Welcome to 2018 and back to the action… ALMOST. Don’t expect we’ll see much going on in this short week, but the Senate does return tomorrow to swear in new members Tina Smith and Doug Jones.
With it being the first week of the New Year, we are rolling out our top 10 Issues for 2018. Issues include Ethanol, trade, taxes, regs, climate, legal challenges, HFCs, Infrastructure, autonomous vehicles, and electricity markets.
One issue that is important but I didn’t mention is rising crude prices. My friends at Platts did touch on that issue with former EIA head Adam Sieminski and others though in their weekly Podcast. These experts see prices ending 2018 as low as $52/b and as high as $70/b, but a number of factors could significantly alter their path, from OPEC compliance to oil demand in Asia to US trade policy. My friends at SAFE are always focused on this issue (you can talk to Leslie Hayward) or Kevin Book at ClearView, has also weighed in on this topic.
Mark your calendar for events starting next week, including API holding its annual State of Energy Address and the NY City Clean Power Plan “hearing” next Tuesday, CSIS hosting former DOE Secretary Moniz on Thursday January 11th, the Detroit Auto Show starting January 14th and BPC hosts FERC’s Neil Chatterjee and Cheryl LaFleur, while CSIS hosts launch of the International Energy Agency’s World Energy Outlook 2017 on Jan 16th. Speaking of the 16th, make sure you note that it is my 50th birthday. Blatantly telling you now because I am accepting presents all month…
Finally, I hope you noticed the super cool super moon last night/this morning. I knew it was out there but I really didn’t get the full impact until I was driving up Massachusetts Avenue this morning and saw it perched over Washington DC. Pretty awesome. Call with questions. Best,
The Top Issues for 2018
- Ethanol and a “deal” – One of the biggest issue last year was the battle over the RFS, RINs and ethanol. The issues reached the highest levels of the White House where they expressed an interest in finding a win-win resolution that solves compliance problems while preserving the biofuels program. This may be one of the early issues to see action this year because it continues to impact volume obligations, confirmations and other items, as well as potential legislative action, which is always a heavy lift.
- Solar, Steel, other Tariff/Trade issues – The President has demanded tariffs and January will be a key moment for this discussion. He faces deadline on steel and solar and continues to hear internal pulls from Economic Advisor Gary Cohn and others who see tariffs as a major concern. On the Solar case, the solar industry and a broad group of opponents that includes retailers, contractors, utilities and conservatives have urged the President to reject tariffs that could harm the entire industry. As well, look for action on the administration’s efforts to rework NAFTA, whose negotiations have dragged into at least the first quarter of this year. Congress also started to look at the NAFTA impacts on energy which is likely to remain a central topic.
- Taxes and more taxes – With the Tax bill passed and in motion, there will be many tax implications in place over 2018. Some will be very political and some will be below the radar, but we are certain that you will hear about it. What you will also hear about as we approach the next budget deadline on January 19th is the potential to have a long-promised tax extenders package that includes incentives for biodiesel blenders, fuel cells, small wind, Geothermal Heat Pumps, distributed wind, CHPs and many other small, but innovative technologies. Senate Finance Chairman Orrin Hatch unveiled a bill containing a smorgasbord of renewable energy credits just before the holidays, and House Chair Kevin Brady has vowed to move this year.
- Slowing regulations in all corners – The White House was most aggressive in 2017 pulling the current regulatory regime back from the previous Administration’s overreach. This effort will remain a key priority in 2018 because it is one place where the Administration remain largely in control of the process. Among the regulations in the crosshairs include the Clean Power Plan, WOTUS, offshore drilling issues, other climate action, ozone restrictions, well construction for natgas wells and a new approach to enforcing bird death restrictions. We have experts on all topics so feel free to reach out.
- Climate ups and downs – While 2017 focused largely on the withdrawal from the voluntary Paris Accord, the Clean Power Plan repeal/replace, what climate websites were changed and other carping about the new Administration not caring enough about climate, 2018 promises to be focused on much of that and more state issues that form new ideas to reduce emissions. While a lot of it will be couched in political clouds, these types of initiatives – along with expanded use of natural gas, and renewables in the regular power mix – will actually reduce our emissions. Already we are beating many of our targets, while Germany and many other Paris signers are struggling to reduce emissions. And don’t think that progress will stop political attacks or legal actions against the Trump Administration or companies.
- Lawsuit Central – Understanding #4 & #5, it seems like more legal battles is a hardy perennial, but in 2018 legal challenges on the climate, regulations will again play a prominent role. Unlike previous years when Republican AGs like now EPA head Scott Pruitt and WV’s Pat Morrisey led the charge, this year Democrat AGs in Blue states – buoyed by environmental activists – will lead efforts to file suits against the Trump Administration. Lawyers will be busy, including those inside EPA who are already prepping for each fight by being very careful in how they write new rules.
