| | | | |  | | By Matthew Choi | With help from Kelsey Tamborrino. Editor's Note: Morning Energy is a free version of POLITICO Pro Energy's morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro.
| | | — House Democrats and Republican both got behind a Russian energy ban, but they are using it to push to completely opposite agendas. — Energy Secretary Jennifer Granholm is urging U.S. producers to increase output, presenting a clear-eyed view of the lengthy timeline to bring on sufficient clean energy. — Costs to build new solar power plants turned higher for most of last year for the first time in over a decade, raising fears that growth of the clean energy source could slow. WELCOME TO THURSDAY! I'm your host, Matthew Choi. Entergy's Rob Hall gets the trivia for knowing Andrea Amati created the world's oldest extant violin. For today: Which villain from "The Incredibles" made a cameo in "Ratatouille"? Send your tips and trivia answers to mchoi@politico.com. Find me on Twitter @matthewchoi2018. 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: EPA restores California's Clean Air waiver.
| | | | | A message from ExxonMobil: ExxonMobil is committed to playing a leading role in the energy transition. We're advancing climate solutions, including carbon capture and storage, hydrogen and advanced biofuels. And, by 2050, we aim to achieve net-zero emissions (Scope 1 and 2) from our operated assets. We're working with partners to achieve similar results from non-operated assets, and advocating for supportive policies to accelerate the deployment of lower-emission technologies needed to support a net-zero future. Learn more at ExxonMobil.com/Solutions | | | | | | A BIPARTISAN FRONT (FOR NOW): House Democrats and Republicans came together to support a bill banning Russian energy imports, a vote that's designed to show a solid U.S. front opposing Moscow's invasion of Ukraine. But that doesn't mean lawmakers will be holding hands for long, and each side of the aisle is using the legislation to buttress their competing agendas, POLITICO's Josh Siegel reports. Republicans are eager to point out that gasoline prices have been on the upswing for months before Russia invaded Ukraine, and are using the import ban as a platform to knock Biden's clean energy agenda and measures like the freeze on federal lease auctions that they contend have hurt domestic fossil fuel production. Democrats, meanwhile, assert high gasoline prices are the latest evidence that the U.S. needs to wean off of foreign fossil energy and focus on building out the renewable sector. "We draw completely opposite conclusions," Rep. Dan Crenshaw (R-Texas) told Josh. The Biden administration is quick to shoot back at the GOP criticisms, arguing that about 75 percent of oil and 86 percent of gas production take place on private land, not federal property, and that goes up to 90 percent when focused on onshore production. And Biden argues that companies aren't drilling on nearly half of the leases they hold — and he's warned the industry not to price gouge amid the price spike. FWIW: API President Mike Sommers isn't too keen on that argument, telling The Wall Street Journal: "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." STICKER WATCH: Retail gasoline prices saw yet another record day, with the national average hitting $4.25 on Wednesday after breaching the 2008 record the day before. Meanwhile, crude futures cooled a bit, settling at $108.70 Wednesday — a sharp decline from the week's high of nearly $130. The calming followed a statement by Emirati ambassador to the U.S., Yousef al-Otaiba, encouraging more output from OPEC beyond its modest scheduled increases. His statement notably called out OPEC rather than OPEC+, omitting the broader coalition that includes Russia. The Biden administration had requested OPEC and its partners ramp up output in order to cool global energy prices for months before the Russian invasion. The cartel has so far resisted and kept to its slow but steady output increase plan. But the UAE's role in shaking up that plan last summer shows it is a major agenda-setter in the region and is unafraid to derail plans by the Saudis, the world's top exporter.
