Daily on Energy: Top Republican says Biden oil and gas leasing pause has already stopped investment

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WESTERMAN ON LEASING PAUSE: Rep. Bruce Westerman of Arkansas, the top Republican on the House Natural Resources Committee, argues the Biden administration’s pause on oil and gas lease sales, now in its sixth month, has already had its intended effect, even if leasing resumes soon.

“Their objective is to create uncertainty, which is just as good as saying we aren't leasing anymore,” Westerman told me in an interview. “If they stop capital investment in these projects, they are accomplishing the same thing to say no more leases.”

Westerman’s argument comes as the Interior plans a report on the future of the leasing program — which Secretary Deb Haaland testified this morning is coming “very soon” (much more on her testimony below) — that is expected to propose reforms to raise costs and impose stricter regulation on oil and gas development.

Lawmakers in Congress have provided a roadmap for the types of policies the administration is likely to propose.

House and Senate lawmakers — including Republican Sen. Chuck Grassley of Iowa — have introduced a suite of legislation to raise royalty rates, increase public input into the leasing process, require cleanup and remediation of abandoned wells, and crack down on methane emissions from oil and gas.

The royalty rates that companies pay to the government to drill on public onshore lands haven’t been raised since the 1920s, while minimum bid requirements set at $2 an acre have not been lifted in decades. But most Republicans seem unlikely to go along, despite arguments from Democrats and some fiscal conservatives that taxpayers deserve a fairer return.

“Oil and gas leasing isn’t broken, but it is harmed by existing regulations that discourage investment in federal lands,” Energy Committee top Republican John Barrasso of Wyoming recently said, arguing current policies already encourage producers to favor state and private lands.

The Biden administration, however, has argued that oil and gas development occurring on existing leases is sufficient to cover the near-term demand for fossil fuels, even if it makes life harder for producers in the future.

It continues approving permits to drill for oil and gas on existing public lands leases at the highest rate since George W. Bush’s administration.

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.

SENATORS GROW ANTSY OVER BIDEN LEASING PAUSE: Senators of both parties are prodding the Biden administration to resume oil and gas lease sales and expressing frustration about the Interior Department’s murky response to a federal court ruling.

"While I’ve supported administration’s desire to pause lease sales to make sure the American people are getting fair returns for our shared resources, we are now well now into the early summer timeline when we were told the review would be completed,” Energy Committee Chairman Joe Manchin, Democrat of West Virginia, said at the hearing this morning. “We need a plan to move forward for responsible oil and gas leasing both onshore and offshore.”

Report coming ‘very soon’: Haaland replied to questioning from Manchin that Interior’s long-anticipated report on the future of oil and gas leasing on public lands promised by early summer is coming "very soon" and being finalized internally.

Haaland also continued to be evasive about how Interior is responding to a June 15 ruling by a Louisiana-based federal district judge granting a preliminary nationwide injunction to 13 states that sued the Biden administration over its leasing pause.

The Interior Department has already canceled lease sales for the first and second quarters, but Haaland did not commit to rescheduling them. She also did not say whether Interior will proceed on third quarter oil and gas lease sales before the end of September.

Interior "is complying with the court order" but "it's not a switch you can turn on," Haaland said, adding “a lot of work” goes into doing a lease sale.

Later on, her message was even more muddled: "Technically I suppose you could say the pause is still in place,” Haaland said. “However we are complying with the court order."

Those comments did not satisfy GOP Sen. Lisa Murkowski of Alaska, a top producer of oil on public lands.

“I hope you can sense the frustration so many of us have in anticipating this and wondering when we will be able to expect you’ll be in compliance with the judge’s order,” Murkowski said.

SCOOPLET...BIPARTISAN CLEAN ENERGY TAX CREDIT BILL OUT TODAY: Republican Sen. Mike Crapo of Idaho and Democrat Sheldon Whitehouse of Rhode Island, along with Reps. Tom Reed, Republican of New York, and Jimmy Panetta, Democrat of California, are poised to introduce matching legislation this afternoon to provide federal tax subsidies for first-of-a-kind clean energy technologies.

