News of the Day:
Biden adviser Gina McCarthy calls it “ridiculous” to push climate sacrifice now
Mike Allen, Axios, May 23, 2021
On “Axios on HBO,” White House national climate adviser Gina McCarthy called for a practical rather than idealistic approach to getting Americans to change their routines to save the planet.
- McCarthy told me that with all the lost jobs, “Now is not the time to sit them down and say: ‘Let’s talk about climate. How can you sacrifice?’ … [I]t’s never going to be a winning strategy. Right now, it’s ridiculous.”
Why it matters: Electric vehicles have had a luxury image. But McCarthy took me for a spin in an electric Chevrolet Bolt before the interview, as part of an effort to show electric vehicles can be an economical part of the average American’s future.
McCarthy — the head of the EPA under President Obama, and now in a new job created by President Biden — noted that change is hard, because people love their routines.
- McCarthy said that with all the new technology, “the whole job is to get people excited about what’s available, get that deployed to its maximum.”
- “They don’t want to have to do research on things like cars,” she added. “They just want ’em to be what they used to be. And if you want to make the kind of shift that we need for climate, you’ve got to be optimistic about the future.”
OIL:
Goldman sees oil hitting $80/bbl despite likely return of Iran supply
Reuters, May 23, 2021
Goldman Sachs said it expects oil prices to climb to $80 per barrel in the fourth quarter of this year, arguing that the market has underestimated a rebound in demand even with a possible resumption in Iranian supply.
“The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply,” the bank said in a note dated Sunday.
Even “aggressively assuming” a restart of Iranian exports in July, Brent prices would still reach the $80 mark by the fourth quarter, it said.
Oil prices fell last week after Iran’s president, Hassan Rouhani, said the United States was ready to lift sanctions on Tehran’s oil, banking and shipping sectors.
Crude recouped some of those losses on Monday as a potential snag emerged in reviving the 2015 Iran nuclear deal that could add more oil supply, with indirect talks between Washington and Tehran due to resume this week. read more
Goldman Sachs said a demand recovery in developed markets would offset a recent coronavirus-led hit to consumption and likely slower recovery in South Asia and Latin America.
Global demand could increase by 4.6 million barrels per day through year-end, with most of the gains likely in the next 3 months, it said.
“Mobility is rapidly increasing in the U.S. and Europe, as vaccinations accelerate and lockdowns are lifted, with freight and industrial activity also surging,” the note said.
The bank also expects the Organization of the Oil Producing Countries (OPEC) and allies including Russia, a grouping known as OPEC+, to offset any ramp-up in Iran production by halting for two months an increase in its output in the second half of 2021.
This would help offset the perceived bearish impact in the physical market of the release of Iranian floating storage, it said.
GAS:
Co-Fueling Power Plants With Natural Gas Can Rapidly Cut GHG Emissions
Mark Green, API Blog, May 25, 2021
New, independent analysis says that the U.S. can rapidly reduce greenhouse gas (GHG) emissions by using natural gas as a co-fuel at coal power plants – pointing to another reason domestic natural gas is key to a cleaner future.
The analysis by Resources for the Future (RFF) outlines how EPA could foster natural gas cofiring at coal plants to reduce emissions. Authors Maya Domeshek and Dallas Burtraw write that a modest cofiring standard at coal plants can reduce carbon emissions significantly and rapidly and that adding a cofiring standard to other national electricity policies also accelerates emissions reductions. The analysis:
Using its existing authority under the Clean Air Act, the Environmental Protection Agency (EPA) can jumpstart the Biden administration’s plan to reduce US greenhouse gas emissions by 52 percent and contribute important air quality benefits in this decade.
The chart below shows the profile of emissions from coal plants over 15 years for a 20% cofiring standard under three forms of regulation described in the RFF paper.
We’ve pointed out how increased natural gas use in the power sector is the leading factor in U.S. carbon dioxide emissions falling to levels not seen in a generation. API’s new Climate Action Framework also describes the important role natural gas has played and will play in advancing the nation’s climate goals. Adding natural gas as a fueling component at coal-fired plans would mean even more reductions in CO2 emissions, according to the RFF analysis.
