| | | | |  | | By Matthew Choi and Ben Lefebvre | Presented by the National Mining Association | With help from Josh Siegel, Kelsey Tamborrino and Catherine Morehouse. 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.
| | | — The oil and gas sector is getting the jitters over the fallout from last week's ruling vacating Interior's offshore lease sale. — As the Biden administration tackles the Ukraine crisis, its climate goals are confronting the reality of fossil generation's role in fulfilling global energy needs. — House Democrats will be focusing on their manufacturing and competitiveness bill this week,but there's still a push to renew BBB's climate provisions. HAPPY MONDAY! I'm your host, Matthew Choi. Danielle Chesky of the Canadian embassy gets the trivia for knowing the denominator of the quadratic formula is 2a. For today: What are the two official written forms of the Norwegian language? 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: Empire State of cryptomining.
| | | | | A message from the National Mining Association: The U.S. minerals mining industry provides the raw materials that fuel our society. From deploying EVs and meeting climate goals, to launching infrastructure projects and creating jobs, minerals make modern life possible. Click here to find out how. | | | | | | THAT'S ALL FOLKS? All eyes are on the Interior Department to see whether it will appeal last week's ruling that knocked November's offshore lease sale into a cocked hat. The oil industry views Judge Rudolph Contreras' ruling invalidating the $191 million lease sale as "a substantial threat," one industry lobbyist told Pro's Ben Lefebvre. Because the judge's order essentially scuttled any hopes that the lease sale will be redone anytime soon, companies will have to look to Interior to release a new five-year plan for future lease sales — something that the Trump administration had publicly sworn it had stopped working on and that the Biden administration has barely mentioned. "The only viable path forward for a new lease sale would be a change in administration, and even with a more supportive administration it would take years to go through the process of establishing a new five-year leasing plan and holding additional leases," this person said. Environmental groups cheered the decision that invalidated the lease sale based on the Trump administration's shoddy environmental review. The ruling, if it stands, would help President Joe Biden keep his pledge to cut U.S. methane emissions, said Diane Hoskins, campaign director at environmental group Oceana. "With this ruling, there's a lot of reason to be hopeful that President Biden can ensure we're not expanding dirty and dangerous offshore drilling," Hoskins said in a statement. But Erik Milito, president of the National Ocean Industries Association, told Pro's Josh Siegel that "the court decision aside, the Interior Department continues to have a responsibility" to move forward with future lease sales. He said that Interior would be able to justify new lease sales even if it did a fuller accounting of greenhouse gas emissions in its analyses, arguing that lost oil and gas production from the Gulf would be replaced by dirtier sources abroad as demand for energy returns to pre-pandemic levels. Interior, for its part, has been mum on its next steps. A spokesperson on Friday only pointed to the agency's previous statement, one that did not sound as if the administration — which had paused lease sales for nearly a year before legal pressure forced it to hold the November sale — was necessarily in a rush. "We have documented serious deficiencies in the federal oil and gas program," Interior's statement read. "Especially in the face of the climate crisis, we need to take the time to make significant and long overdue programmatic reforms."