| | | | SUBSCRIBE TO NATIONAL SECURITY DAILY : Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today. | | | | | | | | ENERGY SECURITY IN COMMITTEE: The Senate Energy Committee is tackling what's on everybody's mind today: how to ensure energy security for the U.S. and its allies. Democratic Chair Joe Manchin (D-W.Va.) will reiterate his calls to use all energy sources, including fossil fuels, to meet U.S. energy demand, according to a draft of his opening statement shared with ME. Though he applauds Biden's decision to impose a Russian energy import ban, Manchin isn't thrilled with how the administration has handled domestic production, citing its decision not to appeal a court ruling gutting its Gulf of Mexico lease sale. "We cannot take a short-sighted approach that pretends two years without lease sales will have no impact on our domestic oil and gas production, even if the brunt of the production decline hasn't hit yet," Manchin will say. Meanwhile, expect Republicans to hammer the Biden administration over the Keystone XL pipeline rejection in addition to its the freeze on auctions of federal land for oil and gas leasing. Environmentalists came out ahead of the hearing to voice their concerns and make sure it isn't entirely a fossil fuel lovefest. "Domestic oil production is close to America's all-time, prepandemic high. But energy independence won't be found at the bottom of a well," the Center for American Progress' Jenny Rowland-Shea, Sally Hardin, Miriam Goldstein and Nicole Gentile write in a column today . "For true energy independence, for lower energy prices, and for our own health and well-being, we must urgently invest in clean energy." Manchin also plans to push for securing nuclear and mineral supply chains, which are currently dependent on Russia and China, to ensure the U.S. isn't beholden to foreign resources in its clean energy and EV sectors as well. ME FIRST: HYDROGEN TRUCKS GET A BOOST: Lawmakers in both parties and chambers hope to reduce heavy trucking emissions, and they view hydrogen as just the ticket to make that happen. Sens. Chris Coons (D-Del.) and John Cornyn (R-Texas), as well as Reps. Katie Porter (D-Calif.) and Gus Bilirakis (R-Fla.), are introducing the Hydrogen for Trucks Act today in a bid to make heavy duty hydrogen trucks accessible to more users. The bill would create a DOT grant program to help early adopters shoulder the costs of buying new trucks and establishing fueling stations. Grantees would also have to submit data related to costs, fuel use and reliability to DOT, which would work in consultation with the Energy Department. The bill authorizes $200 million for FY 2023 through 2027 for the program. Read the bill here. Heavy-duty vehicles make up 23 percent of greenhouse gas emissions in the transportation sector, which is itself responsible for the biggest share of the nation's emissions. Coons and Cornyn introduced three other hydrogen-focused bills last October focused on expanding hydrogen use in shipping and heavy industry, and building out hydrogen infrastructure. Porter and Bilirakis are introducing the shipping-focused bill in the House today. ALL ABOARD THE OMNIBUS: After months of delays and hand wringing, the House passed its spending measure for the rest of fiscal 2022 on Wednesday night, leaving it up to the Senate to advance before temporary funding runs out at the end of the week. The $1.5 trillion appropriations package included modest funding increases for the Energy and Interior departments, EPA and the Army Corps of Engineers, though largely below the targets requested by the White House and proposed in the Senate last year. But the biggest increases show the shifting priorities under the Biden administration from past spending measures. Environmental justice initiatives got a particularly big slice of the pie, jumping from $17 million last year to $100 million. Still, that's well below the $287 million increase requested by the White House. EPA will have to come up with a spending plan within 30 days of the bill's enactment. Clean energy and emissions reductions also saw a major boost, with the Office of Energy Efficiency and Renewable Energy getting a record $3.2 billion in funding, or $338 million more than FY 2021. POLITICO's Alex Guillén breaks down the funding levels for EPA and Interior, while Kelsey Tamborrino digs into the funding for energy and water priorities.
| | | | A message from ExxonMobil:   | | | | | | GAYAU, GRANHOLM: Down in Houston, Energy Secretary Jennifer Granholm urged oil and gas firms Wednesday to hike their production to offset rising energy costs from the Russian import ban. "We are on war footing," Granholm told energy executives at S&P Global's CERAWeek. "That means [crude oil] releases from the strategic reserves all around the world. And that means you producing more right now if and when you can." Granholm hasn't abandoned Democrats' call for greater clean energy deployment to reduce the use of foreign fossil fuels and global energy markets. But she acknowledged "we are under no illusion that every American is going to get an EV or heat pump tomorrow or next month or next year," urging more fossil fuel production as a matter of pragmatism. Granholm also shot down complaints from industry and Republicans that the administration was hostile toward fossil fuel production, calling it "the same D.C. b.s." and emphasizing that the U.S. is slated to be the world's largest LNG exporter. She also said the administration would try to streamline project permitting, garnering a round of applause from the room. POLITICO's Ben Lefebvre is on the ground in Houston and has more on Granholm's remarks. Granholm and State Department energy officials also met with a group of oil industry executives, foreign government officials and environmental group representatives at a "Net-Zero Producers Forum" breakfast Wednesday. A guest list seen by POLTICO included Canada Natural Resources Director General Nada Vrnay; Qatar Energy Corporate Manager Ali Nasser Telfat, Saudi Aramco Executive Director of Strategy & Market Analysis Ashraf Ghazzawi, Abdullah Mohammed al-Subaie of the Saudi Arabia Ministry of Energy, Clean Air Task Force Managing Director Kurt Waltzer, Chevron Corporate Vice President of Strategy and Sustainability Bruce Niemeyer; Canada Minister of Natural Resources Jonathan Wilkinson, Cenovus Chief Executive Alex Pourbaix, Equinor Vice President of Exploration and Production Al Cook, Pathways to Net Zero Oil Sands Director Kendall Dilling, and Saudi Aramco Chief Technology Officer Ahmad al-Khowaiter. An Energy Department spokesperson wouldn't elaborate on the meeting, which took place before Granholm took the stage. CALIFORNIA WAIVES: EPA formally restored California's ability to set its own greenhouse gas vehicle emissions standards, reversing a course taken by the Trump administration that was decried by environmentalists and several states. The Clean Air Act explicitly allowed California to set its own tailpipe emissions standards, and the Obama administration determined greenhouse gasses should be included among them. But the Trump administration disagreed, revoking California's waiver. California's standards stretch far beyond the West Coast, with 16 states and D.C. following its rules. After 2025, California will still need a fresh waiver from EPA to set its own standards. POLITICO's Alex Guillén has more.
