Today’s Key Takeaways: Permitting reform on Senate agenda. Manchin calls Alaska move embarrassing. Australian LNG strike threatening global supply. Federal committee recommends imposing royalties on U.S. Hardrock mining. Is inflation killing offshore wind?
NEWS OF THE DAY:
Senate energy leaders to meet on permitting overhaul
Emma Dumain, Nico Portuondo, E & E Daily, September 12, 2023
Sens. Joe Manchin (D-W.Va.) and John Barrasso (R-Wyo.) said they’ll discuss permitting reform in the coming days.
Republicans are signaling that they’re willing to engage on the debate to overhaul the nation’s permitting laws for energy projects.
The top Democrat and Republican on the Senate Energy and Natural Resources Committee plan to huddle this week to discuss a path forward on overhauling the nation’s permitting laws for energy projects.
At the same time, Sen. Kevin Cramer (R-N.D.), a member of the Senate Environment and Public Works Committee who said he had been appointed a “lead negotiator on electricity transmission provisions in any permitting reform package,” is asserting his party’s position on what role the Federal Energy Regulatory Commission should play in facilitating the expansion of renewable energy projects across the country.
The flurry of activity signals there may still be an appetite on Capitol Hill to finish what members of Congress started as part of the bipartisan agreement to raise the debt ceiling this spring.
On Monday evening, Sen. John Barrasso (R-Wyo.), the ranking member of the ENR Committee, confirmed his plans to sit down with the chair, Sen. Joe Manchin (D-W.Va.) to discuss the next steps on permitting overhaul efforts.
“There’s time set aside for he and I to meet one on one,” he told reporters Monday, “and then have our staff involved. We’ve been working all summer, all through the recess.”
Manchin’s spokesperson, Sam Runyon, also told E&E News on Monday evening that Manchin and Barrasso would meet this week, adding that the chair was “still committed to a path forward; it’s too important not to.”
“There’s incentive to get it done. We need opportunities to transmit energy and we need more American energy to transmit, and you need to have both of those together,” Barrasso said.
He added, “We need to make sure there’s not winners and losers, but that’s what the White House is trying to do. So we’re trying to find ways to make sure that all sources of American energy are producing.”
Manchin had hinted last week that he planned to meet in the coming days with one or more colleagues in a bid to “move it forward,” but he offered few other details.
“We’re working on it,” he said later, when asked to elaborate. “It’ll be informal.”
While informal, any conversation at the lawmaker level on how to tackle the unfinished business of permitting overhaul would be significant.
Though discussions were taking place across party lines in the House before the August recess, the chair and ranking member of the Senate Environment and Public Works Committee — Sens. Tom Carper (D-Del.) and Shelley Moore Capito (R-W.Va.), respectively — had signaled a lull in conversations in their chamber upon their return to Washington from the summer break.
It’s an issue both parties agree needs to be addressed more comprehensively than how it was dealt with in the context of the Fiscal Responsibility Act, essentially a bill that made a number of policy concessions in exchange for the Democratic demand to raise the debt ceiling.
FERC focus
Cramer’s articulation of the Republican perspective on the renewable energy side of the permitting overhaul debate is also significant as lawmakers look for openings to make more progress on the issue — and strike a compromise across the aisle.
Traditionally, Democrats have focused on removing the regulatory red tape impeding transmission deployment, which would allow more renewable energy distribution.
Republicans, in contrast, are largely in favor of expanded changes to the National Environmental Policy Act, which will favor oil and gas initiatives.
Any permitting deal on Capitol Hill that goes beyond the modest suite of changes secured as part of debt ceiling agreement will have to address both.
Cramer’s letter, which he will formally send to FERC on Tuesday, is being characterized by the senator’s staff as a rebuttal to what Senate Majority Leader Chuck Schumer (D-N.Y.) previously laid out on the subject.
In July, Schumer called on FERCto “strengthen” and finalize a slew of major rules that could help speed the deployment of clean energy and transmission lines, and laid out a series of potential rule changes.
At least some Democrats see and the White House see action from the Department of Energy and FERC as a backup for congressional inaction on transmission.
Cramer will divert from Schumer by pressing FERC to not impose renewable energy projects on states “under the guise of transmission planning.”
Republicans have generally pushed for grid reliability by the way of fossil fuel projects, arguing renewable energy can be unreliable during times of high grid demand.
Cramer, in his letter, will express concern that FERC could impose arbitrary, federally determined benefits of additional renewable transmission on states and communities, and use “backstop” siting authority to push through transmission projects opposed by more local interests.
Ultimately, it’s far from certain that lawmakers will be able to find a compromise on any of these differences.
But Barrasso said the Energy and Natural Resources Committee, at the very least, stands a decent chance of being the place where a deal could be reached: He and Manchin, he explained, see “eye to eye on a lot of these things.”
Manchin has in the past railed against the Biden administration for pursuing a “radical” environmental agenda he says scorns the fossil fuel industry — a similar line of attack from Barrasso and other Republican lawmakers.
Still, Barrasso allowed, “There are a number of members on the Democratic side of the aisle that don’t see eye-to-eye with Sen. Manchin,” acknowledging the “additional buy-in” from other members that will ultimately be necessary to get any bipartisan permitting plan across the finish line.
