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THE UNSPOKEN TENSIONS IN BIDEN-EU SUMMIT: The official White House statement recapping the U.S.-EU summit just released before press time does not mention the most contentious energy issues facing the two allies, including the prospect of import tariffs on carbon-intensive products and the completion of the Nord Stream 2 natural gas pipeline from Germany to Russia.
The statement reaffirmed the U.S. and EU’s commitment to upgraded Paris climate agreement pledges to cut emissions by more than half by 2030. The U.S. and EU also repeated a recent G7 pledge to “accelerate the transition away from unabated coal capacity and to an overwhelmingly decarbonized power system in the 2030s.”
BCA tensions: But the EU is ahead of the U.S with its climate policies in an important way that could stress relations. It is expected to unveil a border carbon adjustment (BCA) proposal next month that would likely tax imports of certain carbon-intensive imported goods, such as steel, cement, electricity, fertilizer, and iron. The Biden administration wants the EU to hold off on a BCA, or exempt U.S. products, but President Joe Biden‘s climate policies are mostly theoretical at this point without cooperation from Congress, and he has not proposed a domestic carbon price plan that most experts say the U.S. would need to impose its own BCA on other countries’ exports.
The EU, by contrast, has had an emissions trading scheme since 2005, giving it ample reason to act on a BCA now to prevent European companies from moving overseas to avoid paying the domestic fee.
The White House statement today stresses the U.S. and EU intend to “closely coordinate to address the risk of carbon leakage,” a likely allusion to preventing an increase in emissions in places that don’t have strong climate policies. Pierre Noel, a global research scholar at Columbia University’s Center on Global Energy Policy, told Josh that both sides are facing political difficulties in navigating whether the U.S. should be exempted in some way from a EU BCA. The EU’s BCA is not expected to enter into force until 2026, which gives the U.S. more time to pass a carbon price.
“There is a strong rationale for the EU to hold firm, if only as an insurance against the US climate policy never taking off,” Noel said. “However, politically, it could be difficult for Brussels to find enough political support among Member States to fight with the US on this.”
How about NS2? Noel said the U.S and EU are “relieved that they don’t have to discuss” Nord Stream 2 anymore now that the Biden administration has acknowledged the pipeline is a “fait accompli,” in the words of Secretary of State Antony Blinken.
The issue will now likely be dealt with bilaterally — and quietly -— between the U.S. and Germany, and/or bilaterally to include Ukraine, which fears the pipeline will strengthen Russia’s ability to wield its influence.
Anna Mikulska, a nonresident fellow in energy studies at Rice University’s Baker Institute, told Josh the U.S. is now likely to seek concessions from Germany to appease Ukraine, such as ensuring continued natural gas transit through Ukraine.
“There will be the question of Ukraine and how it can be protected against Russian aggression,” Mikulsa said.
The Biden administration is also likely to promote U.S. LNG as an alternative to Russian gas to the EU, said Paul Bledsoe, strategic adviser at the Progressive Policy Institute who consulted for DOE’s International Office during the Obama Administration. The EU imports 45% of its natural gas from Russia, and will still need to depend on the fuel as it transitions to cleaner energy.
“The best way for the EU to phase out coal to meet its climate goals is to use US liquified natural gas, which is much lower emitting not only than coal but than the methane-heavy Russian gas the EU currently relies on,” Bledsoe said.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] 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.
INFRASTRUCTURE BILL FRUSTRATIONS: Liberal Democratic senators say they’ll refuse to back any infrastructure package without a “guarantee” that aggressive climate provisions will also pass Congress, a fracture that could threaten the bipartisan deal being hashed out by their centrist colleagues.
“We’re saying that there absolutely has to be a guaranteed deal that climate is built into these infrastructure bills and that it matches the problem that has to be solved,” said Sen. Ed Markey, a Massachusetts Democrat and climate hawk, said during a news conference this morning.
Markey, along with Oregon Democratic Sen. Jeff Merkley, said he won’t support any infrastructure bill without certainty that Biden would also be signing aggressive climate and clean energy investments equivalent to what he proposed in his jobs plan into law.
