What does 2022 have in store for climate?

Dec 23, 2021

With help from Alex Guillén, Ben Lefebvre, Josh Siegel and Annie Snider

PROGRAMMING NOTE: Morning Energy won't publish from Friday, Dec. 24-Friday, Dec. 31. We'll be back on our normal schedule on Monday, Jan. 3.

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Quick Fix

— The Biden administration talked a big game in addressing climate change, but the legislative path forward is still as shaky as ever.

— Republicans are offering some common ground on climate legislation, but it'll likely not be enough to satisfy Democrats' climate goals.

— FERC's decisions on a Texas LNG project could have major implications for future CCS projects.

HAPPY THURSDAY! I'm your host, Matthew Choi. This will be the last Morning Energy of 2021, and I'd like to thank each and every one of you for the tips, jokes and trivia answers. You've all given me a grand first year being your ME host.

We've been having some guest co-hosts this week from the Pro Energy team write their analysis on some of the big stories of the year and how they relate to where we are now. To close things off, Zack Colman dives into the challenges ahead for reaching Democrats' climate goals.

And now for trivia: Congrats to Michael Platner of Van Ness Feldman for knowing William the Conqueror was crowned king of England in 1066. For today's trivia, what is the smallest gas giant in our solar system? Send your tips and trivia answers to mchoi@politico.com. Find me on Twitter @matthewchoi2018. And see you in two thousand and twenty two!

Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today's episode: From the archives: Humanity's code red.

Listen to POLITICO Energy Podcast!

Driving the Day

INTO THE NEW YEAR ON CLIMATE: President Joe Biden came to the White House promising to lead on climate change, an endeavor that — if executed properly — would overhaul much of the economy and how Americans get their energy. His term began with an energized Democratic Party and a left flank hankering for aggressive, emissions-cutting action. But doubts are emerging about whether the president can accomplish most of what's needed to fulfill his climate agenda after a member of his own party dealt his signature legislation a potentially fatal blow.

Sen. Joe Manchin (D-W.Va.) put the kibosh on the Build Back Better Act, Democrats' $1.7 trillion climate and social spending plan, which would have amounted to the largest climate investment in congressional history. But taming rising temperatures would require even more action, according to climate scientists, activists and elected Democrats, and it is unclear how much appetite there is to do more after the knockdown, dragout BBB negotiations.

Advocates are still strategizing after the Manchin blow about whether to try again with an ambitious climate package or simply pick up whatever pieces they can. But the outlook is even more uncertain about whether Biden can honor his commitment to the world that the U.S. will cut emissions 50 percent below 2005 levels this decade.

"I think there's going to be a lot of skepticism about that if none of this can be salvaged," John Podesta, who led climate efforts in President Barack Obama's White House, told ME.

Still, other opportunities exist even in what figures to be a partisan year as Republicans set their sights on regaining control of at least a portion of Congress. National Wildlife Federation CEO Collin O'Mara said negotiations over five-year authorization legislation like the farm bill and Water Resources Development Act offer chances for climate victories.

Yet one should not expect much cooperation between parties in Congress, even on areas of potential climate agreement, said Alex Flint, executive director of the Alliance for Market Solutions. "People are just really grumpy with each other right now," he told ME.

That could shift a lot of the climate burden onto the executive branch. Biden has only "just begun to scratch the surface" on regulations, Nat Keohane, president of the Center for Climate and Energy Solutions, told ME. Keohane noted new rules to tighten methane pollution from the oil and gas sector and power plant carbon dioxide emissions would bring sizable reductions in planet-heating pollution. He also said using the federal government's procurement power to hit net-zero by 2050 could spark significant adoption of clean energy, low-emissions materials and electric vehicles.

"We really need to keep that whole-of-government approach alive and really lean into that," he said.