Without endorsing RFF’s specific models, increasing natural gas use is part of a smart, practical path to meaningful emissions reductions, capitalizing on a domestic energy source that’s available, affordable, and reliable.
Of course, any plan to cofire natural gas at coal power plants will require new or expanded natural gas infrastructure, including pipelines to get the natural gas to the plants. Unfortunately, in recent years projects including the Constitution and Atlantic Coast natural gas pipelines have been blocked – ironically, with a lot of help from environmentalists – denying natural gas to customers, including power plants.
It’s something Americans should think about when there are local, state, and regional proposals to build or expand pipelines. Natural gas has significant environmental benefits, but to realize those benefits infrastructure is needed to bring the natural gas to where it can be used – such as for fueling electricity generation.
MINING:
Biden looks abroad for electric vehicle metals, in blow to US miners
Reuters, May 25, 2021
US president Joe Biden will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on processing them domestically into battery parts, part of a strategy designed to placate environmentalists, two administration officials with direct knowledge told Reuters.
The plans will be a blow to US miners who had hoped Biden would rely primarily on domestically sourced metals, as his campaign had signaled last autumn, to help fulfill his ambitions for a less carbon-intensive economy.
Rather than focus on permitting more US mines, Biden’s team is more focused on creating jobs that process minerals domestically into electric vehicle (EV) battery parts, according to the people.
Such a plan would help cut US reliance on industry leader China for EV materials while also enticing unions with manufacturing work and, in theory, reduce pandemic-fueled unemployment.
The US Commerce Department is organizing a June conference to attract more EV manufacturing to the country. Biden’s proposed $1.7 trillion infrastructure plan earmarks $174 billion to boost the domestic EV market with tax credits and grants for battery manufacturers, among other incentives. The department declined to comment.
“It’s not that hard to dig a hole. What’s hard is getting that stuff out and getting it to processing facilities. That’s what the US government is focused on,” said one of the sources.
The approach would see the United States rely on Canada, Australia, and Brazil – among others – to produce most of the critical raw materials needed, while it competes for higher-value jobs turning those minerals into computer chips and batteries, according to the two sources.
Securing the full supply chain from metals to batteries does not require the United States to be the primary producer of the raw materials, said one of the sources.
A full strategy will be finalized after a year-long supply chain review involving national security and economic development officials.
Biden officials want to ensure the administration’s EV aspirations are not imperiled as domestic mines face roadblocks, the sources said, both from environmentalists and even some Democrats.
“It rings hollow when I hear everyone use this as a national defense argument, that we have to build new mines to have a greener economy,” said US Representative Betty McCollum, a Democrat who has introduced legislation that would permanently block Antofagasta Plc’s proposed Twin Metals copper mine in Minnesota.
Ali Zaidi, deputy White House national climate advisor, said the administration was focused on a strategy that “leverages our domestic resources in a way that’s responsible”, noting that included recycling in the supply chain.
While US projects from small and large miners alike will feel the impact, the pain from any blocked projects will fall disproportionately on smaller, US-focused companies. Many large miners also have global projects that could benefit from the administration’s plan.
“We can no longer push the production of the products we want to places we cannot see and to people we will never meet,” said Mckinsey Lyon of Perpetua Resources Corp, which is trying to develop Idaho’s Stibnite mine to produce gold and antimony used to make EV battery alloys.
Investments
The US government in April became the largest shareholder in mining investment firm TechMet, which controls a Brazilian nickel project, a Rwandan tungsten mine and is a major investor in a Canadian battery recycler.
Washington also funds research into Canadian cobalt projects and rare earths projects in Malawi, among other international investments.
The State Department’s Energy Resource Governance Initiative (ERGI) is one of the main programs Washington plans to use to help allies discover and develop lithium, cobalt, and other EV metals.
To be sure, Washington is not ignoring domestic mining.
The US Department of Energy has awarded grants to help old coal mines find ways to produce rare earths. US officials have also funded MP Materials Corp, which owns the country’s only rare earths mine, though it relies on Chinese processors.