The two senators are echoing the frustrations many of their liberal colleagues in both the Senate and House have with the bipartisan infrastructure talks that are largely leaving out clean energy. And the growing fracture puts increasing pressure on Biden as he engages with the bipartisan group of senators and on centrist Democrats keen to strike a deal with Republicans.
More in Abby’s story just posted.
GRANHOLM ‘SENSITIVE’ TO GASOLINE PRICES, RULES OUT TAX INCREASE: Energy Secretary Jennifer Granholm assured senators this morning that the Biden administration does not want to increase the gas tax as part of infrastructure talks — including indexing it to inflation — because “there is sensitivity” to higher prices at the pump.
Granholm, testifying on the DOE budget before the Senate Energy Committee, was responding to attacks from Republicans who blamed the Biden administration’s policies for gas prices rising 70 cents a barrel since Inauguration Day.
“The American people face a potential energy crisis of this administration’s own making,” said Sen. John Barrasso of Wyoming, the committee’s top Republican, citing the administration’s restrictions on oil and gas supply by pausing fossil fuel leasing on public lands and opposing the Keystone XL pipeline.
Granholm responded that gasoline prices are rising because of rising oil demand as the economy springs back to life from the coronavirus, and noted pump prices are similar today (around $3 per barrel on average) as it was before the pandemic.
“Prices have actually not shot up enormously,” Granholm said. “But seriously, we obviously don’t want to see people pinched at the pump.”
…AND PLEDGES SUPPORT FOR CRITICAL MINERALS MINING: Granholm also reiterated 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.
In a report on supply chain vulnerabilities released last week, the Biden administration didn’t rule out bolstering the domestic mining sector, as previous reports had suggested it might due to environmental concerns. The report, Granholm said, states that the administration’s near-term objectives up to 2025 include increasing U.S. “safe and sustainable production” capacity of critical battery minerals by supporting R&D and mining efforts.
“We can mine in a responsible way and many places are doing that,” Granholm said, adding in response to questioning from GOP Sen. Steve Daines of Montana that it’s “not the case” that Biden won’t promote domestic mining.
BIDEN’S ‘STRONG POSITION’ AGAINST CHINESE COAL: Granholm touted the G7’s recent agreement banning new government financing for coal plants abroad without carbon capture and storage, a move that would increase pressure on China to curb its support for the dirtiest fossil fuel.
“We are taking a strong position against China increasing investments in coal,” Granholm said towards the end of the hearing. “We have got to continue to work on this to apply whatever pressure we can to make sure they live up to their commitments.”
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, as we wrote in yesterday’s edition
GREENS LOSE LINE 3 CHALLENGE: The Minnesota Court of Appeals affirmed state utility regulators’ approval of the state’s Line 3 pipeline yesterday, upsetting climate activists who are escalating their calls for the Biden administration to intervene.
A three-judge appeals court panel ruled 2-1 that the state’s independent Public Utilities Commission correctly granted Enbridge permits to expand Line 3, rebuking a challenge by tribes and environmental groups that claimed the Canadian-based company failed to submit an accurate long-term oil demand forecast and that regulators approved the project based on those faulty assumptions.
The $9 billion Line 3 replacement would double the capacity of the pipeline to 760,000 barrels of oil per day, transporting crude oil from Canada’s Alberta oil sands through the state’s watersheds and tribal lands to Superior, Wisconsin.
Despite pressure from activists emboldened from the recent death of the Keystone XL oil pipeline, the Biden administration has declined to weigh in on the Line 3 expansion.
“This incorrect decision means President Biden and Gina McCarthy must act immediately to stop Line 3’s construction and revoke Trump’s fraudulent permits,” said Collin Rees, senior campaigner with Oil Change International, in response to the court ruling.
ILLINOIS LEGISLATURE TAKING UP NUCLEAR SUBSIDIES PACKAGE: The Illinois legislature is coming back in session today to consider a sprawling energy package that would would provide hundreds of millions of dollars in subsidies to keep alive unprofitable nuclear plants.
