Just say no: Federal judge stops Biden leasing pause. Swiss reject climate taxes.

In News by wp_sysadmin


From the Washington Examiner, Daily on Energy:

LATEST ON LEASING PAUSE: Interior Secretary Deb Haaland is mum on her agency’s immediate plans after a federal judge wiped out one of President Joe Biden’s signature climate initiatives by blocking his pause on new oil and gas leasing on federal lands and offshore.

“It’s a fresh decision,” Haaland said in testimony this morning to the Interior and Environment subcommittee of the Senate Appropriations Committee. “Our department is reviewing the judge’s opinion as we speak and consulting with [DOJ]. We will respect the judge’s decision. Any other information will be forthcoming.”

Oil and gas industry groups and Republicans in Congress from fossil fuel states are calling on Haaland to immediately resume lease sales.

“In light of this very important ruling, I expect to hear your plans to resume implementation of those lease sales,” said Sen. Lisa Murkowski of Alaska, the top Republican of the subcommittee, at the hearing this morning.

But the Interior secretary stopped short of saying that as she readies to release a long-awaited report as soon as this month that will reveal the administration’s plans for the oil and gas leasing program.

If you missed it: Early last evening, Judge Terry Doughty of the U.S. District Court for the Western District of Louisiana granted a preliminary injunction to 13 states that sued the Biden administration over its leasing pause. The order applies nationwide, forcing the administration to end its pause and proceed with offering new leases to drill on federal lands and offshore waters.

The Louisiana judge, a Trump appointee, said the Republican attorneys general sufficiently proved they are suffering harm from the pause on new leasing. He also said only Congress can pause offshore oil and gas leases because the legislative branch originally made federal lands and waters available for leasing.

The court defeat for Biden was a blunt reminder of how hundreds of newly installed federal judges appointed by Trump pose a huge hurdle to the new administration’s climate agenda, especially when it acts unilaterally.

But the victory may be short-lived: The ruling will remain in effect pending appeals to higher courts, the Louisiana judge said.

“Not only do we expect Interior to appeal the ruling, but we also think the Biden Administration might look to pause leasing via other mechanisms,” the research group ClearView Energy Partners said in a note late last night.

Despite the court ruling, ClearView said the executive branch has “vast” legal discretion over public lands and the Biden administration could still try to stop new leases by declaring a “climate emergency” similar to Trump’s “emergency at the Southern Border.”

Limiting leasing by another name: Interior is also very unlikely to resume leasing at the same tempo when it concludes its review, and has hinted at proposing reforms in conjunction with Democrats in Congress that would limit new drilling without stopping it by raising costs and imposing stricter regulation on oil and gas development.

The Biden administration and Democrats could limit the available acreage offered for lease and reduce the economic desirability of any future sales by raising royalty rates, shortening the length of leases, imposing higher rents, and more significant bonding requirements.


US oil sector seeks flexible climate disclosure
Argus Media, June 15, 2021

Chevron, ConocoPhillips and other oil and gas interests are asking the US Securities and Exchange Commission (SEC) to take a flexible approach in a pending rule that could broaden what publicly traded companies have to disclose about their climate-related risks.

Those companies, in recent feedback to the SEC, are pushing to retain flexibility for companies to determine what type of climate information is “material” to investors and must be disclosed. The industry also wants regulators to consider building on existing voluntary climate disclosure frameworks, while not putting strict liability on executives for climate-related information they disclose.

That feedback could be important as the SEC begins to reconsider rules that have largely left it up to publicly traded companies to determine what, if any, climate information they disclose to investors. The SEC asked for public input on the issue by 13 June, as it works to formally propose a rule by October that would “enhance” disclosure on climate-related risks and opportunities.

Chevron, in its formal input to the agency, said climate disclosures should take advantage of existing reporting standards, such as a program at the US Environmental Protection Agency that requires industry to report on greenhouse gas emissions from large facilities. The company said the SEC should also retain its existing approach for companies to have the flexibility to decide what disclosures are material to investors, while using a “phased approach” for instituting sustainability-related disclosures.

“This would allow the commission to focus first on those topics it deems of most importance, such as climate change disclosures,” the company wrote on 11 June.

ConocoPhillips in separate comments filed the same day pitched a “hybrid approach” on climate disclosures to the SEC. Some standards could be uniform to help investors compare climate data, the company said, while another set of standards would offer flexibility for companies to decide what needs to be disclosed.

“E&P companies face different risks and opportunities than do fully integrated companies that market consumer products,” ConocoPhillips wrote.

Oil and gas groups are urging the SEC to carefully weigh what types of new disclosure changes are warranted. The American Petroleum Institute (API) said it remains unclear what information was “broadly needed” by investors and said new reporting would impose costs disproportionately affecting smaller companies. The trade group also cited concerns that expanding disclosure rules could exceed SEC’s authority and raise concerns under the US Constitution.

Furnish vs File

“A significantly expanded disclosure requirement beyond the well-established doctrine of materiality could raise serious First Amendment issues,” the trade group said.

