Today’s Key Takeaways: Shielding solar projects from trade penalties. Governor Dunleavy promotes AKLNG in Japan. Demand for Alaska minerals is growing exponentially. Former DOI Secretary donates to Sweeney in AK Congressional special election. Saudi Arabi confidence in demand increases oil prices. Eisenhower’s D-Day speech.
NEWS OF THE DAY:
Biden to invoke Defense Production Act for clean energy
Ben Geman, Andrew Freedman, Axios, June 6, 2022
President Biden will shield solar project developers from the costs of potential trade penalties and offer new federal support for domestic panel manufacturing, the White House said Monday.
Driving the news: The Biden administration plans to provide a two-year reprieve from panel import tariffs that may stem from an ongoing Commerce Department probe of whether Chinese companies are dodging U.S. penalties.
- Biden also plans to invoke the Defense Production Act (DPA) to boost the manufacturing of panels and other clean energy equipment in the U.S., senior administration officials told reporters Monday morning.
- Reuters first reported the upcoming moves and, citing a source familiar with the matter, said the trade effort is designed to “allay companies’ concerns about having to hold billions of dollars in reserves to pay potential tariffs.”
Why it matters: The U.S. solar industry and analysts say the months-long Commerce investigation has slowed the pace of U.S. projects, calling it a hurdle that adds to supply chain woes and other headwinds.
- A recent estimate from the consultancy Rystad Energy said 64% of 2022 U.S. solar additions are “in jeopardy,” mostly because of the threat of new tariffs.
- Commerce Department officials have called predictions of potential tariffs far over 200% overblown, with any levies more likely to be an order of magnitude lower.
What’s next: A source familiar with the upcoming announcement said Biden would “take steps to provide U.S. solar deployers the short-term stability they need to build clean energy projects.”
- Biden will invoke the Defense Protection Act for solar panel parts, like photovoltaic modules and module components, heat pumps, electrolyzers, fuel cells and platinum group metals, as well as infrastructure for the power grid, such as transformers, a White House fact sheet states.
- The Commerce probe will continue, according to a senior administration official.
- Part of the administration’s actions also includes ramping up federal procurement of clean energy, including solar.
The intrigue: The Commerce inquiry, initiated by the U.S. manufacturer Auxin Solar, has become a politically delicate problem for the Biden administration.
- The policy announcement shows how it has reached the top levels of the White House.
- Officials are trying to accelerate renewable power deployment to meet the White House goal of 100% of U.S. electricity coming from zero-carbon sources by 2035.
What they’re saying: “We applaud President Biden’s thoughtful approach to addressing the current crisis of the paralyzed solar supply chain,” Abigail Ross Hopper, CEO of the Solar Energy Industries Association, said in a statement.
- “During the two-year tariff suspension window, the U.S. solar industry can return to rapid deployment while the Defense Production Act helps grow American solar manufacturing,” she said.
- Auxin Solar denounced the administration’s steps, saying: “President Biden is significantly interfering in Commerce’s quasi-judicial process. By taking this unprecedented – and potentially illegal – action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law,” the company said in a statement.
Catch up fast: Commerce is investigating imports made via products assembled in Cambodia, Malaysia, Thailand, and Vietnam.
- The Biden administration has come under pressure from solar developers and many lawmakers to quickly end the probe and avoid major new penalties.
- However, several Democrats recently pushed back, urging the White House not to “abandon” trade enforcement.
Oil gains near $120 as Saudi price boost shows demand confidence
Bloomberg News, June 6, 2022
Oil climbed after Saudi Arabia signaled confidence in demand with a bigger-than-expected price increase of its crude for Asia.
West Texas Intermediate traded near $120 a barrel after earlier rising to the highest level in almost three months. Saudi Arabia boosted its official selling prices for Asian customers in July as China — the world’s top crude importer — cautiously emerges from virus lockdowns that have strained its economy.
Oil has rallied almost 60% this year as rebounding demand from economies recovering from the pandemic coincided with a tightening market after Russia’s invasion of Ukraine. The war has fanned inflation, driving up the cost of food to fuels and prompted aggressive monetary tightening from central banks.