That work started in the runup to the global climate talks in Glasgow, Scotland in November, where Biden's administration announced moves to cease most oil, gas and coal financing, spearheaded a pledge to curb global methane emissions, halt illegal deforestation and struck a deal to enhance climate cooperation with China, the world's top emitter. Biden hopes those vows will compel other countries to follow – though the U.S. needs to prove it can execute, too, and BBB's possible death spiral doesn't help.

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

Names in the News

HOLIDAY PRESENTS FROM ME: You better watch out, you better not cry, ME's handing out gifts and we hope these jokes fly.

— For Joe Manchin, a 2022 calendar with Nov. 8 circled so he can mark the days until he's no longer the most powerful person in Washington.

— For Michael Regan, a Tonal home gym so one day the Administrator can out-muscle the Governator

— For Deb Haaland, Santa will get back to you in, uh, early summer.

— For Jennifer Granholm, a brand new high-flow showerhead to extinguish her hair on fire.

— For the Supreme Court, a request from all environmental reporters to please, please not rule on the scope of EPA's climate authority 10 minutes before ruling on abortion rights.

— For Andrew Wheeler, a set of quality reusable shopping bags.

— For Tom Carper, an "RIP" locket with his 2001 Town & Country minivan on one side and the Clean Electricity Performance Program on the other.

— For John Kerry, a lump of coal that won't get phased out.

On the Hill

THE POST-RECONCILIATION WORLD: Republicans say there are some areas where they can find common ground with Democrats on climate issues, should Dems be forced to abandon their go-it-alone reconciliation package, report Pro's Josh Siegel and Zack. Clean energy tax credits would offer a major boost to many technology-centered climate options with bipartisan support, including carbon capture and advanced nuclear. Domestic manufacturing incentives that wean renewables off of the foreign supply chain as well as forestry measures are also policies with backers on both sides of the aisle.

But temper any hopes of a miraculous bipartisan climate package that'll reach Biden's emissions goals. The areas of agreement are almost certain not to cover the same ground as the $550 billion in climate spending under the reconciliation package, which itself is slated to only barely reach Democrats' climate targets if accompanied by an all-of-government climate approach. And we're entering the politically hairy territory of a midterm year, with good will soured for Republicans miffed by being bypassed in Democrats' social spending measure, and progressives irritated after already making a parade of concessions to court their party's centrist wing. Read more from Josh and Zack here.

TUG OF WAR ON EPA'S METHANE RULE: Democratic and Republican House members are each sending their own letters pushing the Biden administration to either strengthen or withdraw EPA's recent proposals for methane emissions regulations. The long-awaited proposals, revealed in early November, were backed by parts of the fossil fuel industry as more productive than a methane fee mechanism currently under discussion as part of Democrats' reconciliation package. But a group of 30 House Republicans led by Rep. Dan Crenshaw, argued the proposals represent the administration's "continued attack on American energy."

In the letter, shared exclusively with ME Wednesday, the Republicans say the regulations would put further upward pressure on energy prices and threaten U.S. oil and gas jobs, and that they would be duplicative of federal and state regulations already on the books addressing related pollutants called volatile organic compounds. The signatories also include Minority Whip Steve Scalise as well as Reps. Cathy McMorris Rodgers and Bruce Westerman, the top Republicans on the Energy and Commerce and Natural Resource Committees, respectively.

The agency is expected to finalize the rules before the end of 2022. It's likely to be more than a few years before EPA's regulations take a bite into methane emissions, so current energy prices aren't especially relevant.

Meanwhile, Rep. Nanette Barragán, chair of the Congressional Hispanic Caucus Climate Change Task Force, led 15 of her peers in thanking the administration Wednesday for the methane proposals while requesting stronger oversight of smaller wells and gas flaring under the rules. Smaller wells are in general much larger emitters relative to the sellable gas they produce, harming front line communities near fossil fuel infrastructure in particular, the Democrats write.

BECOME A GLOBAL INSIDER: The world is more connected than ever. It has never been more essential to identify, unpack and analyze important news, trends and decisions shaping our future — and we've got you covered! Every Monday, Wednesday and Friday, Global Insider author Ryan Heath navigates the global news maze and connects you to power players and events changing our world. Don't miss out on this influential global community. Subscribe now.