The state Senate is headed back to Springfield today, while the House returns tomorrow. It’s unclear if a vote will happen today in the state Senate, Rep. David Welter, the Illinois House GOP conference chair, told Josh this morning, as Democrats haggle over potential exemptions for fossil fuel plants to phase out their pollution.
The energy package will include nearly $700 million in subsidies over five years to keep Chicago-based utility Exelon’s Byron, Dresden, and Braidwood nuclear plants.
Exelon has warned it will retire Byron and Dresden this fall without state assistance. It has also said that Braidwood faces premature retirement in a few years due to low power prices as a result of competition from cheap natural gas. The nuclear plants are critical to Democratic Gov. J.B. Pritzker’s goal of 100% carbon-free power by 2050.
The Democrats’ energy package is also expected to require the shut down of the state’s coal plants by 2035 and phase out natural gas generation by 2045. Illinois would be the first state in the Midwest to ban utilities from burning coal, the Chicago Tribune reports.
DEJA VU: Only a few months after a cold snap led to blackouts for millions, the Texas electricity grid operator is asking people in the state to conserve energy throughout the week, warning of tight power conditions amid high summer demand.
The Electric Reliability Council of Texas, or ERCOT, is asking Texans to conserve energy this week in anticipation of record electricity usage for June amid scorching temperatures, coupled with a number of power plant outages.
In a news release yesterday, ERCOT said roughly 11,000 megawatts of power generation are offline due to repairs, the bulk of which is fossil fuel plants. Typically, fossil fuel plant outages for repairs on a hot summer day would be around 3,600 MW, the grid operator said.
NATO ADDRESSES CLIMATE FOR THE FIRST TIME: Calling climate change a “threat multiplier,” NATO leaders committed for the first time to take concrete steps to curb climate change, including pledging to conduct an annual assessment of how climate change is affecting NATO’s military installations.
Biden, in a press conference yesterday, touted the Climate Security Action Plan that NATO adopted as a significant achievement that “several years ago, people thought we would never do.” The plan focuses on “reducing emissions from NATO installations and adapting to the security risks of climate change while keeping very sharp on our ability to deter and defend against threats,” he added.
NATO leaders also agreed in their communique to convene “a regular high-level climate and security dialogue,” as well as develop a methodology to map greenhouse gas emissions from military activities and installations. “This methodology will help Allies’ own emission assessment programmes and could contribute to formulating voluntary goals to reduce greenhouse gas emissions from the military,” reads the NATO climate plan.
GROUPS CALL ON CONGRESS TO PRIORITIZE TRUCK ELECTRIFICATION: The Bipartisan Policy Center, Securing America’s Future Energy, and the Electrification Coalition in a new report this morning are calling on lawmakers to include strong incentives for electrifying medium- and heavy-duty trucks in any infrastructure package.
Electrifying these larger vehicles isn’t moving as quickly as passenger cars, due to higher upfront costs for electric trucks with bigger batteries and a slow pace of production in the U.S. and elsewhere, the report notes. But the groups say that electrifying more heavy-duty trucks would help speed adoption of electric vehicles across the entire on-road transportation sector.
The groups recommend lawmakers establish a 30% tax credit for manufacturers of heavier weight electric vehicles, which currently aren’t covered by existing electric vehicle incentives. They also suggest Congress expand tax incentives for charging and refueling infrastructure to eliminate a cap on expenses, which would allow more expensive truck refueling stations to qualify. In addition, the groups call on lawmakers to offer funding to states to build public chargers for electric trucks.
The Rundown
Washington Post Haaland urges Biden to fully protect three national monuments weakened by Donald Trump
New York Times A fading coal county bets on schools, but there’s one big hitch
Bloomberg Scientists are trying to make California forests more fire resilient
Calendar
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.
10 a.m. SD – 124. Interior Secretary Deb Haaland will testify before a subcommittee of the Senate Appropriations Committee on the agency’s fiscal year 2022 budget request.