| | | | DON'T MISS CONGRESS MINUTES: Need to follow the action on Capitol Hill blow-by-blow? Check out Minutes, POLITICO's new platform that delivers the latest exclusives, twists and much more in real time. Get it on your desktop or download the POLITICO mobile app for iOS or Android. CHECK OUT CONGRESS MINUTES HERE. | | | | | | | | UKRAINE ON THE BRAIN: The Ukraine tensions are putting a spotlight on the conflict between the Biden administration's stated climate goals and the realpolitik of global energy needs, Josh and Ben report. While the administration has made the transition from fossil fuels to renewables a central tenet, the White House said on Friday it was "collaborating with governments and market operators on supply of additional volumes of natural gas to Europe." Clean energy backers contend the situation simply highlights the need for less reliance on fossil fuels, but the effort to divert liquefied natural gas cargoes to Europe is a stark reminder that despite the rapid growth of renewable energy sources, they haven't displaced oil and gas. "It rips at the seams of the Democrat party on energy and climate policy," said Bob McNally, president of analytics firm Rapidan Energy and a former senior international energy director for the National Security Council. "You want to inhibit, disinvest, regulate fossil fuels, but on the other hand you have the president begging OPEC+ for more oil, begging Qatar for more gas and promising to look under every rock for oil and gas" in the United States. MURKOWSKI SOUNDS OFF: Sen. Lisa Murkowski (R-Alaska), an oil state centrist and former Energy Committee chair, characterized Biden's desperate search to shore up energy supplies for Europe as adopting a "crisis strategy that didn't have to be." She said the Biden administration has weakened its position geopolitically by making moves to limit domestic fossil fuel production, including through suspending leases to drill oil and gas in Alaska's Arctic National Wildlife Refuge. "It's like all they have at this point in time is to basically go out and search the world oil markets for a little bit here, a little there, to try to soften this," Murkowski told Josh. "I am watching all of this almost with a degree of disgust at times." Murkowski made sure to cast "plenty of blame" on Europe for making itself dependent on Russian gas by limiting its domestic production and shutting down nuclear plants. But she said the U.S. is poorly positioned to respond to energy crises abroad because of its whiplash approach to fossil fuel development. "You have got to have some consistency here. You can't have four years of a Republican administration focused on building out our energy resources and four years of a Democratic administration hellbent on unwinding everything and expect to have an energy system that allows us to respond when you do have a global crisis," Murkowski said. | | | | A message from the National Mining Association:   | | | | | | HOUSE DEMOCRATS' RADAR THIS WEEK: The House is in session and Democrats will be laser-focused on their competitiveness and manufacturing bill, POLITICO's Sarah Ferris reports . The package, which differs from the version passed in the Senate last year, would encourage U.S. manufacturing and counter Chinese control over critical supply chains. It will address macro level issues, such as national security, as well as voter-level concerns with inflation. Democrats want to get a major legislative win as the Build Back Better package languishes in the Senate and midterm elections approach. Swing voters in particular are pushing for a competitiveness bill to get through, Sarah reports. But that doesn't mean hope for BBB is dead. Progressive leader Rep. Pramila Jayapal is still hoping to get the package across the finish line by the time Biden delivers his State of the Union on March 1, even if that means a slimmed down package that Sen. Joe Manchin can get behind. "We're trying to jumpstart the negotiation," Jayapal said Friday. BBB is also still getting a push on the climate front, with over 100 environmental, business, labor and conservation groups writing to House Speaker Nancy Pelosi, House Majority Leader Steny Hoyer and Senate Majority Leader Chuck Schumer today to get the climate provisions of the package through. The groups focus in particular on the 45Q tax credits for carbon mitigation technology, though they urge for the inclusion of the whole clean energy tax credit package. "This tax package will, in turn, deliver an essential down payment on deployment to meet critical emissions reduction targets, while retaining and creating high-wage jobs and fostering domestic energy and industrial production," the groups write. The signatories include Total Energies, Third Way, C2ES and the National Wildlife Federation. Related: " A Biden ally takes over one of Build Back Better's main opponents," via POLITICO's Hailey Fuchs. IN COMMITTEE: The Senate Environment and Public Works and the House Select Climate Crisis committees will get back to business on Wednesday. EPW will dive into recycling legislation while the Climate Crisis Committee will talk about ways to expand domestic clean energy manufacturing via the bipartisan infrastructure package and the Build Back Better bill. The Senate Energy Committee has a hearing Thursday on nominees for the Energy and Interior departments. Members will discuss the nomination of Maria Robinson for assistant secretary of Energy at the Office of Electricity, Joseph DeCarolis to lead the Energy Information Administration and Laura Daniel-Davis to be assistant secretary of the Interior for land and minerals management.
