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WHERE DEMOCRATS GO FROM HERE: Democrats are forced this week to look at third-best options for addressing climate change after Sen. Joe Manchin said he’s a “no” on the Build Back Better bill.
Remember: The provisions in the current working version of Build Back Better were already a sort of second-best option. Originally, Democrats had sought to enact what they called the clean electricity performance program, a form of a clean electricity standard to phase emissions out of the power sector. But Manchin effectively nixed that from the reconciliation measure. Now, in coming out against the bill as a whole, he’s also imperiled its other major climate measures, most notably the $555 billion in spending on measures to encourage green energy.
The next fallback option: Soon after Manchin spiked the legislation yesterday, Senate Finance Committee Chairman Ron Wyden of Oregon began laying out the case for a slimmer package that could meet the West Virginian’s expressed parameters for legislation. His vision includes the clean energy tax credits that Senate Democrats have pursued.
Wyden argued that the tax credits would not disfavor fossil fuels per se, meaning that they should meet Manchin’s specifications.
“Senator Manchin has long said he would only support technology-neutral incentives, and that’s exactly what this package is structured around,” Wyden said in a statement.
The credits in question – more than $300 billion worth – comprise three emissions-based incentives: clean power, clean fuels, and energy efficiency. The incentives wouldn’t favor a particular technology so long as it reduces carbon emissions, meaning that fossil fuels could benefit, as long as they “get cleaner,” in Wyden’s words.
The credits could also be claimed as direct cash payments, expanding the scope of companies that can take advantage of them.
“This is not over. The clean energy tax platform and grid infrastructure provisions in the Build Back Better Act are our last, best chance to tackle climate change,” said Gregory Wetstone, CEO of the American Council on Renewable Energy. “We will be working with Congress to find a way forward and deliver the clean energy future Americans want and deserve. Failure is not an option.”
Guessing at what Manchin might go along with: Speaking on West Virginia radio this morning, Manchin suggested that he would favor Democrats trying again on smaller legislation through a more rigorous process. “I won't continue to go down everything you want to do, major policy changes and reconciliation. It needs to go through a process,” he said.
But while he may be open to some sort of slimmed-down legislation, it’s worth noting that his original statement yesterday included a special note of skepticism about spending on clean energy measures — and that the fundamental motivation behind those measures is to displace fossil fuels. Manchin has proven wary of doing that at the pace at which many of his fellow Democrats want to do it.
“We have invested billions of dollars into clean energy technologies so we can continue to lead the world in reducing emissions through innovation. But to do so at a rate that is faster than technology or the markets allow will have catastrophic consequences for the American people like we have seen in both Texas and California in the last two years,” he said.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Jeremy Beaman (@jeremywbeaman). Email jbeaman@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.
EPA FINALIZES VEHICLE EMISSIONS STANDARDS: The Biden EPA announced raised emissions standards for light duty vehicles this morning in a move the agency hailed as “paving the way” to net-zero.
The rule requires automakers to reduce emissions output in new makes beginning with model year 2023 vehicles and to reach 161 grams of CO2 emissions per mile by model year 2026, which is equivalent to 55 miles per gallon of fuel efficiency.
The new rule would be stricter than the rolled-back standards put forward by the Trump administration. In that version, the emissions standard for model year 2026 allowed for 208 grams of CO2 per mile, or equivalent to 43 miles per gallon.
EPA made clear that it sees the rule as a catalyst for electrification, saying its requirements will “prompt automakers to use clean technologies that are available today and help stimulate production of more electric vehicles.”
The transportation sector accounts for the highest share of emissions among U.S. sectors, and boosting the uptake of electric vehicles is integral to President Joe Biden’s plan to cut them.
OIL FALLS ON OMICRON: The omicron variant is rearing its head again after first sending oil plummeting late last month.
Oil prices slid this morning following a weekend of news about increasing COVID-19 infections and associated school closures in the U.S. and new travel restrictions across Europe. Brent crude is down 4.5% to about $70 per barrel, while West Texas Intermediate fell 5.5% to around $67 per barrel.
The virus is set to test the health of the global oil market, which the International Energy Agency assessed last week to be “[standing] on a better footing than it has for some time.”
Remember, even though OPEC+ moved forward with its production plan during its meeting earlier this month, it said it would “remain in session pending further developments of the pandemic” and that it will “make immediate adjustments if required.”
UK’S CONDITIONS FOR NEW DRILLING: The United Kingdom plans to continue allowing new offshore drilling if developers can demonstrate they will outperform importers, Bloomberg reports.
Regulators could approve new projects if it can be shown that any emissions for which they are responsible are less than those associated with fossil fuel imports, per a document from U.K.’s Department for Business, Energy and Industrial Strategy.
“Homegrown oil and gas is generally more climate friendly than imports,” said Greg Hands, the U.K. energy and climate minister. “That is something which I think the government is keenly aware of.”
But any new oil and gas developments will have to overcome strident opposition from environmentalists and other economic factors challenging viability. Oil giant Shell cited the latter in withdrawing from a drilling project in the North Sea’s Cambo oil field earlier this month, with a spokesperson saying the “economic case for investment in this project is not strong enough at this time.”
ITALIAN OFFICIAL HAS A WORD FOR NIMBYS: Italy’s minister for energy transition is telling locals opposing new wind and solar installations that the alternative is to go without.
“The alternative is you get rid of your car, no air con, no mobile phone, no internet at all,” Roberto Cingolani told the Financial Times. “Citizens have to understand this.”
The bark has some bite with it. The government has adopted new “powers of substitution,” which enable it to overrule regional and local authorities to speed up the authorization of renewable infrastructure projects.
Cingolani’s comments are a reminder of the universality of NIMBYism, something with which green energy project developers in the U.S. are well acquainted. Just last week, a judge declined to enjoin enforcement of a new Maine law prohibiting a hydropower transmission project through the state’s Upper Kennebec Region, which voters passed via ballot initiative last month.
INDIAN POINT BY THE NUMBERS: The nuclear-fueled Indian Point Energy Center’s closure in April means that New York must see “a large amount of new carbon-free generating capacity” come online in order to meet its goal of 100% carbon-free electricity by 2040, according to a new note from the Energy Information Administration.
The retirement of Indian Point Unit 3, the plant’s last operative reactor and one of New York’s 10 largest electricity generators at the time it was taken offline, removes some 1,040 megawatts of nuclear (and carbon-free) generation capacity from the state, EIA’s note says.
Natural gas has picked up the slack, with three plants coming online in the last three years to help keep the lights on in New York City in Indian Point’s stead.
Nuclear proponents have pointed to the greenhouse gas emissions associated with such a reversion to fossil fuel-generated power to lobby for maintaining the nation’s reactor fleet and avoid setting the power sector back on emissions targets.
The Rundown
Bloomberg Reluctance to fund gas threatens West Africa power projects
Reuters Oil driller sees the industry's future in electric rigs, carbon offsets
Wall Street Journal Biden’s China and climate goals clash over solar panels
Calendar
WEDNESDAY | JAN. 12
10 a.m. The American Petroleum Institute and Energy Citizens hosts the 13th annual 2022 “State of Energy” forum.