The Energy Sector Innovation Credit is unique in that it is technology-neutral, providing new electricity sector tax credits to use applications rather than specific energy sources “without the government picking winners and losers,” Reed is poised to say in a press release I obtained ahead of its release.

So, while existing clean energy tax policy provides subsidies for wind and solar, for example, this proposal would direct credits to “low market penetration” applications such as energy storage, carbon capture for natural gas plants, advanced nuclear reactors, and offshore wind.

For each technology, the incentive automatically ramps down as individual technologies scale up, so “taxpayer dollars do not subsidize market-mature technologies,” Crapo is planning to say in a statement. Crapo is the ranking member of the Senate Finance Committee.

Clean energy developers can access an investment tax credit up to 40% or a 60% production tax credit.

The legislation could find its way into infrastructure negotiations as it has garnered support from a broad range of outside groups including ClearPath Action, Third Way, Bipartisan Policy Center, Clean Air Task Force, Citizens’ Climate Lobby, Environmental Defense Fund, and more.

MORE FROM WESTERMAN INTERVIEW: Westerman before our conversation had just returned from the southwest border in McAllen, Texas, where he led a congressional delegation on a tour to witness environmental “degradation” caused by a surge of illegal immigration.

Westerman said he saw trash accumulation and habitat destruction from border-crossers, including in the Santa Ana National Wildlife Refuge along the banks of the Rio Grande. He said he witnessed border patrol officers carrying trash bags to pick up strewn items such as diapers, plastic bottles, and even a cellphone.

“The most damaging thing to the environment and human welfare is the policies encouraging people to make the trek,” Westerman said of Biden administration policies.

LAST MINUTE DISPUTES THREATEN INFRASTRUCTURE DEAL: A long-sought bipartisan infrastructure deal lawmakers hoped to secure could collapse because of a sudden dispute over the terms of the package that has left Republicans and the White House blaming each other, the Washington Examiner’s Susan Ferrechio reports.

A group of Senate Republicans had hoped to announce a finalized agreement yesterday on a measure that would spend $1.2 trillion on roads, bridges, water projects, clean energy, and broadband expansion.

But Republicans now say the White House and Democrats are pushing for late changes to the measure that could sink the deal. Democrats say it’s the other way around — Republicans are reneging on spending for replacing lead pipes.

Despite the bickering, Senate Majority Leader Chuck Schumer said he is "fully committed" to bringing up the bill for a vote and added that the Senate would stay in session into the weekend to vote for the bill. "It's time for everyone to get to yes and produce a bipartisan deal," he said.

Schumer’s pickle: He’s facing pressure from liberals to abandon the bipartisan talks and to proceed to a larger $3.5 trillion budget resolution through reconciliation that contains a clean electricity standard and clean energy tax credits. But he’s in a tough spot because centrists like Manchin, who he’ll need to pass the Democratic-only bill through the split 50-50 Senate, are demanding the bipartisan legislation first.

"I would say that if the bipartisan infrastructure bill falls apart then everything would fall apart,” Manchin told reporters yesterday.

EPA LOOKS TO REVERSE TRUMP ROLLBACK OF COAL WASTEWATER RULE: The Environmental Protection Agency announced yesterday it will strengthen a rule requiring coal-fired power plants to manage disposal and treatment of toxic waste so they don’t contaminate water, reversing the Trump administration’s rollback weakening of the pollution controls.

The EPA, however, will not revert immediately to the stricter standards set under President Barack Obama in 2015, allowing the weaker Trump administration rule to remain in effect until it writes new regulations.

EPA said the Trump-era rules did not do enough to reduce water pollution of toxic metals such as mercury, arsenic, and selenium from coal plants.

Coal producers and coal-heavy utilities have long complained the 2015 steam electric effluent guidelines were a thorn in their side, placing new requirements on the facilities, following some large leaks and spills of toxic waste.

The Trump EPA’s proposals relaxed Obama-era requirements for how companies treat their toxic waste — by extending deadlines, narrowing requirements, and introducing several exemptions for facilities that would further relax the limits.

TESLA TOUTS ELECTRIC VEHICLE TURNING POINT WITH STRONG SALES QUARTER: Electric vehicle pioneer Tesla posted a $1 billion-plus net profit in the second quarter after selling twice as many cars for the three month period ending in June than it did in that timeframe a year earlier.

