Energy Update: Week of December 16

Friends,

This weekend was one of my most favorite moments in sports every year: Army-Navy for the 120^th time.  I live in the Annapolis area so I obviously like our hometown guys/gals at USNA, but no matter what side you are on, there is nothing in sports like both the game (which Navy won this year for the first time in three years, 31-7) but more importantly, the post-game celebrations and singing of the each’s alma mater. 

Congress is down to the wire this week with major action on budget, tax and defense issues all in play. Oh right, and that other thing…  NDAA heads to votes perhaps as soon as tomorrow.  It also sounds like appropriators have the four corners of a budget deal for the year, but the tax extenders still seem to be slowing the action down.  It is supposed to be Pens down today so the bills can be ready for action by Friday. 

My colleague Liam Donovan (202-828-5847, liam.donovan@bracewell.com) is all over the tax side and can give you the latest which seems to change by the minute.  Also, if you haven’t seen it, there is a great op-ed in BloombergLaw Insight today from Delek Refining CEO Uzi Yemin and Advanced Biofuels CEO Mike McAdams urging Congress to renew the Biodiesel Tax Credit before the industry potentially implodes after two-years of waiting for the tax credit to be reinstated.

Not a lot of hearing action this week, but Thursday, Senate Energy digs into California wildfires and grid resilience (or more plainly PG&E’s forced blackouts) with its CEO Bill Johnson in the chair, along with several other experts.  Later in the afternoon at House Oversight, the environment panel digs back into climate and economic impacts. 

Over in Madrid, the longest-ever U.N. climate conference (although I would challenge that after The Hague in 2000 which never really ended and was suspended until June 2001) came to a close this weekend without reaching agreement on several uncompleted rules for the Paris climate agreement that deal with carbon markets and trading emissions credits.  Yes, because this is hard and nations really don’t want to put themselves at economic risk.  And I don’t buy that Brazil, Australia, Saudi Arabia and other difficult nations are being difficult because of President Trump.  He is an easy villain and all of these nations have been pushing back against UN group think for years.   A lot more below…

Other events include tomorrow Alliance to Save Energy, ACEEE and Business Council for Sustainable Energy releasing the first-of-its-kind Energy Efficiency Impact Report tomorrow at 9:00 a.m.  Also, Protestor-in-chief Jane Fonda speaks to National Press Club Headliner luncheon at 12:30 p.m.  The Information Technology and Innovation Foundation (ITIF) holds a briefing on Wednesday at 10:00 a.m. to discuss a new report about using tax incentives to drive clean energy innovation with an expert panel discussion featuring our friend Jeremy Harrell of ClearPath.

Finally, keep your eyes open for a major new analysis – and a likely media call – from the U.S. Chamber’s Global Energy Institute on Thursday that will look at the impacts of fracking bans proposed by some Presidential candidates. 

That’s all for today, call with questions.  Final Star Wars movie at midnight Friday!

Best,

Frank Maisano

(202) 828-5864

C. (202) 997-5932

FRANKLY SPOKEN

“The failure of governments to reach agreement on key issues, including Article 6, at COP 25 makes the work of the private sector and sub-national actors even more essential. Our members are committed to action through a range of measures, including science-based targets, supply chain engagement to reduce emissions and investments in community resilience.”

BCSE President Lisa Jacobson on the outcomes of COP25.

ON THE PODCAST

POLITICO ENERGY Podcast Looks at COP 25 Miss – The latest episode of the POLITICO Energy podcast looks at the UN climate summit on global policy on climate change. POLITICO's Zack Colman says it resurfaced bad blood among parties of the Paris Climate Agreement. Plus, Gavin Bade explains how FERC could stop the climate agenda of many progressive Democratic presidential hopefuls. And, a special analysis of the Democratic candidates' views on nuclear power with Eric Wolff.  Negotiators met at the COP 25 summit in Madrid to iron out global policy that was pending since the Paris Climate Agreement was signed in 2015. Now, more than two weeks later, they return home with little to show. Also, all the Democratic presidential candidates talk about their climate policy proposals, but few have talked about the federal commission that could stop many of their efforts. And, ahead of Thursday's presidential debate, Wolff analyzes the candidates' positions on nuclear power.

