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GOP OPPOSITION TO TRUMP DRILLING BAN: Most Republicans from oil and gas states have been quiet about President Trump’s pre-election pivot to restrict offshore drilling, but Rep. Garret Graves of Louisiana is not holding back.
Graves, in an interview with Josh, said Trump made an “awful move” by imposing a 10-year extension of a moratorium on drilling in the eastern Gulf of Mexico, and expanding it to other coasts in the Atlantic.
“It does undermine one of the crown accomplishments of this administration, which has been energy dominance,” Graves said. “You can’t do withdrawals and continue to be energy dominant.”
Graves is generally no Trump critic: Graves, the top Republican on the House’s special climate change committee, has sought to balance the concerns of coastal residents in his district worried about sea level rise with the demands of the oil and gas industry prominent in his state.
He’s allied with Trump on most issues, though, and has been an outspoken proponent of allowing drilling in the eastern Gulf, which the oil industry views as a natural outgrowth of its dominant presence in the central and western Gulf.
The Bureau of Ocean Management estimates the eastern Gulf holds up to 3.63 billion barrels of undiscovered, technically recoverable oil and 91.27 trillion cubic feet of natural gas.
‘Compounding’ the pandemic-driven oil crash: Graves represents an oil and gas district near areas of the Gulf of Mexico where production is already occurring. He argues locking up areas from offshore drilling will backfire, leading to more imports of oil and gas from countries like Saudi Arabia and Russia. He’s especially critical of the timing of the move, when the oil industry is struggling to recover from the pandemic.
“We are still seeing an industry trying to stay afloat,” Graves said. “This is certainly a compounding issue.”
The process was flawed too: Graves also faulted the Trump administration for failing to establish typical procedure in declaring an executive moratorium via the Outer Continental Shelf Lands Act. Graves argues Trump is within his legal rights to withdraw areas from leasing. But he noted the current moratorium established in 2006 on eastern Gulf drilling, which expires in 2022, was imposed by Congress after years of “balanced negotiation” involving a trade-off in which the central Gulf production area was moved slightly further east.
“I am frustrated the administration took unilateral action,” Graves said, adding he was not consulted on the decision but has since been in touch with Trump officials to discuss his concerns.
Uneven seats at the table: Graves said it’s wrong to be “callous” to the concerns of Floridians and Atlantic coast officials who pushed Trump to extend and expand the drilling moratorium. But he suggested the president is being selective in giving deference to certain states. Offshore drilling is a major revenue source for his district, Graves noted, and losing production opportunities is harmful to his constituents.
“If it’s going to be this administration’s policy to allow states to dictate what happens in federal waters, then I want Louisiana to be able to dictate just like Florida,” Graves said. “If the state gets to make that decision that has extraordinary impacts, I want Louisiana to be able to make the same decision.”
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BAD SIGNS FOR OIL DEMAND: The recovery of U.S. gasoline demand has stalled with the end of summer driving season, helping to explain the recent decline in oil prices.
August demand was down 18% from the same period last year, according to new data Thursday from OPIS, an IHS Markit affiliate. Demand had been picking up earlier this summer, but gasoline consumption actually fell 1.9% during the last full week of August from the previous week.
“The plateauing in demand is a symptom of the continuing aggressiveness of the coronavirus and is telling us that it will take longer to get back to normal,” said Daniel Yergin, IHS Markit vice chairman.
The global picture: The Energy Information Administration, meanwhile, lowered its forecast for 2021 global oil demand in its short-term energy outlook Wednesday.
EIA projects that consumption of petroleum and liquid fuels globally will average 93.1 million barrels per day this year, which is down 8.3 million b/d from 2019. Demand will increase by 6.5 million b/d in 2021, but that is 0.5 million b/d less than what EIA forecast in August. EIA blames lower than expected consumption growth in China.
One more nugget: Also interesting, EIA expects the U.S. to generate less electricity from natural gas next year due to higher prices, resulting in a slight uptick for coal.
Natural gas will generate 39% of U.S. power this year, but only 34% in 2021, while coal will provide 20% of electricity in 2020 compared to 22% next year. Renewables will also see an uptick, from 20% this year to 22% in 2021.
SCOOPLET…GRIJALVA PLANS TO JOIN LAWSUIT SEEKING PENDLEY’S REMOVAL: Democrats leading the House Natural Resources Committee plan to join a lawsuit accusing Interior Secretary David Bernhardt of illegally authorizing William Pendley to act in the role of director of the Bureau of Land Management without Senate confirmation.
Chairman Raul Grijalva told the Washington Examiner’s Nihal Krishan in an interview that his committee plans to file an amicus brief to a lawsuit filed in federal court by Public Employees for Environmental Responsibility and Western Watershed Project that seeks to remove Pendley from his leadership role of BLM.