The company said it made $1.1 billion in the second quarter, up from $104 million in the same period a year earlier. Tesla sold more than 200,000 electric vehicles in the quarter, up from about 91,000 a year earlier, numbers that were affected by the pandemic amid a slowdown across the entire auto industry.

Tesla CEO Elon Musk declared the strong quarter a turning point for U.S. EV sales.

“Public sentiment around EVs is at an inflection point,” Musk said on a conference call, the New York Times reported. “I think everyone agrees at this point that EVs are the way forward.”

While EVs still represent less than 3% of U.S. auto sales, large legacy automakers GM and Ford have recently increased their near-term planned investments in electric models. Democrats in Congress, meanwhile, are looking to pass large consumer rebates and new EV charging investments in infrastructure legislation.

SIGN CHINA IS PULLING BACK ON COAL? China did not provide funding for coal projects through its Belt and Road Initiative in the first half of 2021, the first time that’s happened since the program launched in 2013, the International Institute of Green Finance said in a report today.

Energy projects represent the majority of BRI investments, but most of that spending so far this year has gone to natural gas (37%), followed by oil (30%), and hydropower (28%).

China’s lack of investment in overseas coal comes after the G7 banned new government financing by the end of this year for coal plants abroad without carbon capture and storage.

That left China isolated as the only backers of coal globally, applying new pressure on Beijing to curb coal financing as part of its Belt and Road initiative that supports infrastructure in developing countries.

Renewable funding also down: BRI funding for green energy, however, fell by 90% in the first half of 2021 from a year earlier, according to the report. Spending on wind and solar has dropped from $2 billion in the first half of 2020 to $190 million in the first six months of this year, with only one deal confirmed.

MOVERS AND SHAKERS: The National Electrical Manufacturers Association announced yesterday that Debra Phillips will be its president and CEO.

Phillips joins NEMA from the American Petroleum Institute, where she led the certification, standard-setting, and safety programs division as senior vice president of Global Industry Services.

The Rundown

Wall Street Journal Big oil companies push hydrogen as green alternative, but obstacles remain

Politico In Nord Stream 2 fight, Ukraine gives EU taste of its own bureaucracy

Bloomberg Global LNG market faces shakeup from Japan’s green shift

Washington Post Trucker shortage leads to possible fuel shortages at some airports, airline industry says

Calendar

TUESDAY | JULY 27

2:45 p.m. The Bipartisan Policy Center will host a webinar to discuss how the U.S. can strengthen its domestic supply chain to secure sustainable critical minerals for the energy transition. Republican Sen. Lisa Murkowski of Alaska will participate.

WEDNESDAY | JULY 28

10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to examine the benefits of investing in U.S. Army Corps of Engineers water infrastructure projects.

12 p.m. OurEnergyPolicy will hold a webinar on proposed federal clean energy standards, with opening remarks by Democratic Sen. Tina Smith of Minnesota.

3 p.m. The Center for Climate and Energy Solutions will host a fireside chat with Democratic Sen. Sheldon Whitehouse of Rhode Island to discuss his carbon pricing bill, the “Save our Future Act.”

THURSDAY | JULY 29

9 a.m. 210 Cannon. The House Select Committee on the Climate Crisis will hold a hearing titled “Financing Climate Solutions and Job Creation.”

10 a.m. 406 Dirksen. The Senate Committee Environment and Public Works Committee’s chemical safety subcommittee will hold a hearing on three of Biden’s nominees to be members of the U.S. Chemical Safety and Hazard Investigations Board.

12 p.m. The American Council for Capital Formation will host a webinar conversation with Reps. Kurt Schrader, Democrat of Oregon, and David McKinley, Republican of West Virginia, on their clean electricity standard bill, the Clean Energy Future through Innovation Act.

12 p.m. The Bipartisan Policy Center will host David Hayes, White House advisor, and former Louisiana Gov. Bobby Jindal for a webinar conversation on “offshore wind's important role in the expansion of zero-carbon energy production.”

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel

Original Location: Daily on Energy: Top Republican says Biden oil and gas leasing pause has already stopped investment

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