fund, told Josh it’s “absolutely true” China will look to what the U.S. and other G7 countries do before deciding its near-term actions on coal.

Why Congress is key: Keohane argued, however, a G7 summit is not meant as a forum to create domestic policy and it would have made no sense for the U.S. to push for an end date for coal when its ability to reduce its own fossil fuel use is contingent on passing climate policies through Congress (it also would have probably a bad idea to tick off coal state Democrats like Joe Manchin, a key swing vote, by clamping down on domestic coal before Congress has a say).

Biden’s proposed clean electricity standard targeting carbon-free power by 2035 would do the trick of ending coal use without carbon capture, but that’s still a big “if.”

“The administration needs to be pressing hard, but on Capitol Hill not through a communique in the U.K.,” Keohane said. “The source of that pressure is not the G7. To expect them to do that has it backwards.”

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.

MORE FROM THE G7...CLIMATE FINANCE PLEDGES LACK SPECIFICS: The G7 leaders committed generally to “increase and improve” their financing to help developing countries curb emissions and transition to cleaner energy, but their pledge lacked specifics about how and whether the nations will meet their promise to provide $100 billion per year in climate finance.

Climate finance commitments from developed countries are critical ahead of the next round of global climate negotiations later this year, when governments are supposed to ratchet up their greenhouse gas reduction goals.

Developed nations were supposed to have met the $100 billion per year finance target last year, but thus far have fallen well short of that. While the G7 leaders recommitted to the $100 billion per year goal, the leaders didn’t agree on any new climate funding.

“We welcome the commitments already made by some of the G7 to increase climate finance and look forward to new commitments from others well ahead of COP26 in Glasgow,” the joint communique read.

G7 ALSO BACKED AWAY FROM GAS-POWERED VEHICLE PHASE-OUT: The final G7 communique also shied away from committing to a date certain to end the sales of new gas-powered vehicles.

According to Bloomberg, earlier drafts of the communique had said the G7 nations would “strive” to move away from sales of new gas- and diesel-powered vehicles “by 2030 or sooner.”

The final communique, however, only committed generally to speeding up decarbonization of on-road vehicles through this decade, including by supporting faster buildout of charging and other refueling infrastructure.

“We commit to accelerate the transition away from new sales of diesel and petrol cars to promote the uptake of zero emission vehicles,” the document said.

FIVE MORE PIPELINES TARGETED BY ACTIVISTS: Environmental activists are targeting at least five major oil and gas pipelines after celebrating the death of Keystone XL, Josh reported in a handy listicle this weekend.

Here are five more targets of activists facing uncertain futures.

Dakota Access: The Biden administration has declined to order the Dakota Access oil pipeline to shut down while it completes an environmental review.

But multiple courts have found the Trump administration’s environmental review of the project to be deficient. The Biden administration could still shutter the pipeline if the Army Corps of Engineers environmental review makes that determination.

Enbridge’s Line 3: Enbridge is looking to replace an aging pipeline to transport crude from Canada’s Alberta oil sands through the state's watersheds and tribal lands to Superior, Wisconsin. Despite pressure from activists, the Biden administration has declined to weigh in on the project. Environmentalists are also pressing their case in court.

Enbridge’s Line 5: Michigan Gov. Gretchen Whitmer has ordered the 645-mile Line 5 pipeline operated by the same Canadian energy company, Enbridge, to shut down, citing risks that the pipeline could leak or spill oil in the Great Lakes.

Enbridge is defying the order, however, saying the governor does not have the authority to shut it. Enbridge wants to move Line 5 into a new, $500 million tunnel beneath the Straits of Mackinac to reduce the risk of leaks.

Trans Mountain: Biden does not have any authority over the Trans Mountain pipeline, an expansion project taken over by the Canadian government that would carry an additional 535,000 barrels a day of oil from Alberta’s tar sands to the coast of British Columbia.

But the government plans to sell the project eventually, a tricky prospect as insurers are dropping out.

Mountain Valley: Several of the permits for the $6.2 billion Mountain Valley pipeline, a 303-mile project that would carry natural gas from West Virginia to Virginia, are under legal scrutiny, and its cost has nearly doubled.

ENERGY DEPARTMENT’S NEW HYDROGEN PUSH: The Energy Department is pushing to cut the cost of producing low-carbon hydrogen by 80% in the next decade to tap into the versatile energy resource’s ability to curb emissions in the hardest-to-abate sectors.

Hydrogen is the first focus area of the Energy Department’s new Energy Earthshots Initiative that will marshal the agency’s scientific expertise and resources to accelerate breakthroughs in nascent clean energy technologies, the agency announced last week.

Industry representatives across the hydrogen supply chain are welcoming the move as a good first step, but they also say the Biden administration should craft a national hydrogen strategy similar to those implemented in Europe, Japan, and other countries.

