October 16, 2021

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House and Senate Democrats face differences on clean energy tax subsidies

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DIFFERENCES BETWEEN HOUSE AND SENATE: The House Ways and Means Committee advanced its sweeping green energy tax plan yesterday as part of what Democrats called the single most important piece of climate legislation Congress has had the chance of passing.

But stakeholders are bracing for a “long path to enactment,” as Abigail Ross Hopper, CEO of the Solar Energy Industries Association, noted in one of a hail of statements supporting the package.

That’s because the House and Senate still need to work out, or reconcile, their differences, which are pretty vast when it comes to doling out clean energy tax subsidies.

Ron Wyden, chairman of the Senate Finance Committee, reiterated yesterday he plans to proceed with an overhaul of the energy tax code that would replace 44 energy tax breaks and incentives with three emissions-based incentives: clean power, clean fuels, and energy efficiency. These technology-neutral incentives wouldn’t favor a particular technology so long as it reduces carbon emissions. Technologies prompting greater reductions would receive a higher credit.

House on a different track: The Ways and Means Committee, however, has a more straightforward approach, extending renewable energy tax credits already on the books and expanding them to new technologies, while offering a direct-pay option for several tax breaks and providing higher payments to projects that are made in America by union workers.

Their proposal does not tie the credits to actual emissions reductions and it keeps in place tax breaks for the fossil fuel industry that Wyden is determined to nix.

Wyden, speaking at a digital happy hour hosted by Evergreen Action yesterday, described the 44 tax breaks that currently exist for energy as a “monument of doing business as usual,” taking specific aim at “fossil fuel relics.”

“It’s time to say no more special breaks for the fossil fuel industry,” Wyden said. “That is in line with what President Biden said during the campaign.”

Wyden tried to minimize differences, adding the House “is moving in our direction on these issues.”

But he also continued to stress his committee’s interest in including carbon pricing in its bill, which would represent a meaningful addition that House Democrats are keen to avoid.

“If you are going to change behavior that really drives our problem that underly climate change, you need to change prices, you need to change taxes,” Wyden said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

WHAT’S IN HOUSE DEMOCRATS’ RECONCILIATION PACKAGE: Now that committees have finished their markups, the Washington Examiner’s Zachary Halachek has a handy roundup of some of the spending and tax measures that have made it through so far.

*Climate/environment/energy:

  • Provides $150 billion for the Clean Electricity Performance Program. The program requires electric providers to increase the percentage of clean energy given to customers by 4% year over year. Providers will be given grants if they meet the goal and fined if they fall short.

  • $13.5 billion in spending on electric vehicle charging infrastructure.

  • $5 billion to replace some heavy-duty vehicles, such as school buses and trash trucks, with zero-emission vehicles.

  • $9 billion toward transmission improvements to the electric grid.

  • $17.5 billion to help decarbonize federal fleets and buildings.

  • $18 billion toward home energy efficiency and appliance rebates to reduce energy usage.

  • $27.5 billion to local, state, and nonprofit climate institutions that support developing low-emission and zero-emission technology. At least 40% is planned for investments in disadvantaged communities.

  • $30 billion to remove and replace lead service lines.

  • $10 billion for Superfund site cleanup.

*Transportation:

  • Provides $10 billion in funding to support the planning and development of public high-speed rail projects.

  • $1 billion for investment in projects using low-emission aviation technology or produce, transport, or blend sustainable aviation fuel.

  • $1 billion for climate-resilient infrastructure construction and improvements for the Coast Guard, $788 million for a new polar security cutter, and $350 million for a new icebreaker for the Great Lakes.

  • The Maritime Administration would receive $2.5 billion for grants to support supply chain resilience, reduce port congestion, and develop offshore wind infrastructure.

DEMOCRATS TO PROBE FOSSIL FUEL INDUSTRY ‘DISINFORMATION’: House Oversight Committee Democrats this morning called on top executives of oil and gas companies and lobby groups to testify on the role of the industry in “spreading disinformation” about the role of fossil fuels in causing global warming.

