NEWS OF THE DAY:
The Great Labor Shift, Explained in One Chart
Liz Ornitz, The Wall Street Journal, November 4, 2021
Millions of Americans are quitting or changing their jobs
The American workforce is rapidly changing. In August, 4.3 million workers quit their jobs, part of what many are calling “the Great Resignation.” Here’s a look into where the workers are going and why.
Oil Prices Spike As OPEC+ Panel Still Favors Cautious Production Increase
Tsvetana Paraskova, OilPrice.Com, November 4, 2021
After slumping by more than 3 percent on Wednesday, oil prices returned to rallying early on Thursday as the first reports from the OPEC+ meetings indicated that the Joint Ministerial Monitoring Committee (JMMC) supports keeping the current cautious approach to easing the cuts.
The JMMC, which gives a recommendation for oil policy to the full ministerial OPEC+ meeting that begins shortly, “supports no change to Opec policy,” Amena Bakr, Deputy Bureau Chief & Chief Opec Correspondent at Energy Intelligence, reported, citing sources.
The “no change” in policy would mean that the JMMC would recommend to the OPEC+ ministers to stick to the current pace of easing the production cuts, which is increasing supply by 400,000 barrels per day (bpd) every month. The OPEC+ group is meeting online to discuss production levels and quotas for the month of December, amid heightened pressure from the United States to open the taps and ease the prices.
The refusal of OPEC+ to increase oil production is affecting America’s working class, U.S. President Joe Biden said at a news conference following the G20 meeting in Rome this past weekend.
“I do think that the idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is — is — is not — is not right,” President Biden said on Sunday.
Some of the heavyweight participants in the OPEC+ deal—including top OPEC producer and the world’s largest oil exporter Saudi Arabia—have already signaled they would rather keep the current pace of easing the cuts. Two other major oil producers in the Middle East, Kuwait, and Iraq, said earlier this week that they support plans for a 400,000 bpd increase in production as an adequate and sufficient intervention to meet demand and balance the market.
California Forced To Embrace Natural Gas
Irina Slav, OilPrice.Com, November 4, 2021
Severe droughts and wildfires this year have pushed California to turn to natural gas in order to secure its energy supplies this winter, Reuters has reported, with the California Public Utility Commission to vote this week on expanding the gas storage facility in Los Angeles.
Droughts severely cut hydropower generation in the state, while wildfires compromised electricity imports, which are a big part of California’s energy mix. The state also has plans to shut down four gas-fired plants and its nuclear plant, and last month the PUC ordered utilities to start buying renewable power and battery storage, the Wall Street Journal reported.
“While the companies are moving quickly to contract for power, the California Energy Commission and the state’s grid operator have recently expressed concern that the purchases may not be enough to prevent electricity shortages in coming summers,” the report said.
Per the Reuters report, also this week, regulators will vote on increasing the amount of gas stored at the biggest gas storage facility in California—Aliso Canyon. The facility is problematic: six years ago, a months-long leak made headlines, and there have been suggestions that it must be shut down.
The problems with Aliso Canyon have contributed to California’s tight gas supplies along with a lack of pipelines. But, according to PUC Commissioner Martha Guzman Aceves, a small boost in capacity “will allow us to get through this winter while we continue our progress toward planning how to reduce or eliminate our use of Aliso Canyon by 2027 or 2035, or any time in between.”
Until that happens, the planned closure of gas-fired plants could be delayed yet again. Initially, they were scheduled for retirement last year, but fears of blackouts in the evenings, when demand rises but solar power output declines, prompted a postponement. Now, one will be shut down this year and the other three in 2023.
Biden’s carbon-capture plan hands lifeline to coal plants
Bloomberg News, November 3, 2021
Coal-fired power plants would be eligible for billions of dollars in extra tax breaks under President Joe Biden’s economic legislation if they install carbon-capture systems, an incentive that environmental groups say may delay the retirement of dozens of facilities.
Power plants that capture their carbon dioxide emissions would be eligible for a tax credit of as much as $85 per metric ton under the draft of Biden’s $1.75 trillion spending plan released by the House last week. That’s an increase from a rate of $50 a metric ton in current law.
The change could result in a single 1,000-megawatt coal plant receiving $6 billion in payments over 12 years, according to an analysis of the proposed credit by the environmental group Sierra Club, which estimates the increase could result in a quarter of the nation’s coal-fleet delaying retirement.
“The provision, as written, delays the transition from fossil fuels — and emissions reductions — in the electric sector by throwing a decade-long lifeline to uneconomic coal plants,” the Sierra Club said in an analysis of the credit. “Even with the lower costs of renewable energy that will be spurred by Build Back Better, utilities will find carbon capture with these payments to be too attractive to pursue clean energy alternatives.
