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WAR ‘REDEFINES ARCHITECTURE OF EUROPE’: Leaders from the European Union met in Versailles today for the second of a two-day summit, where discussions are expected to focus almost entirely on the crisis in Ukraine, as well as the EU’s efforts to secure energy independence in wake of Russia’s invasion.

Leaders are ultimately seeking to make Europe “stronger, more sovereign, more independent,” European Council President Charles Michel said ahead of today’s meeting.

The war should push the EU “to reduce our interdependence with the outside world, to create not an autocracy but a form of European independence,” Clément Beaune, France’s EU minister, said earlier this week. "If this is the result of this crisis, it will be a success for Europe."

Speaking at the start of the summit, French President Emmanuel Macron said the war "completely redefines the architecture of our Europe" and will make the continent "change even faster and stronger."

"Europe must prepare itself for all scenarios," Macron said. "Europe must prepare itself to be independent of Russian gas, to be independent, to ensure its own defense."

Even countries like the Netherlands, which have long been reluctant to bolster Europe’s defense capabilities, have signaled they are warming to such proposals, Politico reports. “We have to enhance our open strategic autonomy, something France has been urging for a long time,” Dutch Prime Minister Mark Rutte told reporters earlier this week.

Asked whether the Netherlands were “shifting position” on the concept, Rutte replied: "Yes, we are."

Another show of unity: President Joe Biden announced this morning that the U.S. will work alongside the EU and G-7 nations to strip Russia of its “favored nation” trading status.

“The free world is coming together to confront Putin,” Biden said, speaking this morning from the Roosevelt Room of the White House.

As the Washington Post reports, the decision will end Russia’s “permanent and normal trade relations” status––effectively reducing it to “pariah status” in the global trade system, alongside countries like Cuba and North Korea.

Biden also said the U.S. and its allies will seek to block Russia's ability to borrow capital from "leading multilateral institutions, such as the International Monetary Fund and the World Bank."

Taken in lockstep with other allied nations, the measures will likely have a drastic impact on isolating Russia’s economy. Two-way trade between EU nations and Russia amounts to roughly $700 billion annually––and already, decisions made by the West have caused Russia’s ruble to plummet 76% in value over the past month.

Expect more signs of unity as EU leaders wrap their summit in Versailles. Following yesterday’s meeting, leaders issued a joint statement condemning Russia’s “unprovoked and unjustified military aggression” in Ukraine, and pledged “unwavering support” for refugees fleeing the war. But the bloc also stopped short of fast-tracking the EU membership request submitted by Ukrainian President Volodymyr Zelensky.

On the agenda for today: EU leaders are expected to discuss a proposal published earlier this week that would phase out its dependence on all Russian energy supplies by 2030. The bloc would also reduce its Russian gas imports by two-thirds this year. (Britain separately has announced it will phase out all Russian oil imports by the end of this year.)

While some have pushed for a faster phase-out, other leaders, such as Rutte, remained skeptical, noting the potential pain it could cause to Europe’s economy. "I would not plead to cut off our supplies of oil and gas today from Russia. It's not possible, because we need the supply and that's the uncomfortable truth," Rutte said.

“It’s a very difficult situation that, on the one hand, we have these financial sanctions that are very hard but on the other hand, we are supporting and actually financing Russia’s war purchasing oil and gas and other fossil fuels from Russia,” Finnish Prime Minister Sanna Marin told reporters today. “We have to get rid of the fossil fuels coming from Russia as soon as possible.”

To replace their dependence on Russia, leaders plan to diversify their gas supply in the short-term––including seeking out additional LNG partnerships––and speed up the roll-out of renewable gas, solar energy, and other energy-saving measures, according to a draft copy of the plan.

A short-lived coal revival? Russia’s invasion has upended energy markets in Europe, setting off a scramble for coal––one of the few energy alternatives available to consumers in Europe in the short-term. E&E News reports: “Two coal plants, one in the United Kingdom and another in Germany, have already delayed retirement plans, and more are expected to follow, said Glenn Rickson, head of European power analysis at S&P Global.”

Rickson predicted coal generation in Europe will “average 15 gigawatts in 2022, up from 11GW in 2021 and 8 GW in 2020,” E&E reports. “Germany’s coal fleet, which has largely operated as a backup source of power in recent years, is now likely to run more frequently.” That’s a major about-face for Europe, and could represent a stark setback – at least for now– to its climate efforts.