| | | | 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. | | | | | | | | SOLAR'S WORRYING INFLATION: U.S. solar prices for utility-scale fixed-tilt projects increased up to 18 percent last year amid supply chain constraints and legislative and trade uncertainty, according to a new report released today by the Solar Energy Industries Association and Wood Mackenzie. While the industry still posted a record-breaking year for installed capacity, the new findings underscore industry calls to pass the clean energy tax provisions in the stalled Build Back Better legislation to achieve the Biden administration's climate and manufacturing goals. Last year marked the first year that solar system prices increased consistently year-over-year and quarter-over-quarter for every segment beginning in the second quarter, the report said. Shawn Rumery, SEIA's senior director of research, told ME the price increases largely stem from materials costs, which are increasing due to supply chain challenges. "We've been issuing this report now for almost 12 years and never in the report's history have we seen the kind of sustained quarter-over-quarter price increases that we have seen for three consecutive quarters," he said. Provisions in the BBB, including investment tax credit extension would be "a major catalyst for the industry," the report said, and likely increase capacity installations over the next decade by 66 percent. While the solar industry is expected to more than triple by 2032, without passage of the provisions it is expected to fall far short of what is needed to hit the Biden administration's 2035 decarbonization targets. In order to be on pace to hit that 2035 target, the industry would need to hit about 900 gigawatts by the end of the decade, Rumery said. "Under a baseline situation without the clean energy provisions of BBB, we're only going to get to about half of that, which is extremely problematic," he added. The industry is also warning of the impacts from potential trade action looming this month. California-based Auxin Solar recently petitioned the Commerce Department , arguing that solar cells and modules imported from Malaysia, Thailand, Cambodia and Vietnam should be covered by tariffs that hit imports from China. Utilities and renewable energy groups have strongly urged Commerce to reject the request, but SEIA's report said applying the China antidumping and countervailing duties could more than double the cost of imported modules, the majority of which come from the nations targeted by the request.
| | | — "Coal helped drive energy-related CO2 emissions to a record high last year, research says," via CNBC. — "Michigan GOP senators pass resolution to keep Line 5 open, increase domestic oil production," via Michigan Live. — "Chevron Phillips to pay $121M to resolve chemical pollution allegations," via POLITICO. — "CERAWEEK 'Energy transition? Leave us out,' say African energy leaders," via Reuters. THAT'S ALL FOR ME!
| | | | A message from ExxonMobil: ExxonMobil is committed to playing a leading role in the energy transition and advancing climate solutions while continuing to power economies around the world. We're investing $15 billion in lower-emission technologies, including carbon capture and storage, hydrogen and advanced biofuels, through 2027. By 2050, we aim to achieve net-zero emissions (Scope 1 and 2) from our operated assets, backed by a comprehensive approach with detailed emission-reduction roadmaps. And where we are not the operator, we're also working with partners to achieve similar results and help them reach their emission reduction goals. We're advocating for supportive policies, such as a price on carbon, which can help reduce costs and drive new markets to accelerate deployment of key lower-emission technologies needed to support a net-zero future. Learn more about our plans and how our strategy is resilient under the International Energy Agency's Net Zero Emissions by 2050 scenario at ExxonMobil.com/Solutions | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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