Around the Agencies

WILL IT CAPTURE? FERC has to mull over how to deal with a Texas LNG project that is aiming to be the greenest in the world via carbon capture technology. But critics say the company's claims are "misguided" and are casting doubt it'll achieve its emission reduction targets. How FERC handles the venture, the Rio Grande LNG project in Brownsville, could have further consequences on how the commission reviews and verifies future projects that seek to employ capture technology to offset their emissions.

The project's backers dispute their critics' claims, with Michael Mott, senior vice president of strategy at project owner NextDecade Corporation, telling Pro's Catherine Morehouse that "Advancing technological solutions to voluntarily reduce emissions of a fully permitted LNG facility can hardly be characterized as placating FERC and the courts, especially when these verifiable emissions reductions equate to removing nearly one million cars from the road each year."

Meanwhile, critics of the project want to push for greater assurances that it isn't a greenwashing ploy that could be mimicked in other projects, particularly as carbon capture technology grows in bipartisan support as a central element to the climate solution mix. Read more from Catherine here.

ICYMI: CAR EMISSIONS, ROUND 2: The Biden administration this week quietly finalized a Department of Transportation rule repealing a Trump-era decision that had blocked California and other states from setting vehicle emissions standards that are stricter than the federal government's. The move came the same week that EPA also finalized more ambitious greenhouse gas emissions standards for vehicles — the sector responsible for the largest share of climate-warming gases.

Beyond the Beltway

OKLAHOMA LOSES FIRST ROUND OF MINING FIGHT: A federal judge on Wednesday rejected Oklahoma's request to block the Interior Department's Office of Surface Mining and Reclamation from taking control of coal mine cleanup oversight in part of the state. The dispute stems from the Supreme Court's 2020 contentious McGirt ruling that declared a big chunk of eastern Oklahoma, including much of Tulsa, is technically a tribal reservation. The Biden administration subsequently declared that federal law empowers OSM to oversee mine clean-ups on tribal lands, not states, and so is taking control of oversight of mines in that region.

But Judge Stephen Friot of the U.S. District Court for the Western District of Oklahoma, a George W. Bush appointee, said Oklahoma failed to make its case for federal overreach . Though clearly not a fan of the McGirt ruling, which he argued has wreaked legal "havoc," Friot concluded that the plain language of federal law excludes Indian lands from state regulation. He also ruled that Oklahoma waited too long to bring legal challenges to OSM's disapproval of the state's regulatory program and denial of certain grants. Friot's decision doesn't end the case, but also doesn't bode well for Oklahoma's legal quest.

Still to come: The Biden administration last week asked Friot for its own injunction against Oklahoma to stop the state from implementing mining clean-up oversight on the affected lands — and given Friot's ruling here, OSM may be well placed for a win. The state has until Jan. 24 to respond.

In another bit of McGirt action, EPA is also lining up to nix and reconsider its 2020 decision to give Oklahoma extended approval on its environmental regulatory programs in parts of the state considered Tribal territory. The agency is still seeking comment until Jan. 31 on the proposed withdrawal, and has consulted with a number of local Tribal stakeholders.

The Grid

— "Why Green Stocks Are Slumping During an ESG Boom," via Bloomberg.

— "3rd Circuit pauses appeal of controversial PJM order, giving FERC Democrats time to act," via POLITICO.

— " Military exempt from Biden order to cut federal emissions," via E&E News.

— "Confronting Inflation, Biden Administration Turns to Oil Industry It Once Shunned," via The Wall Street Journal.

— "'Top of the list': W.Va. faces surprising climate dangers," via E&E News.

— "Louisiana Company to Pay $43 Million for Longest-Running Oil Spill in U.S. History," via The New York Times.

— "Youth climate activists get boost from Dutch tech billionaire," via Axios.

THAT'S ALL FOR ME AND HAPPY HOLIDAYS!

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