“We are deeply concerned that the fossil fuel industry has reaped massive profits for decades while contributing to climate change that is devastating American communities, costing taxpayers billions of dollars, and ravaging the natural world,” Reps. Carolyn Maloney, the committee’s chairman, and Ro Khanna, who leads the panel’s Subcommittee on the Environment, wrote in letters to ExxonMobil, Chevron, BP, and Shell, as well as the lobby groups American Petroleum Institute and the Chamber of Commerce.

The committee’s Democrats ask the companies and groups to provide documents and communications by September 30 related to their organization’s role in “supporting disinformation and misleading the public to prevent action on the climate crisis.”

They also requested the fossil fuel executives to testify at a committee hearing on October 28.

Will the recipients agree? API suggested it would make its CEO Mike Sommers available to the committee.

“API welcomes the opportunity to testify again before the House Oversight Committee and advance our priorities of pricing carbon, regulating methane and reliably producing American energy,” Bethany Aronhalt, a spokesperson for the group, told me.

US-EU METHANE PLEDGE: The Biden administration and European Union officials reached a deal to reduce methane emissions at least 30% by the decade’s end and are looking to secure commitments from other nations to make cutting the potent greenhouse gas into a global effort, the Washington Examiner’s Jeremy Beaman reports.

Officials from the EU and the U.S. agreed to the “Global Methane Pledge” and will likely pitch it to others during the Major Economies Forum on Energy and Climate tomorrow, a virtual meeting with world leaders, before introducing the initiative at the United Nations’s climate change conference in November.

A senior administration official told reporters the meeting, which won’t be broadcast, is intended to present an opportunity for world leaders to engage in a “candid conversation on what needs to happen” to build momentum for strengthening emissions reductions ahead of the U.N. COP26.

The methane pledge is a start: Nations that U.S. and EU officials want to target for expanding the pledge reportedly include China, the world’s No. 1 greenhouse gas emitter, as well as top-ranking emitters Russia and India. Oil-producing Saudi Arabia and Qatar, along with Norway, Brazil, and New Zealand, are also on the list of nations to be targeted with the methane pledge, Reuters reported.

The U.S.-EU’s 30% target is not as ambitious as it could be, according to Arvind Ravikumar, a professor in the petroleum engineering department at the University of Texas.

“Over the past five years, our understanding of methane emissions, and technology to address emissions, have significantly improved. And I think there’s no reason why countries cannot be more ambitious than a 30% reduction in emissions,” Ravikumar told Jeremy, pointing to the Obama administration’s goal of cutting methane emissions by 40 to 45% from 2012 levels by 2025.

ANDREW WHEELER JOINS TRUMP-ALIGNED POLICY GROUP: Former EPA administrator Andrew Wheeler has joined the America First Policy Institute as chairman of its Center for the Environment, Jeremy also reports.

Wheeler, who headed the EPA from late July 2018 through the end of Trump’s administration and joins a bevy of former Trump administration alumni at AFPI, said he plans to use the post to promote environmental conservation and energy independence while challenging Democrats’ aggressive policies aimed at climate change mitigation.

“It’s the policy that counts, and it’s the policies that we’re focusing on, and we want to make sure that we’re putting in for the best policy ideas that will help, in this case, solve the environmental problems that we do have,” Wheeler told Jeremy. “But we need to solve them without hurting jobs.”

Wheeler said he didn’t discount altogether the Biden administration’s preoccupation with carbon emissions but contrasted it with the Trump administration’s deregulatory approach, saying Biden’s proposed climate policies will boost the price of energy for consumers.

“They are looking at things totally under one lens, and that is climate change. We looked at it through multiple lenses, including greenhouse gases,” he said.