“He’s still assigned the job. He continues to be acting director of BLM making all the calls. And as such he’s going against and skirting the whole idea of a confirmation,” Grijalva said. “So we want to challenge that because we think he is there illegally going against not only the Senate confirmation process, but even internal BLM rules in terms of what who should be in charge of that.”
Grijlava called Pendley an “extreme ideologue” and said Trump only withdrew his nomination to permanently lead BLM because he “wouldn’t be able to get 60 votes in the Senate.”
NOT BACK BY POPULAR DEMAND…NUCLEAR ENERGY: Nuclear energy still has an image problem despite advocates promoting the zero-carbon source as crucial to combating climate change.
Just 6% of Americans say the U.S. should keep current nuclear plants running, build more reactors, and promote civil nuclear programs abroad, according to a Morning Consult poll released Wednesday.
One in three of people polled said the U.S. should keep current plants running but not build any new facilities. A smaller number, 16%, support both maintaining existing plants and building new reactors. Nearly half, 49%, view nuclear energy unfavorably, while 29% have a favorable opinion. Tellingly, the respondents who said they are concerned about climate change view nuclear less favorably than the general public, at 55% unfavorable and 27% favorable.
Rita Baranwal, the Energy Department’s top nuclear official, reacted to the poll with alarm, tweeting, “Public perception has always been issue for nuclear,” and declaring “we have to find more creative ways of engaging all Americans and key stakeholders in the value of nuclear.”
The Aug. 24-27 survey polled 2,200 U.S. adults and has a margin of error of 2 percentage points.
CEOS PRESS CONGRESS ON CARBON PRICE: The CEOs of several major companies, including cement maker LafargeHolcim, New Jersey-based utility PSEG, and DSM America, are working to build support in Congress for a nationwide carbon price.
The executives, members of the CEO Climate Dialogue, all told reporters Wednesday they were prioritizing a nationwide carbon price in conversations this week with lawmakers on climate policy. They all say the policy is a must-have for the U.S. to effectively and affordably tackle climate change, although they acknowledged that building political support for the policy has been tricky.
There are a handful of carbon pricing bills proposed in both chambers and by members of both parties in this Congress, but they’ve struggled to gain broader traction, as Republicans are weary to back any new tax and some Democrats fear the policy doesn’t go nearly far enough to reduce emissions.
Which approach is best? The CEOs didn’t express support for a specific carbon pricing approach, but rather the underlying need for a price. “The most important part is that it be economy-wide, market-based, and durable,” said Jamie Gentoso, CEO of U.S. Cement for LafargeHolcim.
Hugh Welsh, president and general counsel of DSM North America, said a carbon price should be set at a level “meaningful” enough to “drive change in behavior,” and he stressed it should protect U.S. companies by raising prices on imports of carbon-intensive products, through a border adjustment mechanism.
Ralph Izzo, head of PSEG, said a nationwide carbon price would help avoid disparities at the state level, noting New Jersey’s climate policies set implicit carbon prices that range from $400 per ton to $95 per ton. All of those are “way more than we need to be charging people,” he added.
Equity and scale are important, too. Jennifer Morris, CEO of The Nature Conservancy, told reporters any carbon pricing policy shouldn’t negatively affect low-income people or those most affected by climate change.
MORE FROM CEOS…CHANGE WITHIN CHAMBER IS SLOW: Welsh, of DSM North America, told reporters the U.S. Chamber of Commerce still isn’t where companies like his want it to be on climate change.
“I think you’ve seen some modest movement by the Chamber, at least with respect to their communications. We haven’t seen the substantive changes at the Chamber yet that we want to see,” Welsh said. His company and a few other members, including Bank of America and Citigroup, formed a working group to pressure the Chamber to change its tune on climate change, and Welsh said they’re working to expand that group now.
“A lot of our work right now has just been trying to get member companies to speak up on this issue,” Welsh added.
This election cycle, the Chamber is endorsing a slate of Democratic candidates, including several centrist Democrats from fossil fuel states, in a move lobbyists and energy industry officials say is meant to encourage those lawmakers to hold the line with Republicans against more aggressive climate policies that would restrict fossil fuel use.
CHARLESTON BECOMES FIRST SOUTHERN CITY TO SUE BIG OIL: The largest South Carolina city launched its lawsuit Wednesday, making it the 21st city or state across the country to take ExxonMobil, BP, Shell, and other oil majors to court alleging that they lied about the effects their products would have on climate change.
Charleston’s lawsuit, like the others, seeks to force oil companies to pay hundreds of millions to compensate for the city’s efforts to adapt to the effects of climate change. The South Carolina city is particularly vulnerable to sea level rise and increased flooding, as well as significantly warmer temperatures.
