| | | | |  | | By Matthew Choi | Presented by ExxonMobil | With help from Catherine Morehouse and Alex Guillén. 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.
| | | — President Joe Biden will highlight the need for clean energy legislation and protections against energy and other consumer price increases during his first State of the Union today. — The international community is turning the heat up on Russia with new sanctions on its central bank and greater pressure for businesses to bow out of the country, with two UK-based energy giants heeding these calls. — The Supreme Court appeared to favor limiting EPA's climate authority, challenging its ability to regulate beyond what is explicitly stated in legislation. WELCOME TO TUESDAY AND HAPPY SOTU DAY! I'm your host, Matthew Choi. I'm off to the mountains for the rest of the week, and my colleagues Zack Colman and Josh Siegel will be taking over the newsletter. Now for some trivia. Sadly, no one knew Antonin Dvorak wrote nine operas. For today: What is the tallest volcano in Italy? 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: Climate change's "uneven burden".
| | | | | 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 | | | | | | SOTU DAY: While the geopolitical crisis spurred by Russia's invasion of Ukraine looks to be the dominant topic of President Joe Biden's first State of the Union tonight, also expect a lot of talk about the bipartisan infrastructure package and reining in consumer prices. The administration certainly hoped to have the Build Back Better package out the door and passed by now. But instead it'll be leaning hard into its environmental regulatory actions and the clean energy investments under the bipartisan law passed last year, including lead pipe removal, abandoned well reclamation, wildfire risk reduction, rare and critical mineral research and battery manufacturing. Biden also plans to touch on the two competitiveness bills that are up for conference on the Hill, particularly their investments and research in clean energy manufacturing at home. But Biden isn't giving up the ghost of BBB. The president also plans to call on Congress to pass a bipartisan agenda focused on clean energy and climate action through critical investments and tax credits, according to a White House fact sheet that didn't name the Build Back Better bill. He plans to focus on the economic benefits of investing in energy efficiency and domestic manufacturing and deployment. Biden will also hit on the high consumer prices Americans face coming out of the pandemic and going into the major market disruptions from the war in Ukraine, a senior administration official told reporters Monday. He'll highlight the growth in U.S. supply chains and shipping that should make goods more affordable for everyday consumers. Among the goods at the top of mind, of course, are gasoline and heating fuels, which Biden warned would become more expensive as energy markets respond to the Ukraine conflict. Biden said last week new releases from the Strategic Petroleum Reserve were on the table, and The Wall Street Journal said they could be announced as soon as today. The White House wouldn't say if Biden would be touching on the SPR tonight, but reiterated it was still keeping an eye on the market and working with allies.
| | | SANCTIONS ON SANCTIONS: The Biden administration continues to carve out exceptions for the Russian energy industry as it escalates sanctions on the country, including punishing new measures Monday on the country's central bank. The new sanctions target Russia's hundreds of billions of dollars in assets overseas and holdings in U.S. dollars, yen, euros and pounds "to make sure that the Russian economy goes backward," a senior administration official told reporters. The Treasury Department will continue to offer exemptions for energy-related transactions to prevent "unnecessary harm for consumers" and "spikes in prices that would only pad the pockets of President [Vladimir] Putin," an administration official told reporters. But the market-driven blows to Russia's energy continued with Shell joining BP in withdrawing from the country Monday, announcing it would divest its stakes in Gazprom and Nord Stream 2. "Our decision to exit is one we take with conviction," Shell CEO Ben van Beurden said in a statement. "We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security." America Hernandez has more for Pros on the move. Canada is outright banning Russia crude imports, which globally make up about a third of Russia's federal budget revenue. It's largely a symbolic gesture since U.S. crude imports have essentially replaced Russian crude going to Canada, POLITICO's Zi-Ann Lum reports. And back home, Senate Energy Chair Joe Manchin (D-W.Va.) made a similar call, urging "the Administration and industry partners to take action immediately, up to and including banning crude oil imports from Russia." Russia is a relatively minor importer of crude into the U.S., though its share increased to account for the loss of sanctioned Venezuelan oil. But Manchin said in a Monday statement that continuing the imports while Russia uses energy to pressure European partners "makes no sense at all and represents a clear and present danger to our nation's energy security." Manchin urged greater domestic energy production to protect U.S. energy independence and wean off allies from Russian energy. The heat is on for American firms to follow their UK counterparts in exiting their Russian holdings. Sen. Kevin Cramer (R-N.D.) tweeted that "It's time for a patriotic US company to step up and do the same. Invest in clean U.S. oil and gas production." Senate Energy ranking member John Barrasso (R-Wyo.) hotlined his energy security bill, the Energy Security Cooperation with Allied Partners in Europe Act, which would expedite natural gas export applications for allies in NATO and East Asia and mandate sanctions on anyone involved in constructing or servicing Russian energy infrastructure. Bethany Williams, spokesperson for the American Petroleum Institute, said in a statement to ME that "We strongly condemn Russia's attack on Ukraine. As with most of the international business community, our member companies are closely monitoring the situation and assessing the best options for ensuring continued access to affordable and reliable energy around the world during this time of crisis." Related: " Cecilia Rouse says Russian invasion of Ukraine has 'clouded' economic outlook for U.S," via POLITICO's Myah Ward.