Estimated fuel shortages have also sent coal prices soaring. This week, coal prices increased by roughly 30%, while Europe’s futures reported trading at more than $350 a metric ton — triple pre-pandemic levels.

After a volatile week, oil markets appeared to calm slightly this morning, with futures for Brent crude rising by 0.7% a barrel––the smallest move this week––while futures for U.S.-based West Texas Intermediate rose 0.6% to $106.68 a barrel.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email or 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.

DEMOCRATS TARGET NEW OIL PROFITS: Democrats have proposed imposing a new tax on large oil companies designed to "curb profiteering" by redirecting profits associated with higher crude oil prices to back drivers.

Sen. Sheldon Whitehouse of Rhode Island led the effort, which would collect a portion of the profits companies are earning during this high-price period and return it to consumers as quarterly rebates.

“We cannot allow the fossil fuel industry to once again collect a massive windfall by taking advantage of an international crisis," Whitehouse said in a statement.

California Rep. Ro Khanna, chairman of the Oversight and Reform Committee's Environment Subcommittee, will introduce a version in the House.

Eyeing the earnings: Biden and other critics of the oil and gas industry have turned the heat up, suggesting and in some cases saying outright that companies are unduly profiting from higher crude oil prices.

Environmental group Friends of the Earth published a review of several oil executives’ stock sales from just before and since Russia invaded Ukraine, finding that five of them have sold shares worth $99 million in recent weeks.

Lukas Ross, program manager for Friends of the Earth, accused the executives of “cashing in on war” and called for an end to “the age of fossil fuels.”

Industry players have denied those accusations.

"I think they need to stop the rhetoric that, you know, this industry is seeking to capitalize on a tragic moment in U.S. history and world history," Mike Sommers, president and CEO of the American Petroleum Institute, told the Wall Street Journal.

STATES PUSH FOR GAS TAX RELIEF: Maryland Gov. Larry Hogan and state legislative leaders agreed to a 30-day gas tax suspension, seeking to blunt rising gas prices, which surged past $4 per gallon for the first time since 2008.

Momentum is building for such efforts at both the state and federal level as prices at the pump continue to rise. Currently, the federal gas tax stands at 18.4 cents per gallon, and state tax averages out to roughly 31 cents, according to AAA.

Lawmakers in at least 15 other state legislatures are discussing legislation that would either temporarily suspend, reduce, or freeze state gas taxes, Breanne reports.

And earlier this week, governors from six states: Colorado, Michigan, Minnesota, New Mexico, Pennsylvania, and Wisconsin, called on Congress to suspend the federal gas tax through the end of 2022.

Virginia Gov. Glenn Youngkin is also pushing for a one-year gas tax suspension, which he touted on Fox Business yesterday. “This is a big moment for us to recognize that the average American family is really, really hurting right now,” he said.

BIDEN BOASTS BOOSTING PRODUCTION: Biden expressed pride in oil production rates yesterday to a crowd of fellow Democrats at the DNC’s retreat in Philadelphia, framing more output as a war-time necessity.

“We are increasing oil production with a record productivity. By the end of the year, we will have produced more oil than any time in the last number of years,” he said to applause.

The White House is pinched to illustrate it’s helping to bring short-term relief to drivers in the face of constant needling from Republicans, even while its prevailing goal is to move off of fossil fuels — something Biden acknowledged in the next breath. (Consider how unlikely it would have been three months ago for Biden to brag about oil production.)

Finding fault: Biden also implicated oil companies for not doing more, as well as Wall Street, and asserted that industry leaders say there’s “nothing the U.S. government needs to do to incentivize them.”

“There’s an impediment to production in the United States, and it’s called ‘the bankers on Wall Street.’ And this crisis is another indication of why we need to get off dependency on fossil fuels,” Biden said.

To the contrary: The administration and some industry leaders are on the same page about a few things, including the ban on Russian fuel imports and the view that production needs to increase, but they diverge widely in their accounting of events.

Erik Milito, president of the offshore trade group National Ocean Industries Association, brought up the dearth of successful lease sales since Biden took office and said it has been inhibitive.