OPEC+ last week agreed to accelerate output increases following repeated calls by the US to pump more. The producer group said it would add 648,000 barrels a day for July and August, about 50% more than the increases seen in recent months. However, the group has struggled recently to meet its supply targets, raising doubts about whether it would be able to meet the goal.
“Sentiment should remain decidedly bullish over the summer months,” said Stephen Brennock an analyst at brokerage PVM Oil Associates. “The rebound in oil demand coupled with the backdrop of inadequate supply has the makings for higher oil prices.”
The fuel market has also tightened considerably, just as the peak period for US demand kicks off with the summer driving season. Retail gasoline prices have rallied to a record, while futures in New York hit a fresh high on Monday.
Saudi Aramco raised its key Arab Light crude grade for Asian customers by $2.10 a barrel from June to $6.50 above the benchmark it uses. The market was expecting a boost of $1.50, according to a Bloomberg survey. Aramco also increased its prices for northwest Europe and Mediterranean regions.
Brent remains steeply backwardated, a bullish structure where near-dated contracts are more expensive than later-dated ones. The prompt timespread for the global benchmark was $2.76 a barrel in backwardation, compared with $2.69 on Friday. For WTI, the spread was $2.72.
Alaska Governor Mike Dunleavy concluded a trade mission to Japan Friday.
Jasz Garrett, KINY, June 5, 2022
The Governor met with Japanese companies, utilities, and government ministries about procuring Alaska’s natural gas while also assessing the state’s potential to export various new sources of fuel.
Governor Dunleavy’s meeting comes at a time when Japan is pivoting towards an energy transition that Alaska can supply in the coming decades, including blue and green hydrogen, at a time of great geopolitical instability.
“Alaska and Japan have a trade partnership going back over fifty years to the first LNG export from Nikiski to Japan,” said Governor Dunleavy. “The natural gas of the Cook Inlet literally turned the lights on in cities across Japan and powered the economic engine that lifted that nation’s postwar society into a critically powerful western ally. There appears to be, due to the shift across the world away from older fuel sources, and the simultaneous need for supplies that are not risked due to political instability, a role that Alaska natural gas could play. Alaska can supply Japan with another fifty of natural gas and clean hydrogen for decades to come.”
Governor Dunleavy’s journey came on the heels of the inaugural Alaska Sustainable Energy Conference, which showcased the multifaceted ways the state can produce various sources of fuel for both the state and the world, in an environmentally safe manner. The Governor conducted the trip along with the First Lady, Rose Dunleavy, and members of the Alaska Gasline Development Corporation, marked the Governor’s second foreign trip during his administration; the Governor’s first was also to Japan in 2019, marking the 50th anniversary of the first LNG shipment from Nikiski to Tokyo.
For four days, Governor Dunleavy and the Alaska delegation held meeting with representatives of the Japan Energy Resource Agency (JERA), the Japanese Ministry of Economy, Trade, and Industry (METI), the Japan Oil, Gas and Metals National Corporation (JOGMEC), the Japan Bank for International Cooperation (JBIC), along with Tokyo Gas and TOYO Engineering.
Meetings were also held with the Mitsubishi Corporation, the Chiyoda Corporation, as well as INPEX and O.S.K Lines.
Alaska sustainable energy key for mining
Shane Lasley, June 2, 2022
Green energy transition is creating exponential demand for Alaska’s minerals and low-carbon electricity to power mines
The global transition to low-carbon energy and transportation is both an incredible opportunity and daunting challenge for Alaska’s mining sector. On the one hand, Alaska is incredibly enriched with the minerals and metals required to build electric vehicles, solar panels, wind farms, and other clean energy technologies. On the other, America’s Last Frontier is burdened by a lack of affordable, low-carbon energy options in the remote reaches of the state where many of these critical mineral resources are found.
“There will be exponential demand growth for critical minerals in the coming decades because of the global move toward the global greener energy transition, no one disputes that fact,” Alaska Department of Natural Resources Commissioner Corrie Feige framed a May 26 discussion on mining in a net-zero world during the Alaska Sustainable Energy conference.