“I think the Earthshot initiative is kind of laying the groundwork for that,” said Paul Wilkins, vice president of federal policy for fuel cell and electrolyzer manufacturer Bloom Energy, of a possible U.S. national hydrogen strategy.

Wilkins said he’d like to see the Biden administration set ambitious goals similar to Europe, which is aiming to deploy 40 gigawatts of electrolyzers, used to split water into hydrogen and oxygen, by 2030.

More on the Energy Department’s initiative in Abby’s story posted this morning.

HEADS UP ON LITHIUM SUPPLY CHAIN: Energy Secretary Jennifer Granholm teased that the department will soon be announcing a “critical public-private partnership to focus on the lithium battery supply chain” to build off of the Biden administration’s recently unveiled strategy to bolster and secure a domestic supply chain for lithium-ion batteries.

Granholm previewed the upcoming announcement during a roundtable this morning with executives from companies across the lithium-ion battery supply chain. She also unveiled a new series of funding from the Energy Department’s vehicle technology office — $200 million to national labs over the next five years to research next-generation batteries, charging infrastructure, and connecting and autonomous vehicles.

In addition, Granholm touted Biden’s infrastructure plan, urging the lithium industry executives to put their support behind the proposal. The infrastructure plan “means that we’re going to put billions more behind lithium battery technologies, critical mineral extraction, and more,” she said.

GAS TAX OFF THE TABLE FOR BIPARTISAN INFRASTRUCTURE PLAN: The bipartisan infrastructure framework being pitched by a group of 10 senators does not address the gas tax as originally expected, GOP Sen. Susan Collins of Maine said on the Sunday shows.

Reports last week suggested the Senate group’s plan would index the nation’s 18-cent gas tax to inflation for the first time, which would raise it over time. But the Biden administration quickly made clear that doing that would violate the president’s pledge not to raise taxes on people earning less than $400,000 a year.

Collins, instead, listed three pay-fors: an infrastructure financing authority, repurposing unused Covid-19 relief funds, and a provision to ensure that drivers using EVs pay for using roads and bridges (i.e. a mileage tax).

The White House, however, has also said it won’t sign a bill that includes EV fees, which would contradict his American Job’s Plan’s emphasis on massively expanding electric vehicle use.

NO CLIMATE, NO DEAL: The liberal activist groups Evergreen Action and Sunrise Movement launched a new website today to spotlight Democratic members of Congress’ opposition to any infrastructure bill that fails to include significant climate provisions.

“The American people elected Democrats to deliver on an ambitious climate agenda—and now more than half a dozen members of the Senate Democratic caucus have made it clear that they won’t support a deal that strips away the investments we need to build a just and thriving clean energy future,” said Evergreen executive director Jamal Raad and Sunrise Movement executive director Varshini Prakash.

Their website NoClimateNoDeal.com, tracks recent statements by Democratic senators demanding aggressive climate measures, including Sens. Martin Heinrich of New Mexico, Sheldon Whitehouse of Rhode Island, Tina Smith of Minnesota, and more.

BUSINESS AND INVESTOR SUPPORT FOR CLIMATE DISCLOSURE GROWS: The Securities and Exchange Commission’s biggest decision isn’t whether to require public companies to report their greenhouse gas emissions and climate risks, but how to set up a framework for mandatory disclosure.

The SEC recently concluded accepting public comment on how to set up a framework for companies to report their climate risks, and the agency heard support for requirements from some of the biggest investors, asset managers, pension funds, and major public corporations.

“The current state of climate change disclosure does not meet our needs,” a coalition of investors, companies, advocacy groups, and others wrote in a statement on June 10. Signatories on the statement included investors with more than $2.7 trillion in assets under management collectively and companies such as Patagonia, Danone, and BHP.

For any disclosure regime, however, the devil will be in the details. More on some of the most difficult decisions the SEC will face as it crafts a climate disclosure framework in Abby’s story for this week’s Washington Examiner magazine.

The Rundown

Bloomberg The green revolution is being built on a very dirty industry

CNN US assessing reported leak at Chinese nuclear power facility

Reuters Shell weighs blockbuster sale of Texas shale assets

Wall Street Journal The hedge-fund manager who did battle with Exxon -- and won

Wall Street Journal Oil hits pandemic high as investors bet on green energy

Reuters Energy majors bid for Qatar LNG project despite lower returns

Calendar

TUESDAY | JUNE 15

10 a.m. 366 Dirksen. Energy Secretary Jennifer Granholm will testify before the Senate Energy and Natural Resources Committee on DOE’s fiscal year 2022 budget request.

WEDNESDAY | JUNE 16

10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to consider the nominations of Jeffrey Prieto to be general counsel of the EPA, Jane Nishida to be EPA’s assistant administrator for international and tribal affairs, and Alejandra Castillo for assistant secretary for economic development of the Department of Commerce.

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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: G7 agreement on coal puts new pressure on China

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