VOTE OF CONFIDENCE IN MASSIVE PLANNED NEVADA LITHIUM MINE: International mining giant Sibanye Stillwater is investing $490 million to help bring ioneer’s planned lithium mine in Nevada to production.

Under the terms of the agreement announced last night, South African-based Sibanye is buying half of Australia-based ioneer’s Rhyolite Ridge mine, in one of the largest deals ever to advance the electric vehicle battery materials supply chain.

“Rhyolite Ridge is a world-class lithium project and we recognize its strategic value, with the potential to become the largest lithium mine in the U.S.,” said Sibanye Chief Executive Neal Froneman.

Ioneer will remain the operator of the project, which would tap into the reserves in Nevada’s Rhyolite Ridge, located about halfway between Las Vegas and Reno. The region has one-of-a-kind mineralogy that ioneer hopes to take advantage of to produce lithium at some of the world’s lowest costs.

Both companies said they will now work to secure debt financing to fund the rest of the project. Ioneer expects to have the necessary financing, as well as permit approval, by the second half of next year.

Why it matters: A plentiful supply of critical minerals such as lithium, cobalt, and rare earth elements will be vital to Biden’s aggressive climate plans to massively boost renewable energy deployment and EV adoption. The U.S., however, has little domestic supply of critical minerals, with much of the world’s production and processing dominated by China.

VINEYARD WIND GETS FINANCING TO START CONSTRUCTION: Vineyard Wind announced yesterday it has closed on a $2.3 billion loan from nine international and U.S.-based banks, enabling construction to begin as soon as this week on the nation’s first large-scale offshore wind project.

The financing enables suppliers to start hiring, training, and mobilizing people to begin work. Onshore construction will begin this fall, with offshore work starting in 2022. The first power from Vineyard Wind will be delivered to the grid in 2023.

“Achieving financial close is the most important of all milestones because today we finally move from talking about offshore wind to delivering offshore wind at scale in the U.S.,” said Vineyard Wind CEO Lars Pedersen.

The Biden administration approved Vineyard Wind in May, touting as a move that could help jumpstart an industry that thus far has been stagnant in the U.S.

It’s a first step toward meeting a goal Biden set in March for the U.S. to deploy 30 gigawatts of offshore wind power by 2030. Currently, the U.S. only has two small-scale pilot offshore wind projects in operation, one off the coast of Rhode Island and the other off the coast of Virginia, totaling about 42 megawatts of power.

GRANHOLM CHEERS ILLINOIS NUCLEAR SUBSIDIES: Energy Secretary Jennifer Granholm is gung-ho about Illinois saving its at-risk nuclear plants after Gov. J.B. Prtizker signed legislation yesterday providing nearly $700 million in subsidies as part of a massive clean energy package.

“Preserving our existing fleet of nuclear reactors is essential to reaching our nation’s climate goals,” Granholm tweeted, adding Illinois’ legislation would protect “thousands of good-paying jobs all while showing just what bold state-level action can do to usher in the clean energy future.”

The action in Illinois comes as the Biden administration and Congress are interested in pursuing a federal program giving nuclear plants tax credits or other subsidies to keep America’s largest zero-carbon resource viable.

The bipartisan Senate infrastructure bill creates a $6 billion four-year credit program for nuclear reactors that would provide a big boost to existing nuclear reactors, potentially including others in Illinois.

Democrats are also looking to provide production tax credits for struggling nuclear plants as part of their infrastructure and social spending package.

The Rundown

Axios UN climate summit warning signs are adding up

Reuters UN says world likely to miss climate targets despite COVID pause in emissions

Associated Press Los Angeles County votes to phase out oil and gas drilling

Chicago Tribune EV truck startup Rivian launches production in Normal

Bloomberg Chevron CEO warns of high energy prices and supply crunches

Calendar

THURSDAY | SEP. 16

Congress is out in observance of Yom Kippur.

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel

Original Location: Daily on Energy: House and Senate Democrats face differences on clean energy tax subsidies

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