Mayor John Tecklenburg, a Democrat, said he experienced firsthand that oil companies weren’t telling the truth about climate change in his prior role as founder of an industrial lubricants business in South Carolina. “I was hearing the same false and misleading claims from them as everyone else,” he said in a statement.
The pace of lawsuits against Big Oil is only speeding up, and the oil companies have suffered some setbacks in their fight against the cases. Just last week, Hoboken, New Jersey, brought a similar challenge, and in June, attorneys general from D.C. and Minnesota brought their own lawsuits.
Breaking: The state of Delaware announced Thursday it is suing 31 oil and gas companies, including Exxon, Chevron, BP, and its main trade group, API, for “decades of deception about the role their products play in causing climate change” which attorney general Kathy Jennings said is imposing “mounting costs” on her state’s residents.
DEMOCRATIC STATES SUE TRUMP FOR ANWR DRILLING PLAN: A coalition of 15 state attorneys general sued the Trump administration Wednesday over its decision to begin selling leases for companies to drill for oil and gas in the Arctic National Wildlife Refuge.
The attorneys, all Democrats, argue the Interior Department unlawfully prioritized oil and gas development above the conservation purpose of the refuge, gave inadequate attention to alternatives, and underestimated the increase in emissions that would result from the leasing program.
Washington Attorney General Bob Ferguson and Massachusetts Attorney General Maura Healey led the lawsuit, and were joined by the attorneys general of California, Connecticut, Delaware, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New York, Oregon, Rhode Island, and Vermont.
THE CASE FOR EXTENDING CARBON CAPTURE TAX CREDITS: Pushing back the deadline for federal carbon capture tax credits by five years would more than double the amount of capture capacity in the U.S. through 2030, the Rhodium Group finds in new analysis Thursday.
Permanently extending the carbon capture incentives, as some Republican lawmakers have proposed, could bring U.S. capacity to remove carbon dioxide emissions up to as much as 152 million metric tons by 2050, according to Rhodium. That could slash 2.5 billion metric tons through 2050, four to five times as much as the potential reductions prompted by the current credits, for which projects have to break ground by 2023 to qualify.
Without an extension, the credits have their limit: Rhodium estimates about 29 million metric tons of capture capacity could be installed by the end of 2030 under the current policy, but retrofitting power plants or industrial facilities with carbon capture would halt after that.
The research firm also says the current credits, with their 2023 deadline, would lend themselves to a small scope of facilities where costs would be the lowest, such as ethanol production. Extending the deadline, however, opens up possibilities on a wide range of facilities, including cement manufacturing, refining, and hydrogen production.
ROOFTOP SOLAR SLOWDOWN: Installations of rooftop solar are suffering from a pandemic-induced slowdown, the industry group Solar Energy Industries Association (SEIA) and Wood Mackenzie said in a new report Thursday.
Residential rooftop Installations were down 23% in the second quarter compared to the first, and also fell 12% in the non-residential commercial sector, due to restrictions and shelter-in-place orders imposed to curb the pandemic.
The overall solar market saw a smaller decline in installations, 6% compared to the first quarter, because utility-scale solar was resilient, representing 71% of new capacity in the second quarter.
The Rundown
Wall Street Journal Oil major BP gives a taste of how it will go green
New York Times Wildfires bring new devastation across the west
Bloomberg In a bummer year for auto sales, EVs are outperforming
Reuters Enterprise abandons Texas pipeline project as oil prices remain weak
Politico EPA’s top lawyer to depart
Calendar
THURSDAY | SEP. 10
2 p.m. Ocean Conservancy hosts a webinar titled, “Blue-Green Future: U.S. Federal Ocean-Climate Recommendations for 2021” featuring a keynote address from Rep. Kathy Castor, D-Florida, chairwoman of the House Select Committee on the Climate Crisis.
FRIDAY | SEP. 11
11:25 a.m. Energy Secretary Dan Brouillette joins a conversation on the global outlook for the U.S. energy industry at Ex-Im Bank’s virtual annual conference.
WEDNESDAY | SEP. 16
10 a.m. The House Energy and Commerce Committee’s Subcommittee on Environment and Climate Change holds a remote hearing titled, “Building a 100 Percent Clean Economy: Opportunities for an Equitable, Low-Carbon Recovery.”
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee holds a confirmation hearing to consider Allison Clements and Mark Christie to be members of the Federal Energy Regulatory Commission.
2:30 p.m. 366 Dirksen. The Senate Energy and Natural Resources Committee’s Subcommittee on Public Lands, Forests, and Mining holds a hearing to review various bills.