But the bulk of Biden’s approach is designed to sidestep battles with environmentalists and save capital for other fights, according to one administration source.
During a visit to a Ford Motor Co. plant in Michigan on May 18, Biden called for government grants for new EV battery facilities. He mentioned Australia’s lithium reserves during the tour, but not large US supplies of the key battery mineral.
Republicans say Biden’s EV plans will be impossible to achieve without more US mines.
“These ‘not-in-my-backyard’ extremists have made clear they want to lock up our land and prevent the mining of minerals,” US Representative Lauren Boebert, a Colorado Republican, told a House Natural Resources Committee forum held the same day as Biden’s Michigan visit.
Placating labor
Biden’s approach comes with risks, including angering political supporters within the labor movement who want the administration to have an openness to resource extraction and the attendant jobs.
“Let’s let Americans extract these minerals from the earth,” said Aaron Butler of United Association Local 469 union, which does work for Rio Tinto Ltd’s proposed Resolution copper mine project in Arizona and endorsed Biden in the elections. “These are good-paying jobs.”
Many of the skills that labor unions would use to build mines, including concrete and electrical work, can also be used to build EV metal processing plants.
The National Mining Association, an industry trade group, has been lobbying the White House and Congress to support domestic projects, arguing that the coronavirus pandemic showed the importance of localizing supply chains.
Biden’s White House is now quietly working to enlist labor support as it tries to build a case that its green policies are creating jobs, ahead of the 2022 midterm elections that could determine whether the strategy wins congressional backing, according to two organized labor sources familiar with the campaign.
Biden officials have reached out to unions across the country asking for specific job-boosting projects the administration can take credit for, the labor sources said.
POLITICS:
Lawmakers: Budget negotiations to begin Wednesday
Peter Segall, Juneau Empire, May 24, 2021
The legislative conference committee tasked with reconciling two versions of the state’s budget will likely begin Wednesday, according to Rep. Neal Foster, D-Nome, chairman of the committee. Still, the likelihood of lawmakers finalizing the budget before Memorial Day was slim, he said.
In a phone interview Monday, Foster said the committee hoped to meet Tuesday but some members were still traveling and might not be in Juneau until Wednesday. Some lawmakers had hoped to finish by the holiday weekend, Foster said, and while that wasn’t very likely he said the committee still intended to work as if Friday was their deadline.
“It’ll be really challenging to do that knowing we have so many pieces on the table,” Foster said.
The Alaska Senate passed a budget last week but members of the House of Representatives failed to concur with its passage, sending the bill to a bicameral committee where a few lawmakers hash out compromises in the budget. Once the conference committee agrees on a final budget, both bodies of the Legislature will have to vote a simple majority to approve it without being able to make any changes.
Staff had only just finished preparing the paperwork to allow the conference committee to do its work, said Sen. Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee. In a meeting with reporters Monday morning, Stedman said conference committee members would address first areas where there’s mutual agreement and then work toward more contentious issues such as the Permanent Fund Dividend later in the negotiations.
“I don’t think the operating budget is going to be a complicated discussion,” Stedman said. “We’ll have a budget by July 1. We have to go through the process, it may come together faster than some of us think.”
Deeper divides
The Senate voted for a $2,300 PFD, an amount following the formula for calculating the dividend contained in Gov. Mike Dunleavy in his proposed constitutional amendments which uses half of the state’s yearly percent of market value draw from the Alaska Permanent Fund. But to pay of dividend of that size and keep the state budget mostly flat the state will have to overdraw from the Earnings Reserve Account, something several lawmakers, including Stedman, have said they’re against.
“50-50 doesn’t work,” Stedman said, referring to the proposed formula.
Division of Legislative Finance projections show the 50-50 model still leaving a gap in the state’s budget, requiring additional draws on the Earnings Reserve unless the state can raise additional revenue. However, Dunleavy has said his proposed amendments are meant to work together, and also proposed combining the principal and the earnings reverse accounts of the Permanent Fund which would increase the amount of the state’s current 5% percent of market value draw.