“All of this skyrocketing demand comes as the mining industry itself is embracing the energy transition – companies are developing strategies and technologies to meet the growing need while also implementing their own operational efficiencies and strategies to reduce emissions and drive their operations toward their net-zero targets,” she continued.
These strategies include the development of electric mining equipment and other technologies that will only be effective if they can be plugged into low- to zero-carbon power.
Without the reliable year-round sunshine that is available closer to the equator, abundant hydroelectricity such as is found in many parts of Canada, or access to energy grids being fed with greater quantities of zero-carbon energy, mining companies must think outside the box when developing net-zero strategies at current and future Alaska mines that could help the world meet the skyrocketing demand for energy metals.
Alaska is aflush in potential sustainable energy solutions for communities, mines, and other industries across the state. Some of the greatest tidal energy potential in the world; geothermal, massive amounts of natural gas and carbon storage capacity for blue hydrogen, plentiful wind energy, and even solar.
The 49th State is also at the forefront of the development of micronuclear, a safe and zero-carbon energy source that is ideal for replacing the diesel generators that typically power remote villages and rural mines.
These potential sustainable energy solutions could help lower the carbon footprint of Alaska mines that produce the minerals and metals needed in enormous quantities as the world transitions to low-carbon energy.
With billions of dollars available to Alaska through the roughly $1 trillion Bipartisan Infrastructure Law, realizing Alaska’s vast renewable energy potential could become a reality.
“If we can capitalize on some of this infrastructure money to get some of the renewable concepts going, we will be awash in energy,” Alaska Gov. Mike Dunleavy penned in a statement leading up to the inaugural Alaska Sustainable Energy conference. “We will have realized Alaska’s dream of not only being a gas and oil exporter, but we will drop the cost of energy in Alaska dramatically. This will transform the landscape in this state. This will get manufacturers looking at Alaska. This will get more mining possibilities.”
Critical minerals trove
Alaska hosts tremendous potential to be a domestic source of the minerals and metals needed for every aspect of America’s economy. In addition to the more than $3 billion worth of zinc, gold, and other minerals exported each year, the Far North State hosts deposits of the rare earth elements that make EV motors and wind turbines more efficient; graphite, cobalt, and other raw materials for the lithium-ion batteries powering EVs and storing intermittent renewable energy; and the copper needed in large quantities for every aspect of the envisioned green energy future.
“Alaska is actually the treasure trove for critical minerals in the U.S.,” Ray Leonard, CEO of Linden Energy Holdings, a private firm focused on international natural gas projects in Africa, said during a keynote address at the Alaska Sustainable Energy conference. “This is a place where Alaska can punch above its weight.”
Given the massive quantities of minerals being demanded by the clean energy and EV sectors, the world needs jurisdictions with the ability to punch above their weight when it comes to feeding raw materials into the clean energy supply chains to do so.
The International Energy Agency, Wood Mackenzie, and other global energy analysts have cautioned that achieving the climate pledges made by global governments is dependent on the availability of critical minerals essential to realizing those ambitions.
“The energy transition primarily depends on the pace at which sufficient reserves of mined commodities can be developed, extracted and processed into refined products,” WoodMac penned in its “Mission Impossible: supplying the base metals for accelerated decarbonization” report published earlier this year.
This is due to every aspect of low-carbon energy and transportation being much more mineral-intensive than the legacy technologies they are replacing.
Offshore wind, for example, requires nearly 14 times more metals per megawatt of power produced than natural gas and roughly six times more than coal.
And low-carbon energy sources not only must replace the normal electrical needs but will need to be expanded to recharge the millions of EVs being plugged into global grids – adding to what some analysts see as “mission impossible” for ramping up global mines at the pace needed to meet demands powered by global climate goals.
The International Energy Agency estimates that the roughly 16 million vehicles currently traveling international roadways draw roughly 30 terawatt-hours of electricity off global grids per year, which is roughly as much as “all the electricity generated in Ireland.”
With the EV revolution still in its infancy, this draw on electrical grids will grow by orders of magnitude as battery-powered cars, trucks, SUVs, and busses replace more of the 1.4 billion fossil-fueled vehicles currently being driven around the world.