- HFC issues and the Kigali Amendment – The Kigali amendment was signed in late 2016 as part of the Montreal Protocol. Its aim is to reduce the hydrofluorocarbons (HFCs) used in air conditioners and refrigerators. Early in 2018, the big news will be whether the administration follows through on statements from late last year where they vowed to fund efforts to implement it and send the amendment to the Senate for a ratification vote. The Treaty is binding and goes into effect in 2019 since many countries already have ratified it. The agreement was supported by both industry, environmental and other sustainability groups, and holds China, India and others to binding limits as global AC and refrigerant use grows globally.
- Infrastructure – The most important word for 2018 is infrastructure. Why? Because it is an election year and infrastructure sells in both parties. The President is expected to unveil a long-awaited statement of infrastructure “principles” soon and some see the push as an opportunity to advance energy and water infrastructure investments. This means pipelines, transmission and other generation assets. While the larger infrastructure debate will take on many shapes, energy will play a significant role in the form of new pipeline approvals to move new natural gas, export terminals to get it our resources to foreign markets and important generation assets like new nuclear projects, renewables and gas plants.
- Emerging Autonomous Vehicle Rules – Last year, autonomous vehicles began to emerge as a new, important issue. As the technology and regulatory discussion continues and becomes more defined, there will be more details, innovations and exciting changes for 2018. Our friends at SAFE have been among the leaders on this issue and have an Autonomous Vehicle Task Force with leading experts to help develop an action plan to facilitate the widespread deployment of this transformative technology.
- Electricity markets and the Perry plan – FERC faces an early January deadline (delayed from last month) to respond to the Energy Department’s request to propose a rule that would compensate nuclear and coal plants for resiliency. As our friends at Axios point out, it is a wonky, complex issue, but it remains a battle over nuclear and coal versus gas and renewables. As natgas prices remain low (as expected for 2018), the market challenges for coal and nukes remain a potential problem. With many political and energy sectors interests on both sides, it will be a key decision for going forward in 2018.
“It’s a good context to revisit things like siting, permitting, certainly some of the export terminal issues.”
Rep. Kevin Cramer talking Infrastructure to POLITICO.
IN THE NEWS
EIA talking Year-end Oil – Last week, the U.S. Energy Information Administration said that after decreasing nearly 20% in the first half of 2017, the spot energy index in the Standard and Poor’s (S&P) Goldman Sachs Commodity Index (GSCI) ended 2017 16% higher than the beginning of the year. Higher crude oil and petroleum product prices in the second half of 2017 were responsible for the increase in the S&P GSCI energy index. EIA also reported that total U.S. production was slightly over 9.75 million barrels per day in the week ending December 22nd. Our friends at Axios point out that this is actually 35,000 barrels per day less than the prior-week average, signaling the first weekly dip since Hurricane Nate took a bunch of Gulf of Mexico production temporarily offline in mid-October.
ON THE SCHEDULE THIS WEEK
Senate Returns, Jones, Smith Sworn in – The Senate returns for the second session of the 115th Congress on Wednesday when they will swear in new Alabama Sen. Doug Jones and Minnesota LG Tina Smith. Smith is replacing Sen. Franken who resigns today and Jones defeated Roy Moore to give Democrats a win to replace AG Jeff Sessions. The House returns next Monday.
IN THE FUTURE
75th Annual Global Globes – Can’t wait for Seth Myers to host this one from January 7th from Hollywood.
API’s Annual State of Energy Address – On January 9th, API holds its annual State of Energy Address in the Atrium Ballroom of the Ronald Reagan Building and International Trade Center. The luncheon starts at 12:00 Noon with a CEO Jack Gerard’s speech at 12:30 p.m. and a reporter briefing at 1:15 p.m.
NY to Host CPP Meeting for EPA Comments – On January 9th, New York AG Eric Schneiderman holds a meeting to provide public comments to EPA on repealing the Clean Power Plan at The New School in NYC. Schneiderman is calling it a “people’s hearing” 1) as if the residents and miners of WV are not people and 2) certainly most New Yorkers are just regular folks Like everyone else. My guess it will be very entertaining but not all that valuable to EPA.
Wilson Forum to Look at Taiwan Energy Issues – The Woodrow Wilson Center holds a discussion on next Tuesday at 10:00 a.m. looking at the political and social, as well as economic ramifications of the options Taipei has to meet its expansive energy needs, and how its decisions may impact Taiwan’s foreign policy.