“The message coming out of the administration is, ‘You guys are fine, it's your fault that you're not producing energy because you have everything you need,’” Milito told Jeremy. “That is really contrary to the reality on the ground where companies need to be able to make investments in the most prospective acreage in the offshore environment so that they have the best opportunity to actually find oil and gas.”

More from Milito: The line from the White House and industry critics has been that companies are not capitalizing on existing federal land leases and drilling permits and that lobbying for more lease sales is unnecessary at best, greedy at worst.

“The implication coming out of the administration is that if you have a lease, you have oil,” Milito said, speaking to offshore development in particular. “Companies have every incentive to develop these properties, but most acreage does not have oil. In the offshore, it's still a process of spending hundreds of millions of dollars on seismic work to see what the rock looks like and then to actually drill the exploratory wells to see if oil is actually there in commercial quantities.”

MANCHIN SUGGESTS BIDEN INVOKE DPA TO COMPLETE US GAS PIPELINE: Sen. Joe Manchin urged President Biden yesterday to use the Defense Production Act if necessary to complete construction of a 303-mile U.S. natural gas pipeline, which he said could help replace natural gas supplies in wake of the U.S. ban on Russian natural gas imports.

The move comes as the administration calls on industry leaders to expand production and help blunt the spike in gas prices, which soared past $4 a gallon this week for the first time since 2008.

Speaking at a Senate Energy Committee hearing yesterday, Manchin called on the administration to ramp up construction of the Mountain Valley Pipeline, calling it the “quickest thing that we can get” to get “more energy into the market that’s going to be needed.”

He said that construction of the pipeline, which runs through his home state of West Virginia to southwestern Virginia, could be completed in four to six months if the president authorizes DPA.

“I’ve been preaching to the heavens for a long time on this one,” Manchin said.. “It can be done with the Defense Production Act.”

“What we do know is that Russia has weaponized energy,” he added. “They have used it as a geopolitical weapon. The thing I know about an adversary or a bully is if they have a weapon, you better have one that will match it or be better than theirs. And we do, we just haven’t used it,” Manchin said.

White House Press Secretary Jen Psaki appeared to throw cold water on the idea, however, telling reporters later that authorizing DPA to drive energy production “would basically be providing money to oil companies to do something that they already probably have the capacity to do.”

EPA DROPS ‘GOOD NEIGHBOR’ SMOG PLAN: The agency announced a new plan today to limit cross-state smog pollution from power plants and industrial facilities.

Power plants in 25 states would be subject to new nitrous oxide reduction requirements beginning next year, while industrial sources like kilns used in cement manufacturing and furnaces used in iron and steel mills in 23 states would have to comply by 2026.

EPA has already moved this year to cut mercury pollution from power plants, but a broader regulation targeting power plants’ greenhouse gas emissions is outstanding in the face of the Supreme Court’s pending decision in West Virginia v. EPA.

CASSIDY ENERGY POLICY RESET REVEALED: Republican Sen. Bill Cassidy is intent on “resetting American energy and climate policy” with a new policy outline promoting growth of domestic energy production to displace Russia’s share of global fuel markets.

Cassidy, who recently previewed the agenda to us, detailed the plan earlier this week, describing it as a counter to the Biden administration’s approach which he said is “trying to view the issue of climate independently of energy, national security, and the economics of our country and our families.”

The agenda calls for an “Energy Operation Warp Speed,” a borrow of the Trump administration’s COVID-19 vaccine effort moniker, to swiften the review processes for approving energy infrastructure and carbon capture projects.

A big piece of the plan is to enable export of more U.S. LNG and other fuels and encourage more LNG capacity to be built abroad, as well as using trade-based solutions for lowering emissions.

Cassidy said he hasn’t yet conversed with the White House about acting on his plan but that interest in it among his fellow senators is bipartisan.

The Rundown

E&E News SEC to consider historic rule requiring climate disclosure

Washington Post Gas leak at ConocoPhillips Alaskan drilling site forces some to leave

Bloomberg Orsted says BP trying to block part of U.K. wind farm at sea

Axios Oil giants: You need us on climate



10 a.m. The Senate Environment and Public Works Committee will hold a hearing to evaluate the formula for the EPA’s Clean Water State Revolving Loan Fund (CWSRF)––a federal-state partnership that seeks to provide communities with low-cost financing for water infrastructure projects

10 a.m. The House Agriculture Committee will hold a hearing to review USDA’s climate change programs