OIL:
Manchin Dubs Alaska Move Embarrassing
Andreas Exarheas, Rigzone, September 13, 2023
Canceling valid leases, removing acreage from future sales, and attempting to reduce production in Alaska while taking steps to allow Iran and Venezuela to produce more oil, with fewer environmental regulations, makes no sense and is frankly embarrassing.
That’s what Joe Manchin, a Democrat Senator for West Virginia and the Chairman of the U.S. Senate Energy and Natural Resources Committee, said in a statement posted on his website after the U.S. Department of the Interior (DOI) revealed that it canceled oil and gas leases in the Arctic National Wildlife Refuge (ANWR) and proposed new protections in National Petroleum Reserve in Alaska (NPRA).
“I can’t explain to the American people why we would willingly become more dependent on foreign oil imports, eliminate good paying American jobs, and drive up the cost of our electric bills and gas prices across the country,” Manchin said in the statement.
“This is yet another example of this administration caving to the radical left with no regard for clear direction from Congress or American energy security,” he added.
“Let’s be clear – this is another attempt to use executive action to circumvent a law to accomplish what this administration does not have the votes to achieve in Congress,” Manchin continued.
The Tax Cuts and Jobs Act of 2017 mandated two lease sales of not less than 400,000 acres within the Coastal Plain of ANWR, the statement posted on Manchin’s website noted, adding that the first sale was held in January of 2021 and that a second sale is required to occur prior to December 22, 2024.
GAS:
Chevron LNG workers go on strike, threatening global supply
Reuters, September 13, 2023
The dispute between Chevron (CVX.N) and workers at its two liquefied natural facilities (LNG) in Australia will be heard by the industrial relations tribunal on Sept. 22, potentially offering a resolution to strikes that began last Friday.
The disagreement is over wages and conditions at Chevron’s Gorgon and Wheatstone operations, which account for more than 5% of global LNG supply.
Chevron had been negotiating with the workers for weeks alongside Australia’s Woodside Energy (WDS.AX), which had managed to avert the strikes last month after reaching a deal.
MINING:
US committee recommends royalties on minerals for EVs in sweeping reform proposal
Mining.Com, September 12, 2023
A federal committee on Tuesday recommended imposing royalties on US hardrock mining for the first time, a move it said could increase domestic production by providing funds for the agencies in charge of issuing new mining permits.
The proposal was part of a suite of recommendations aimed at increasing supply of the materials like lithium, cobalt and nickel that are needed for a domestic electric vehicle (EV) industry that is key to President Joe Biden’s climate agenda.
In a 168-page report, the Interagency Working Group on Mining Laws, Regulations and Permitting broadly encouraged Congress to reform the General Mining Law of 1872, which established a system that provides free and open exploration of federal mineral deposits.
In addition to recommending royalties of 4% to 8%, the interagency group advocated for moving to a system of leasing federal lands for mining and encouraging mining claimants to develop claims in a timely manner by increasing fees over time.
Such changes would put the industry on more even footing with those like oil and gas and coal.
Increased funds could both shore up agency staff needed to speed mine permitting, engage with local communities and protect taxpayers from the cost of cleaning up abandoned mines.
“Agreeing to play by the same rules that other people are playing by can help with the public perception of the mining industry,” an Interior Department official said. “Also, if a community or a state is going to receive some of the revenue from this, then that can also either lower opposition or provide funding to address some of the issues that are causing the opposition.”
Automakers, miners, and mining states like Nevada have pressed for faster, more efficient mine permitting. Some tribes have asked for greater transparency and engagement around mine planning, while others and environmentalists have called for more studies on the pollution and safety risks of hard rock mining, pushing the federal government to limit mines.
The committee is led by the Interior Department and includes representatives from the Environmental Protection Agency, the Agriculture, Energy and State departments, the White House, and the Advisory Council on Historic Preservation.
POLITICS:
Is Inflation Killing Offshore Wind?
Institute for Energy Research, September 13, 2023
- Biden’s “Inflation Reduction Act” is pushing inflation and interest rates so high that offshore wind development is slowing.
- Subsidies in the law are proving inadequate to attract and keep developers without contract renegotiations and higher approved prices.
- Price increases of around 50 percent to already expensive offshore wind are hurting politicians’ plans both in the United States and in Europe.
President Biden’s climate legislation, the Inflation Reduction Act (IRA), passed solely by Democrats, may be making it more difficult for companies to invest in offshore wind by actually producing more inflation—something the bill was supposed to reduce as its title claims. While the law provided an estimated $370 billion in grants, tax credits and other incentives for climate and “clean” energy projects, the funds are proving insufficient for rising inflation and borrowing costs. Estimates regarding the costs incurred by taxpayers due to the bill are as high as $1.2 trillion as the tax credits in the law are not capped and the Biden Administration is loosely interpreting conditions for those credits, driving their costs up.
Just two years ago, offshore wind developers were making plans based on a projected cost of $77 per megawatt hour; now the cost is up to $114 per megawatt hour. Danish wind company, Orsted, said that it is prepared to walk away from projects unless it gets more government aid, having announced a potential $2.35 billion price increase in its U.S. projects. Orsted told utility regulators that it would not be able to make a planned final investment decision to build its proposed 924-megawatt Sunrise Wind project unless its power purchase agreement was amended to factor in inflation. Orsted’s warnings include issues with the provisions of the president’s Inflation Reduction Act where incentives are higher for companies sourcing U.S.-made parts. However, the domestic supply chain has not been able to catch up, mostly due to China’s dominance and Biden’s anti-mining policies that are driving prices higher.