FUN OPINIONS

Refiner, Biofuel Execs Push Together for BTC Renewal – There are strange bedfellows arguing for renewal of the Biodiesel in a new op-ed in Bloomberg Insight where Delek Refining CEO Uzi Yemin and Advanced Biofuels Association head Michael McAdams say the tax extender is essential to increase biodiesel capacity, farm revenues and jobs. “While the severe economic challenges are clear, it is also extremely timely as Congress looks to approve a package of tax extenders. It’s easy to get lost in a hodgepodge of more than two dozen temporary tax provisions, but from a practical standpoint, the BTC is the most widely-supported, beneficial, and passable because of its broad support and significant impact.” The stakes are high, both financially and politically. There comes a time when not even Congress can ignore its own deadlines. Two years past the drop-dead date is about the limit. That’s where the plausible pretense that Congress accidentally missed a deadline is no longer tenable.  There is a consensus to act. Congress must seize the opportunity and give farmers, biodiesel producers and rural America the relief they need.

FROG BLOG

Economic Think Tank Tackles EU Green New Deal – The American Institute for Economic Research released a blog on the European Union’s Green New Deal, which they hope to be a net-zero carbon emitter by 2050.  AIER says the EU is radically overhauling its economy in an attempt to combat climate change. Europe’s Green Deal appears slightly more modest than the proposed Green New Deal in the United States, but cost estimates still run as high as $13 trillion by 2050, when the EU aims to be a net-zero carbon emitter, the flagship goal of the proposal. Opinions vary wildly about whether the EU should take such radical steps toward carbon neutrality. But economists across the ideological spectrum should pay rapt attention to what will be the most significant test case of economic planning since the end of the Cold War.  The obstacles are be staggering, perhaps even insurmountable, for one large nation-state according to AIER. But Europe itself is the largest and most comprehensive experiment in supranational governance in history. Brexit voters, German savers, and Greek spenders are merely a few of the groups that have not been impressed by the results. In fact, were you an elected official in one of the 28 national governments you would have an undeniable incentive to push back on Brussels in terms of bearing as little of the cost as possible. Early roadblocks created by coal-heavy Poland could be just the beginning.

IN THE NEWS

Tax Update – My colleague Liam Donovan is following the tax discussions moment-by-moment and is constantly updating.  After a wild weekend in which we heard every rumor under the sun, Liam says things finally seemed to be settling down yesterday evening, as the consensus in and off the Hill had come around to the likelihood of a straight "date change" extension of extenders through 2020. This would mean three years' worth of the affected provisions, and harmonization of 2017 and 2019 extenders, with no substantive changes or anomalies, and no broadening or narrowing of existing incentives. Once the principals entered talks to walk through the broader deal, however, something changed. Ultimately they adjourned for the night with no deal, and a plan to pick up negotiations again this morning. As of this writing, there is still no final agreement on tax.

What we know:

• Appropriations nearly done. Legislative text is expected around noon--they have to release the package soon in order to move it through the Rules committee this evening, a necessary step in order to meet the 12/20 shutdown deadline.
• ACA levies reportedly repealed. Multiple outlets are reporting that the deal will include significant changes in the health care space, including permanent repeal of long-delayed Obamacare pay-fors, including the HIT, the Cadillac Tax, and the medical device tax.
• False Start on Extenders. As far as what happened to the rumored tax deal mentioned above, we are told that, in some sequence, the White House wanted technical corrections while Democrats wanted green energy concessions. Neither was ready to make the trade.
• Noon text unlikely to include tax. As negotiations continue, the initial release is reported not to include tax policy items. Once resolved, these would presumably be added this evening during the House Rules markup.