But the Permanent Fund is the state’s main source of revenue, Stedman said, and taking funds out of the fund today comes at the cost of future state revenues, something he and lawmakers in both bodies are opposed to.
“I’m not concerned about the amount of this year’s dividend as I am about the future of the dividend,” Stedman said. “When you overdraw the Permanent Fund, you damage future income for every Alaskan for now and perpetuity.”
Foster said he and most of the House Majority Coalition felt strongly about not overdrawing the ERA.
There are still lawmakers who say they support a dividend based on a statutory formula, but it’s not clear if they’ll vote against a budget that doesn’t pay one. House Minority Leader Cathy Tilton, R-Wasilla, said in a phone interview Monday the caucus didn’t have unified opinions on the PFD, but there was a desire to resolve the issue and have a formula the state follows.
“We still have the statutory formula on the books, we should be following the formula until we have a new amendment,” Tilton said, speaking for herself. “I would like to see it stay at least at that 50-50 point, but I have concerns that amount may be even lower.”
Tilton said her caucus was eager to resolve the state’s long-term fiscal issues. The House Minority generally doesn’t favor an income tax, she said, but is willing to consider a sales tax and wants to look at ways to increase resource development as a way of increasing revenue.
Several Republican lawmakers including the governor have been staunch defenders of the statutory formula, with some senators losing their committee assignments in the last Legislature for voting against a budget that didn’t pay a full PFD. But Dunleavy and some of those lawmakers said at a May 12, news conference they were willing to step away from that formula if it meant putting the state on stable fiscal footing.
Issues remain
But, Foster noted, the vote for a so-called “reverse sweep” which requires two-thirds of members in both bodies has yet to be addressed. The sweep is an accounting mechanism used by the state which automatically empties a number of state accounts at the end of the fiscal year. In previous years the sweep went unnoticed and lawmakers voted to reverse the move when passing a budget. But in 2019, Gov. Dunleavy expanded the number of programs susceptible to the sweep and there were initially not enough votes for a reversal when the Legislature passed its budget.
Sitting on the conference committee are the four co-chairs of finance committees from both bodies, Stedman and Sen. Click Bishop, R-Fairbanks and Foster and Rep. Kelly Merrick, R-Eagle River, and Sen. Donny Olson, D-Golovin, and Rep. Steve Thompson, R-Fairbanks, who represent their respective minorities.
The outcome of the budget negotiations could have an impact on the discussion for the second special session in August where lawmakers hope to address the fiscal issue and proposed amendments,” Stedman said.
“You have a lot higher degree of success if members are not upset about issues, they’re more willing to sit down and compromise,” Stedman said. “We’re going to button up the budget, and then, we’ll see what the attitude is. It might not be very positive.”
CLIMATE CHANGE:
From the Washington Examiner, Daily on Energy:
and transparent way. It has done so for decades.”
CLIMATE ACTIVISTS CLOSING PUSH ON INFRASTRUCTURE…IT’S GO TIME: The group Climate Power is launching a seven-figure ad campaign over the next two weeks urging Congress to pass an infrastructure package that invests heavily in clean energy and electric vehicles. The ads will air in D.C., on national cable, and online.
“The time has come to turn plans into action and invest in clean energy solutions like manufacturing electric vehicles in the U.S.,” said Climate Power executive director Lori Lodes.
Negotiations at an impasse: The push comes as bipartisan talks between the White House and Senate Republicans over infrastructure are collapsing, according to reports this morning by Politico and Punchbowl News.
Climate activists have urged Biden and Democrats to move on from negotiations and act alone using reconciliation, since Republicans are not interested in significant clean energy provisions, especially electric vehicle funding.
The White House’s latest $1.7 trillion offer costs $500 billion less than the original version of Biden’s plan, but it still proposes to extend renewable energy tax, provide point-of-sale rebates for electric cars, and include a clean electricity standard requiring utilities to purchase increasing amounts of carbon-free power.
Republicans plan to submit a counterproposal this week, but Democrats are facing pressure to forge ahead soon if the two sides can’t reach a deal.