Even in these nascent stages of the transition to low-carbon energy and transportation, however, shortages are already causing skyrocketing prices for the mined materials needed to build the clean energy future.
“Prices of many minerals and metals that are essential for clean energy technologies have recently soared due to a combination of rising demand, disrupted supply chains and concerns around tightening supply,” Tae-Yoon Kim, an energy analyst at International Energy Agency, penned in a May editorial on critical clean energy minerals.
While runaway prices are good for the bottom line of mining companies producing these materials, the lack of supply threatens to slow the progress and raise the price tag of the green energy transition.
“From batteries to solar panels and wind turbines, the rapid cost reduction trends seen over the past decade mostly reversed in 2021, with prices for wind turbines and solar PV (photovoltaic) modules up by 9% and 16% respectively. Prices for lithium-ion batteries are likely to see a major uptick in 2022,” Kim wrote.
The inadequate supplies of mined materials, however, are not limited to battery metals, rare earths, and other critical minerals. The green energy transition is also putting strains on the supplies of base metals such as aluminum, copper, and zinc.
WoodMac estimates that mining companies, financiers, and governments will need to invest roughly US$2 trillion into base metal mines and supply chains over the next 15 years to have a chance of supplying enough of the basic metals to achieve the ambitious climate goals that came out of the COP26 climate change conference in Glasgow, Scotland.
“If this capital is not mobilized in time, then an accelerated energy transition cannot be achieved,” the natural resource analytics firm penned in a summary of its findings.
The rocketing demand and prices of clean energy metals, along with the massive investments needed to meet that demand, provide a once-in-a-century opportunity for Alaska and its mining sector.
“Alaska’s mineral resources are key to national security, and the nation and Alaska’s economy and clean energy transition goals,” Feige said.
Low-carbon energy critical
While skyrocketing demand for the minerals and metals needed to build the clean energy and transportation future is a potential boon for Alaska’s mining sector, a lack of low-carbon energy to extract and process these mined commodities could prevent this opportunity from being realized.
Investors, financiers, manufacturers, and the public at large are increasingly demanding that minerals and metals be produced with the highest environmental, social, and governance standards. One of the big points of emphasis on ESG is the quantity of carbon dioxide emissions pumped into the atmosphere to produce these raw materials.
While lowering CO2 emissions is especially important for mines that produce the long list of minerals and metals needed to build EVs and the low-carbon energy grids, the focus on how much greenhouse gas they emit is becoming an increasingly important factor for the viability of all operations.
Jim Coxon, vice president of North America operations for Northern Star Resources, a gold mining company that owns the Pogo Mine in Alaska, said investors and fund managers ask about CO2 reduction and ESG strategies before they even begin investigating the financial aspects of potential investments into a mining project.
GHG emissions are also weighing on mining companies’ ability to sell the gold they produce, according to Sunil Kumar, vice president of energy strategy and engineering for Kinross Gold Corp., a major gold mining company that owns the Fort Knox Mine in Alaska.
Kumar said one of the refiners that upgrades doré – a gold bar produced at mine sites that typically has some silver and other impurities – to high-purity gold bars has informed Kinross that in the future it will only accept doré from mines that meet certain CO2 emissions criteria.
For mining companies, this means that the availability of reliable, low-cost, and low-GHG-intensity electricity will be a major factor in the economics and investment decisions for new and existing mines.
Moving in lockstep with global government climate initiatives, most of the major mining companies are implementing strategies to reach net-zero GHG emissions by 2050.
This is a tall order for a heavy industrial sector with operations that often use as much electricity as a small city and have traditionally depended on large diesel burning equipment to dig up and transport mineral-rich rocks.
Like society at large, the mining industry is rapidly installing zero-carbon energy sources to power their operations and are developing new technologies such as battery- and hydrogen-powered mining equipment.
The electrification of mining, however, only has minimal GHG emissions benefits if the electric haul trucks and excavation equipment are plugged into CO2 emitting power sources.
Besides Southeast Alaska, which has plentiful hydroelectricity, there is currently no readily available low-carbon energy accessible to mines and residents across most of the 49th State.