Among the group’s concerns is a tweak to the credit that would change the requirement that carbon capture systems be operational by 2026 to simply under construction by 2032 to qualify. That change could extend the life of coal-fired plants by a decade since carbon capture facilities can take years to construct, according to the Sierra Club. And any coal plant that does use the credit to install carbon capture technology would still have the same emissions profile of an unmitigated natural gas plant since the credit only requires electric-generation facilities to capture 75% of their emissions, the group said.
The increased credit, which is backed by a coalition that includes utility DTE Energy Co. and miner Peabody Energy Corp., is one of dozens of energy and climate programs included in the House’s draft of Biden’s Build Back Better plan that includes $555 billion in climate spending. The increase in the carbon-capture credit has been seen as necessary to win the support of West Virginia Senator Joe Manchin and other Democrats who hail from states flush with coal and gas reserves.
Coal plants have been retiring early in the face of competition from cheap natural gas and cleaner renewable energy sources. The credit may have the unintentional affect of delaying some of those from shutting, the Sierra Club says.
The proposed increase comes as high costs have kept carbon capture technology in the U.S. from getting off the ground. No carbon capture projects for power generation currently exist in the U.S.
The Sierra Club is concerned that even utilities that end up opting not to install carbon capture technology will delay the retirement of plants by years while it’s under consideration. Last year two coal fired power plants in North Dakota and New Mexico announced plans to scrap planned retirements while they consider the economics of installing carbon-capture technology using the credit.
“We’ve seen the subsidy at the current level being used in Public Utility Commission proceedings as a reason to stay online,” Pat Drupp, the Sierra Club’s deputy legislative director, said in an interview. “It’s a very lucrative subsidy.”
Other environmental groups are fighting the increased carbon capture credit, arguing the technology could extend America’s reliance on fossil fuel while steering financing away from wind and solar.
“This is a total disaster,” said Lukas Ross, a program manager with Friends of the Earth. “This is an astoundingly regressive approach to climate policy. Any policy that delays coal retirements is going to increase extraction and increase harm to communities on the front lines.”
But the Clean Air Task Force, a Boston-based environmental group, estimates that the increase in the credit would result in an 125 million metric ton reduction in carbon dioxide emissions a year by 2031.
“Unless Congress ups the amounts, capture isn’t going to be adopted voluntarily by high-emission sources,” said John Thompson, the group’s technology, and markets director.
The credit is important because it can also be used by sectors that are hard to de-carbonize such as refineries, cement and steel, Thompson said.
“I don’t see how looking at carbon capture is going to extend the life of coal plants,” Thompson said.
Biden sets a hard deadline for vaccine mandates
Marissa Fernandez, Axios, November 4, 2021
President Biden will announce Thursday that certain employers must ensure their workers are fully vaccinated or tested weekly by Jan. 4, 2022 or face federal fines starting at nearly $14,000 per violation, according to senior administration officials.
The big picture: The Department of Labor’s Occupational Safety and Health Administration (OSHA) will enforce the COVID-19 Vaccination and Testing Emergency Temporary Standard, which affects about two-thirds of all U.S. workers.
- Some businesses and hospitals have already started to enforce vaccination requirements, with so far minimal non-compliance.
Details: Employers with 100 or more workers must implement a mandatory vaccination program and/or mandate weekly testing and masks for those who refuse the vaccine. Two doses of either Pfizer or the Moderna shots or one dose of Johnson & Johnson’s vaccine will be acceptable.
- OSHA will largely rely on complaints to investigate violations, administration officials said.
- Fines for violating the vaccination rules could start at $13,653 each and go as high as $136,532 per violation if employers are found to be willfully non-compliant or repeat offenses. The amounts are in line with violations for other rules the agency enforces.
- The 21 states with their own health and safety oversight will have 30 days to adopt OSHA’s standard or align with their own similar standards, officials said.
Health care systems and facilities will not have a testing option, but like other businesses will have to submit medical and religious exemptions. Cutting facilities out of the Medicare and Medicaid programs for refusal to comply is a “last resort,” one senior administration official said.
- “Our goal is to bring health care facilities into compliance and termination really would only occur after providing a facility with an opportunity to make corrections and come into compliance if they chose not to do so,” the official added.
By the numbers: More than 222 million people in the U.S. have received at least one dose of the vaccine. About 70% of adults are fully vaccinated, per the CDC.
State of play: Biden in September said lower vaccination turnouts over the summer pushed the administration to draft up the OSHA vaccination rule.
- Dozens of GOP senators publicly challenged the rule on Wednesday.
Context: Previously, some federal contractors were expected to enforce a vaccine mandate by Dec. 8, which has now been pushed back to Jan. 4. Officials would not comment on whether the date was pushed back due to the holiday season or worker shortages, but said the delay was meant to “align” with health care facilities and U.S. employers.
- “It’s not a reason to wait of course. We know that vaccines help reduce absenteeism,” a senior administration official said.
- Worth noting: Commerce Secretary Gina Raimondo told CBS’ “Face the Nation” over the weekend that delaying the establishment of vaccine mandate deadlines until after the holidays would be a “big mistake.”