The oil and gas sector also wants climate information to be “furnished” to the SEC, a standard that would avoid the strict legal liability that applies to “filed” information such as those affecting financial performance. API said letting companies furnish this information would allow them to expand their climate information and offer more context, particularly because climate-related risks are likely to be qualitative.

Democratic-led states and environmental groups are pushing the SEC to mandate robust disclosure of climate information, which they say would allow investors to understand their risk exposure to climate change and better understand which companies have plans for curbing their emissions.

“Transparency about whether and how companies are addressing climate change is essential for investors, retail or institutional, to make smart decisions about where they put their money,” said California attorney general Rob Bonta, who led a coalition of a dozen attorneys general in filing comments to the SEC.


Price agency Platts launches carbon-neutral LNG assessment
Jessica Jaganathan, Reuters, June 16, 2021

SINGAPORE, June 16 (Reuters) – Commodity price agency S&P Global Platts said on Wednesday it has launched a daily carbon-neutral liquefied natural gas (LNG) price assessment, to track the cost of carbon credits bought and retired to offset carbon emissions from LNG trade.

The assessment involves offsetting the carbon emissions associated with the upstream production, liquefaction, transportation and, where required, combustion of the gas through the purchase and retirement of carbon credits, Platts said in the statement.

“We are already seeing LNG consumers around the world demand action on emissions associated with LNG use amid an increasingly carbon-conscious economy,” said Platts’ global director of LNG pricing Ciaran Roe.

Leading industry traders and consumers have been seeking more transparency on carbon and methane emissions in the gas value chain amid a global decarbonisation push.

While LNG is generally considered a cleaner fuel than coal or oil, there is currently no accepted standard for measuring the emissions from producing and transporting the fuel, which needs to be cooled to minus 162 degrees Celsius (minus 260 degrees Fahrenheit).

Platts publishes the Japan-Korea-Marker (JKM), which is increasingly being used as a benchmark in the spot LNG market in Asia.

The agency said it launched the daily carbon-neutral LNG price assessment in response to recent growth in trade of carbon-neutral LNG cargoes this year.

The new assessment for well-to-tank emissions will reflect LNG cargoes loaded in Australia, the world’s second-largest LNG exporter, and delivered to Japan, South Korea, Taiwan, and China. This route is considered one of the most active trade channels globally, Platts said

Platts said it will use a weighted average of the estimated emissions of carbon dioxide equivalent, or CO2e, per metric tonne of LNG produced from all Australian liquefaction plants and an average emissions rate for a standard LNG vessel sailing from Australia to the Japan, South Korea, Taiwan and China region.


US tariffs on Chinese permanent magnets counterproductive – report
Mining.Com Editor, June 15, 2021

The US Department of Commerce is set to evaluate whether or not imports of rare earth permanent magnets from China pose a national security threat, but imposing tariffs on products sourced from its largest supplier might be counterintuitive, an analysis by Roskill has found.

On June 8, the White House released a report detailing the findings from a 100-day review of vulnerabilities within the supply chains of four critical products, including semiconductors, large capacity batteries; critical minerals and materials; and pharmaceuticals.

The report was released in response to President Biden’s February 24 executive order calling for an assessment of the vulnerabilities within essential supply chains.

The administration analysed and provided recommendations on the supply chains within the report and also seeks to create a Supply Chain Disruptions Task Force to address supply chain challenges across the government.

In addition, the report calls for the US to begin the process of building comprehensive strategies for revitalising key industrial bases.

As it stands, when rare earth magnets are exported from China, rare earths receive no value-added tax (VAT) refund, while permanent magnets qualify for the full 13% refund. This financial incentive encourages the domestic production and subsequent export of permanent magnets and also provides a cost advantage to Chinese producers.

The trade relationship is one of several contributing factors explaining China’s dominance in the rare earths industry.

China produced 85% of the world’s rare earths refined products in 2020, but with Chinese domestic output leveling off, imports of rare earths to China are forecast to grow to 80,000 tonnes per year by 2030, up from an estimated 60,000 tonnes in 2021, according to a recent report.

Level the playing field

According to Roskill, it appears counterproductive for the US to impose import tariffs on rare earth permanent magnets sourced from their largest supplier. China currently produces about 90% of the world’s neodymium-iron-boron or NdFeB permanent magnets, and alternative sources are limited.

This could lead to increased costs for US-based companies and further associated economic impacts.

Roskill also believes that in order to develop a truly resilient rare earths supply chain, North America must establish domestic capacity for precursory magnet metals and alloys, and the subsequent production of permanent magnets.

Imposing import tariffs on Chinese permanent magnets could encourage said domestic supply chain development or alternatively encourage China to either grant full VAT refunds upon exporting rare earths or cancel the VAT refund upon exporting permanent magnets.

“This would help level the playing field for other magnet producers because Chinese companies would either prefer to export the refined material prior to magnet generation, to receive the VAT refund, or accept the higher cost of exporting permanent magnets, therefore allowing rest-of-world producers to compete more closely on a cost basis,” says Roskill rare earth and titanium analyst Ross Embleton in a research note.

In short, the US Department of Commerce could impose import tariffs on permanent magnets from China in a bid to reduce the reliance on Chinese derived products, thus increasing supply chain security. This strategy could encourage China to review its current trade policies, or the development of North American capacity for permanent magnet production.