Kumar informed attendees of the Alaska Sustainable Energy conference that a quick and decisive strategy for achieving zero-carbon energy goals is important to Kinross and other global mining companies considering investments in current and future mines in The Last Frontier.
“Timing is critical,” he said.
Emerging low-carbon strategy
Understanding the urgency of establishing low-carbon infrastructure in the state, along with an abundance of federal funding to help make this happen, are primary reasons Gov. Dunleavy and his administration hosted the first Alaska Sustainable Energy conference.
“This isn’t about an either, or, this is about an all-in approach on energy sources,” Dunleavy said at the beginning of the three-day event that boasted roughly 90 speakers and nearly 500 attendees.
An emerging low-carbon energy strategy that involves leveraging the state’s abundant natural gas to serve as a bridge to some mix of tidal, hydro, wind, solar, geothermal, hydrogen, and micronuclear energy to power Alaska’s energy needs began to come to light during the event.
“Alaska has got everything we need to lead, not just this country but in many respects the world,” Dunleavy said during opening remarks at ArcticX, a one-day Arctic energy summit hosted by the U.S. Department of Energy that segued to the Alaska Sustainable Energy conference.
The importance of DOE hosting an energy summit in Anchorage and having a presence during the three-day Alaska Sustainable Energy conference that followed cannot be overstated.
First, DOE holds the purse strings to at least $62 billion of federal clean energy funding made available by the Bipartisan Infrastructure Law, and secondly, the national labs under the energy department are developing the technologies with the potential to unlock Alaska’s clean energy potential.
“If Alaska wants to be a leader on carbon sequestration, we can; if we want to be a hydrogen hub, we can be; if we want advanced marine energy, geothermal energy, and be the early site for microreactors, we can; and if we want to bundle smaller projects across the state and apply for funds to build them, that door is now open at the loan program office,” said Sen. Lisa Murkowski, R-Alaska. “So, Alaska is poised in a good place right now – we stand to benefit greatly from the partnerships and collaborations with DOE.”
The successful implementation of a sustainable energy strategy would help lower the CO2 emissions and raise the ESG scores of mines currently operating in Alaska, as well as attract investments needed to realize the state’s vast potential for supplying the enormous quantities of critical, base, and precious metals needed for the global transition to low-carbon energy and transportation.
Bernhardt donates to former Interior colleague in Alaska race
Timothy Cama, E & E News, June 3, 2022
David Bernhardt, the former Interior secretary, said Tara Sweeney would be a “wonderful addition” to Congress.
Former Interior Secretary David Bernhardt has chosen Tara Sweeney, a fellow former Trump administration official in the Interior Department, as his preferred candidate to be Alaska’s next member of Congress.
Bernhardt, now an attorney with the firm Brownstein Hyatt Farber Schreck LLP, contributed $2,000 last month to Sweeney’s campaign, according to a Federal Election Commission filing made public this week.
Sweeney is one of nearly 50 candidates vying to succeed the late Rep. Don Young (R) to be Alaska’s sole member of the House. The all-mail special nonpartisan primary wraps up June 11, with the top four finishers advancing to a general election Aug. 16.
Sweeney was assistant secretary of the Interior for Native American affairs from 2018 to 2021, overlapping largely with Bernhardt’s time as secretary. The position is the top official overseeing the Bureau of Indian Affairs and other matters related to the federal government’s relations with Native American and Alaska Native tribes.
Bernhardt told E&E News that Sweeney, a member of the Iñupiat Community of the Arctic Slope, was a “fantastic” assistant secretary.
“She was a dedicated public servant. She is the only Alaskan Native to ever be confirmed by the U.S. Senate,” Bernhardt wrote in an email. “I believe she would be a wonderful addition to the United States Congress, and a fierce advocate for the interests of the great state of Alaska.”
Other main contenders for the seat include vice presidential candidate and former Gov. Sarah Palin (R), software company executive Nick Begich III (R), Al Gross (I) and former state Sen. John Coghill (R).
Sweeney reported raising $230,000 since the beginning of the special election earlier this year. She trails Begich with $1.2 million, Palin with $600,000 and Gross with $546,000.