Hopper, Honorable to Headline WCEE Event – The Women’s Council on Energy and the Environment (WCEE) will hold a reception at Dentons on Tuesday January 9th at 6:00 p.m. to discuss lessons learned from political appointees. The event features a lively discussion about the political appointment process in the energy and environmental fields and will feature a panel of former state and federal political appointees about how they started down the path towards political appointment and navigated the process. Panelists will share their experiences and candid views about the challenges and rewards of a political appointment, as well as lessons they have learned while in these highly visible roles. Speakers include SEIA’s Abby Hopper, former director of Interior’s Bureau of Ocean Energy Management; former FERC Commissioner Collette Honorable and Connecticut Consumer Counsel Elin Katz, who is President of the National Association of State Utility Advocates.
WRI Outlines Stories to Watch – On Wednesday, January 10th at 9:00 a.m., the World Resources Institute hosts in 15th annual Stories to Watch event. The event is for policymakers, business leaders and media in Washington, DC, and around the world. Dr. Andrew Steer, WRI President & CEO, will share his insights on the big stories in the environment and international development in the coming year. In this turbulent time, he will explore global trends and emerging issues related to economics, climate change, energy markets, forests, water, security issues and more.
CSIS to Host Moniz – On Thursday, January 11th at 4:00 p.m., CSIS holds a discussion with Ernest J. Moniz, the co-chair and CEO of NTI and former U.S. Secretary of Energy. He will provide remarks on the role of nuclear weapons in today’s increasingly dangerous global security environment, which will be followed by a discussion with John Hamre, president and CEO of CSIS.
Detroit Auto Show Launches – The North American International Auto Show runs from January 13th to 28th and serves as the global stage for companies to debut brand-defining vehicles and industry-shaping announcements. Press Days start on January 14th where the world’s automotive and mobility leaders gather for three days of worldwide product and technology debuts. Last January, the 2017 NAIAS featured 71 vehicle introductions, including 46 worldwide debuts. News coming out of NAIAS is heard across the globe as more than 5,100 journalists from 61 different countries annually attend to cover the latest and greatest happenings our industry has to offer.
BPC to Host LaFleur, Chatterjee – On Tuesday, January 16th at 10:00 a.m., the Bipartisan Policy Center hosts FERC Commissioners Neil Chatterjee and Cheryl LaFleur to discuss the proposed Grid Resiliency Pricing Rule. This proposal, drafted by the Department of Energy, calls for an expedited rulemaking to support generators that provide specific reliability and resiliency attributes. FERC is expected to take action on the proposal by January 10.
World Energy Outlook Set For Launch – On January 16th at 1:30 p.m., the CSIS Energy & National Security Program will host a forum and the U.S. launch of the International Energy Agency’s World Energy Outlook 2017. Fatih Birol, Executive Director of the IEA, will present the findings from the report.
WCEE to Look at 2018 Agenda – The Women’s Council on Energy and the Environment (WCEE) holds its 6th Annual WCEE Lunch & Learn Brainstorming Event on Tuesday January 23rd at Noon kicking off its Lunch & Learn planning, as well as deciding what topics to cover in 2018.
CSIS to Host Canada Energy Discussion – The CSIS Energy and National Security Program will host a presentation on January 23rd at 9:30 a.m. featuring the National Energy Board’s (NEB) Canada’s Energy Future 2017: Energy Supply and Demand Projections to 2040. This report, part of NEB’s annual Energy Future series, features long-term projections of Canadian energy supply and demand. The 2017 edition examines how recent energy developments, especially in climate policy, have affected Canada’s energy outlook. The study also includes additional scenarios focusing on long-term climate policy and technology trends. Similar in structure to the U.S. Energy Information Administration’s Annual Energy Outlook, the report is the only public, long-term Canadian energy outlook that includes all energy commodities in all provinces and territories.
Pruitt, Snyder, Others Headline Washington Auto Show – The Washington Auto Show launches on January 23rd and runs through February 4th. The Washington Auto Show is the Public Policy Show, where the auto industry intersects with the government officials who write and enforce the laws and rules that affect the field. This coming year, one of the focuses of the show will be on connected and autonomous vehicle technology, and the ways pending legislation could impact its development. Major speakers include EPA Administrator Scott Pruitt, Sen. Gary Peters, Michigan Gov. Rick Snyder, and many others, including representatives from the U.K., South Korea, Japan, China, and the U.A.E. Press Day is January 25th and will feature a sneak peek of the more than 600 cars on the floor of the consumer show.
Pruitt to Head to Senate Environment – The Senate Environment and Public Works Committee said EPA Administrator Scott Pruitt will appear before the Committee on Jan. 31st making his first return to the panel nearly a year after his confirmation.
National Ethanol Conference Set – The Renewable Fuels Association holds its 23rd annual National Ethanol Conference on February 12-14 in San Antonio. Former Presidential Advisor Mary Matalin and veteran Democratic Political Strategist Donna Brazile are scheduled to speak together at the event on Washington Politics.