| | | | 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. | | | | | | | | ROLLING IN THE DEADLINES: EPA finalized its rule last week to extend the deadlines for refiners to meet biofuel blending requirements and change how future deadlines are determined. The final rule extends the compliance deadlines for 2020, 2021 and 2022 for all obligated parties under the Renewable Fuel Standard, as well as the deadline for small refineries for the 2019 compliance year. It also finalizes changes that would tie future compliance deadlines to a date after the subsequent year's renewable fuels volume standard is set. EPA first proposed the changes in November and said the agency will "ensure regulated parties have clarity on their present and future RFS obligations." Renewable Fuels Association President and CEO Geoff Cooper said the ethanol trade group was concerned with the new approach. "With this final rule, EPA just gave itself the power to perpetually delay implementation of yearly RFS blending requirements and continually kick the can down the road on compliance deadlines," he said in a statement. "This is not what Congress intended, and this approach could exacerbate the uncertainty and instability around RFS implementation that was created by the past administration." MAKING A FERC COMPRESSION: New York utilities National Grid and Consolidated Edison defended their proposed compressor station against criticisms from EPA in comments filed with FERC Thursday and Friday. EPA in November called FERC's analysis of the project "inadequate," arguing the commission did not take a close enough look at the project's associated greenhouse gas emissions and should delay approval of its needed permits. Utilities argued the project is needed for reliability in the region and will keep New York on track to reach its climate goals. It strikes a balance between increased customer demand in the state and resistance to "traditional, large-scale natural gas infrastructure projects" by avoiding new pipeline builds and focusing only on additional compression to increase gas supply, according to the companies. GAS PLANT APPEAL KILLINGLY-ED: FERC in a Friday night decision shut down the bid from a Connecticut gas plant trying to keep its investment alive. The commission found the Killingly power plant failed to prove the regulator's decision to terminate the project's capacity contract with the region's grid operator would result in irreparable injury, and argued further FERC's decision does not doom the project. Killingly had argued that the revenue it would lose from being barred from the New England Independent System Operator's next capacity market auction will cost it the millions of dollars it spent developing the power plant that it hopes to bring online in 2024. ISO-NE alleges the facility is not on track to finish development on that timeline. But FERC found in its Friday decision that the plant could still participate in future auctions, and allowing it to participate in the next auction could harm other market participants. Killingly also appealed to the U.S. Court of Appeals for the D.C. Circuit on the issue, which directed FERC earlier this month to reply within 10 days. A NEW COAL COUNCIL: The Energy Department is revamping its coal advisory board after letting its charter lapse in November — this time with a new name and mission, Pro's Kelsey Tamborrino reports . A notice published in the Federal Register today creates a National Advisory Committee on Coal established for a two-year period that will focus on coal workers and communities. It's a shift from the old National Coal Council, which faced allegations from environmentalists as being too industry-heavy. Republicans in Congress have been pushing for the administration to renew the NCC's charter, saying it gave crucial advice on the coal industry. Senate EPW ranking member Shelley Moore Capito said in a statement that she was "disappointed" that DOE let the council's charter lapse and urged "the department to work with those who were members of the NCC to ensure that this continues to be a beneficial resource for the coal community. I will be following this closely, as the work of the NCC has been important to my state of West Virginia and I hope that this new committee will work in good faith to help the coal industry." | | | — " Pipeline company opposes 'prescriptive' FERC intervention on responsibly sourced gas proposal," via POLITICO. — " German finance minister backs early end to green energy levy," via Reuters. — " Aluminum Prices Can't Keep Up With Energy Costs, Driving Wave of Closures," via The Wall Street Journal. THAT'S ALL FOR ME! | | | | A message from the National Mining Association: The EV revolution will drive global demand for metals up 500 percent or more by 2050. Producing EV batteries and charging stations takes minerals like copper, lithium and nickel.
Why it's important: For U.S. automakers to compete with China, mineral supply chains must start at home. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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