Editor’s note: This story has been updated with additional details. It has also been corrected to reflect those businesses could face fines starting at nearly $14,000, not tens of thousands of dollars as previously stated.
Proposed solar project on Kenai Peninsula would be Alaska’s largest
Elizabeth Earl, Alaska Journal of Commerce, November 4, 2021
The Kenai Peninsula may soon get the state’s largest solar power farm to date, but it may depend on the local government’s willingness to provide a tax break.
Renewable Independent Power Producers, an Anchorage-based company with several solar farms in Anchorage and the Mat-Su area, is working on a new project on the Kenai Peninsula. If it moves forward with the development, the farm — planned to be 160 acres, with about 60,000 panels and 20 megawatts of power production — would be the largest in Alaska.
Jenn Miller, the CEO of Renewable IPP, told the Kenai Peninsula Borough Assembly in October that the company isn’t sharing details of the exact location for the project yet because the land lease details are still in the works.
“It’s definitely significant,” she said. “This would be about 60,000 solar panels. Our record to date is a panel per minute to install, so we’ll see if we can beat that.”
Across Alaska, cooperative utilities like Chugach Electric Association, Matanuska Electric Association and Homer Electric Association generate and provide electricity to members. Their boards are elected, and the members underwrite the infrastructure projects in their power bills. In the past, the cooperatives have built and owned all their generation sources. IPPs are essentially private companies that build and own the generation projects, but not the transmission lines. They then sell the electricity they generate to the cooperatives.
Renewable IPP already owns three projects—one in Willow, one in Houston and one in Anchorage. Miller said the Willow project is the largest so far, but the Kenai Peninsula project will be significantly larger than that, providing enough energy to support about 4,500 homes, or about 6.5% of HEA’s energy demand.
But one factor that may make or break the project is whether the Kenai Peninsula Borough Assembly is willing to give the project a property tax break. Without a significant subsidy, the project won’t be competitive as a power producer, she said.
“Property taxes would be about 10-15% of our annual revenue,” she said. “Ultimately what that does is it inhibits our ability to offer the lowest possible electricity cost to HEA members.”
There’s a tax difference between public utilities and for-profit private energy generation companies. Utility cooperatives like HEA are incorporated as nonprofits, and therefore are not taxed on their properties. Private for-profit corporations — even if they are providing utility services — are. Electric utilities also operate as regulated monopolies under the Regulatory Commission of Alaska, which prevents them from altering prices to consumers too much without oversight. They can only adjust power costs so much under RCA regulations.
Renewable IPP is providing electricity like a utility, but because it doesn’t have any paying members, it can’t pass the cost along directly to amortize its infrastructure project. HEA can’t necessarily pass along its cost directly, either, because its prices are regulated by the RCA. Therefore, the solar project has to be competitive with natural gas prices in order to be economical. Miller said that’s why the property tax amounts on a project like the Kenai solar farm—with an estimated $30 million-$35 million in infrastructure costs—can make or break it.
“If we get this exemption for this project, how does it benefit the borough residents?” she said. “If we come in four-tenths of a penny below the current cost of generation, we will equal what we would have paid in property taxes, and those dollars are going directly to the residents.”
Renewable IPP does pay property taxes on the Willow project in the Mat-Su Borough. However, the difference there is the size of the project, Miller said — the Kenai project would be larger, and with intermittent energy like solar, the company has to cover the cost of guaranteeing power to HEA when the sun isn’t shining.
Assembly members expressed some skepticism about having to provide a tax subsidy for a private industry. Borough Mayor Charlie Pierce said several times he didn’t support providing a tax cut to the solar project when another utility provider like Enstar Natural Gas pays taxes on its lines. Enstar, where Pierce was previously an employee before retiring, is a for-profit company and thus pays taxes. However, Enstar is also different in that it has a direct subscriber base of consumers.
Miller said Renewable IPP usually does have a set escalator over the life of a lease that has to “meet or beat inflation.” The company has to look out a few decades at a price forecast for the utility’s cost of generation and show its price comes in under the estimate to receive
approval from the utility and the RCA. She said the estimated cost per kilowatt-hour of electricity for the project would be competitive with HEA’s current costs of generation—between 7 and 9 cents per kilowatt hour—which is still more expensive than the Lower 48 average for solar power generation, but it is renewable and doesn’t depend on the cost of fossil fuels like natural gas or coal, which can fluctuate.
She said the project may appeal to new businesses coming into the area as well.
“We have heard for some new industries (what) they are looking at when they are considering siting a manufacturing plant here in Alaska … energy prices are one of the major deciding factors,” she said. “Some new businesses are very keen on renewable energy, and they want to be able to say, ‘We’re getting this much of our generation from renewable,’ but people have different feelings about that.’”
The assembly took no action on a potential tax exemption for the project in October, but several members said they appreciated the information and were looking for more.