| | | | 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. | | | | | | | | SCOTUS SIGNALS STRICT EPA INTERPRETATION: The Supreme Court doesn't look like it will embrace EPA's interpretation of its authority on regulating power plant pollution after Monday's arguments, POLITICO's Alex Guillén reports. The high court spent much of the day questioning how far the agency's powers go beyond what is explicitly instructed by Congress — the crux of Republicans' arguments in their challenge of EPA's pollution reduction agenda. While the court's liberal minority appeared to support the administration's goals in combating planet warming emissions from the power sector, the conservative justices raised a common critique that the administration was merely doing what it couldn't get done through legislation. "It is not a question of how to reduce emissions from particular sources, but you are claiming that the interpretation gives you the authority to set industrial policy and energy policy," Justice Samuel Alito asked Solicitor General Elizabeth Prelogar. Depending on how the justices rule, the case could go beyond EPA's climate priorities into the government's ability to regulate a broad variety of issues, Alex reports. That would even further narrow Democrats' options for addressing climate change through the power sector after the collapse of their Clean Electricity Performance Program and the stalling of BBB. Read more from Alex. ELSEWHERE IN THE COURTS: EPA is also getting some legal grief over its rule targeting tailpipe emissions issued last December. Texas Attorney General Ken Paxton, along with several of his Republican peers in other states, sued the agency Monday, saying the new rule would ruin his state's fossil fuel industry and overpower the grid with new electric vehicles. The rule tightened limits for new vehicles for model years 2023 through 2026 as the National Highway Traffic Safety Administration works on its own rule for model years 2024 and on. The administration hopes to have half of all new vehicle sales be electric by 2030. Alex has more. And: "Natural gas industry sues DOE over efficiency rule," via POLITICO's Kelsey Tamborrino.
| | | DRAWING A 'BRIGHT LINE' ON UTILITY TRADE DUES: Six senators urged FERC to protect ratepayers from paying for utility trade association dues, in a letter dated Friday. Sens. Sheldon Whitehouse (D-R.I.), Ed Markey (D-Mass.), Elizabeth Warren (D-Mass.), Jeff Merkley (D-Ore.), Dianne Feinstein (D-Calif.), and Bernie Sanders (I-Vt.) asked the commission to draw "a bright line" on how utilities classify their expenses to ensure that customers are not on the hook for the political activity of their utilities. FERC is currently reviewing these rules to prevent captive ratepayers from paying for utility lobbying efforts run through trade organizations. Under current accounting practices, utilities can recover "operating expenses" from ratepayers, which include trade association fees, while non-operating expenses are not recoverable and include political and advocacy work. But the line becomes blurred when trade associations engage in lobbying or other political actions — a critical gap the senators say needs to be clarified. "[U]tility ratepayers, who may not support the political activities of their utility's trade associations, should not be required to pay any portion of the trade association's dues," the senators wrote, urging FERC to characterize all trade group fees as "presumptively non-recoverable." Such a change would still allow utilities to recover some trade dues — but they would have to justify to regulators why those costs should fall on ratepayers. A spokesperson for utility trade group Edison Electric Institute said cost recovery requests already require utilities to prove the expenses are reasonable, and such requests are subject to review from state regulators. "In instances of inadvertent expenses being approved, mechanisms already exist for state commissions to ensure that accounting changes are made, and, if needed, refunds granted," he said in an email. IN COMMITTEE: The Senate Energy Committee will meet today on a number of bills on research and organization at the Energy Department. The House Natural Resources National Parks, Forests and Public Lands subcommittee will discuss five bills largely focusing on specific local public land priorities.
| | | | A message from ExxonMobil:   | | | | | | DOI WON'T FIGHT LEASE SALE REJECTION: The Interior Department isn't going to appeal a court ruling that vacated the results of its offshore oil and gas lease sale — a lease sale the administration appeared reluctant to carry out in the first place. The American Petroleum Institute and Louisiana's attorney general both appealed the court decision in a bid to go forward with the lease sale, which generated $191 million. The administration said the process to successfully appeal and going through the legal process of meeting the lower court's ruling would have taken longer than the original leasing plan that included the November sale. Ben Lefebvre has more for Pros. EPA ADDS CLIMATE RISKS TO RMP RULEMAKING: EPA will better incorporate the risks posed by climate change and natural disasters into its planned rulemaking addressing Risk Management Plan facilities such as chemical plants and wastewater treatment sites, following recommendations from the Government Accountability Office. More than three in 10 RMP facilities around the U.S. are at risk from more extreme weather driven by climate, but many lack the information needed to properly judge and protect against that risk, according to a GAO report released on Monday. EPA agreed to clarify requirements for facilities to plan for risks from climate change, such as flooding, wildfire and sea level rise as part of a rulemaking, Reg. 2050-AH22, slated for proposal this fall and finalization in 2023. It also agreed to help facilities comply by providing necessary information about site-specific risks of climate change. GAO also recommended EPA take into account the "relative social vulnerability of communities" when picking facilities to inspect.
| | | | 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. | | | | | | | | — Cecilia Martinez is joining the Bezos Earth Fund as principal adviser for resilience and communities. Early this year, Martinez left the White House Council on Environmental Quality, where she led environmental justice efforts. Her departure shook up EJ advocates, who feared a loss of personnel focused on addressing the needs of marginalized communities.
| | | — "Chevron to Buy Biofuel-Maker Renewable Energy Group for $3.1 Billion," via Bloomberg. — "The Youth Movement Trying to Revolutionize Climate Politics," via The New Yorker. — " U.S. shuts down Belarus embassy amid attack on Ukraine," via POLITICO. — "Twitter to label all state-affiliated Russia media," via POLITICO. 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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