Alaska House fails key vote affecting dividend, programs
Becky Bohrer, Associated Press, June 16, 2021

 The Alaska House late Tuesday passed a state budget that would result in a $525 dividend to residents this year and leave in doubt funding for a number of programs and infrastructure projects after it failed to garner sufficient support on a key vote.

House leaders left open the potential for continued talks or even possibly another vote as the special session neared its end. Special sessions can last up to 30 days. That limit would be reached on Friday.

“We’re gonna look for a resolution that we can all live with and be happy with, and the people of Alaska will be very grateful to us,” said House Speaker Louise Stutes, a Kodiak Republican.

“My hope is that the talks don’t stop,” House Minority Leader Cathy Tilton told reporters after the floor session, adding later: “I would hope that we would come together and have serious conversations, where all voices are being heard.”

Dividends typically have been paid using earnings from the state’s oil-wealth fund, the Alaska Permanent Fund. But the budget agreement that advanced from a six-member conference committee on Sunday cobbled together money for dividends of about $1,100 from various sources, including the constitutional budget reserve fund that requires three-fourths support in each the House and Senate to tap.

But that so-called three-quarter vote failed Tuesday night in the House, where 30 votes were needed. The vote was 24-15.

The Legislative Finance Division has said a failure to reach the three-quarter vote threshold would mean $525 dividend checks this year. The last time the check was in the $500 range was in 1986.

Tilton, a Wasilla Republican, said the conference committee made fund-source choices that were not necessary. The budget proposal tied strings to funding for programs beside the dividend, including oil and gas tax credits and some infrastructure projects, making them subject to the three-quarter vote.

Rep. Ben Carpenter, a Nikiski Republican, called the approach risky and said that was the choice of the budget proposal’s crafters. Carpenter said he felt that minority Republicans were not meaningfully included in the process.

But Rep. Ivy Spohnholz, an Anchorage Democrat, said House members did have choices, including whether to support an $1,100 dividend and to keep pots of money from being swept into the constitutional budget reserve.

Under the state constitution, funds taken from constitutional budget reserve, which lawmakers have relied on for years to fill budget gaps, are to be repaid. The budget plan included language that has been used in prior budget cycles meant to prevent a long list of accounts used for such things as student scholarships and rural electric costs from being swept into the reserve fund. The three-quarter vote also was needed to do this.

The statutory budget reserve is among the pots considered subject to the sweep. At the start of the current fiscal year, it was empty, according to the Legislative Finance Division. But the budget proposal resuscitated it, in part with money previously authorized to be spent but not needed in the current year, the division’s director, Alexei Painter, has said.

The budget proposed spending $739 million on dividends, with $320 million from the statutory budget reserve, $48 million from the constitutional budget reserve and the rest from the state general fund.

The House, originally set to meet Tuesday morning, convened around 7:30 p.m., following a day marked by closed-door meetings between lawmakers as they evaluated options for securing votes and completing their work ahead of the Friday special session deadline.

House Majority Leader Chris Tuck told reporters before the floor session that a failed vote would mean lawmakers would need to keep negotiating.

The Senate was expected to take up the budget Wednesday. The House also adjourned until Wednesday.

The House also failed to win support for a procedural effective date vote.

In 2018, lawmakers began using permanent fund earnings, long used to pay dividends, to help cover government expenses, and sought to limit withdrawal amounts for dividends and government costs. The withdrawal limit for the fiscal year starting July 1 is about $3.1 billion.

One of the big debates surrounding the budget was whether to exceed that limit. Painter has said the withdrawal limit would be adhered to under the budget plan.

The budget plan also would move $4 billion from spendable permanent fund earnings to the fund’s constitutionally protected principal. Such transfers aren’t subject to the withdrawal limit.

There was an estimated $11.3 billion in uncommitted funds in the permanent fund’s earnings reserve as of April 30, according to the Alaska Permanent Fund Corp.


Saying No to Climate Taxes
The Editorial Board, The Wall Street Journal, June 15, 2021

Swiss voters reject the costs of meeting the Paris CO2 emissions limits.

Climate alarmists continue to have a big problem: democracy. Every time voters are presented with something close to the actual costs of achieving draconian CO2 emissions targets, they say no.

The latest reality check came Sunday in Switzerland, where 51.6% of the voters rejected a government scheme to meet the anti-carbon goals of the Paris Agreement on climate change. That’s the agreement that President Biden recently rejoined, albeit without the approval of American voters or Congress.

At least the Swiss were honest enough to tell voters that they would have to pay for their climate indulgences with the likes of a surcharge on car fuel costs and a tax on airline tickets. Perhaps most Swiss thought this cost was exorbitant, or useless since the country contributes only 0.1% to global CO2 emissions. The Swiss could go net-zero on CO2 and it wouldn’t matter a whit to the climate.

This explains why America’s climate left assiduously avoids putting carbon taxes on the ballot. Mr. Biden won’t even endorse indexing the federal gas tax for inflation. Instead the Administration is planning to use regulatory and judicial coercion. Voters understand they will pay for the climate obsessions of elites.