While nothing is baked until we see bill text, Liam’s base case on tax policy would be defaulting to the original extenders deal through 2020, with the caveat that things can unravel at any moment. The White House has been dug in against the Dems’ coveted green energy provisions, and Democrats for their part wanted to extract significant concessions in order to deal with technical corrections, the most valuable political chip they have in the tax arena. As to what, if anything, Democrats may have won on the other priorities they have been holding out for (EITC/CTC, LIHTC, storage), it remains to be seen.

COP Ends Without Progress – The longest-ever U.N. climate conference (although I would challenge that after The Hague in 2000 which never really ended and was suspended until June 2001) came to a close this weekend without reaching agreement on several uncompleted rules for the Paris climate agreement that deal with carbon markets and trading emissions credits.  Yes, because this is hard and nations really don’t want to put themselves at economic risk.  And I don’t buy that Brazil, Australia, Saudi Arabia and other difficult nations are being difficult because of President Trump.  That is an easy villain and all of these nations have been pushing back against UN group think for years.  So what really happened?  Lots of good reports starting with our friend Zack Colman and his colleagues at POLITICO.  The negotiators could not agree on rules for dealing with carbon markets and trading emissions credits — something that was supposed to be a main aim of the summit.  As always, pushed by EU’s New “Green Deal,” delegates agreed on language calling for countries to boost their climate pledges under for next year (of course they did). Zack says the final outcome was a trade-off where rich countries accepted language to review their commitments up to 2020, and emerging economies softened their resistance to more ambitious calls for higher climate goals.  Or as someone who has been to many of these Might say, “just like always.”

Still a lot of Problems – COP 25 did not bridge substantial divides elsewhere, and negotiators punted on finalizing carbon market rules and who should bear the greatest burden for cutting greenhouse gases — all of which came in the absence of U.S. leadership, according to POLITICO.  Not surprisingly, China, India Australia, Saudi Arabia and Brazil created plenty roadblocks to delay making new climate commitments while softening language urging countries to pursue more ambitious cuts.

The Big Deal? – The final deal was not so big at all. The final agreement endorsed an approach that requires only 13 countries, representing 0.25% of global emissions, to raise their targets next year. The only 13 countries that set increased 2025 targets in their pledge to the Paris Agreement account for around one quarter of one percent of global emissions. They are: Ecuador, Congo, Gabon, El Salvador, Suriname, Guyana, Belize, Micronesia, Saint Vincent and the Grenadines, Samoa, Niue, Palau, and Tuvalu.

Next Up, Scotland – While the negotiations fell way short in Madrid, next round of climate talks will move to Glasgow, Scotland, in November 2020.  With so little agreed at this year’s conference, the stakes will now be even higher for the Glasgow talks. COP26 will now have the challenge of finding a resolution to the carbon markets and common timeframes at the same time as galvanizing countries to submit upgraded climate pledges due next year.

HFCs, Sponsors – The Kennedy-Carper legislation introduced last month authorize a 15-year phasedown of hydrofluorocarbons, or HFCs has added a significant number of new bipartisan cosponsors.  There are now 32 cosponsors after adding Dems Joe Manchin (WV) and Doug Jones of Alabama and Republicans David Perdue (GA) and Jerry Moran (KS). The American Innovation and Manufacturing (AIM) Act, a bill that would authorize a 15-year phasedown of hydrofluorocarbons, or HFCs - potent greenhouse gases that are used primarily as coolants in refrigerators and air conditioning systems. The legislation will give companies certainty to make the investments necessary to lead the world in the production of next-generation coolants.  This bipartisan legislation was crafted with input from the manufacturing industry and environmental groups to give businesses a clear timeline for transitioning to new innovations in refrigerants.

Global CCS Report Rolled Out in Madrid – The Global CCS Institute rolled out its 2019 Global Status of CCS report in Madrid.  The report – which says there are now 51 large-scale carbon capture facilities around the world – documents important milestones for CCS over the past 12 months, its status across the world and the key opportunities and benefits the technology presents.  The report provides detailed information on, and analyses of, the global CCS facility pipeline, policy, CO2 storage and the legal and regulatory environment. In addition, four regional updates and a CCS Technology section further demonstrate global development and the versatility of CCS across a variety of applications and industry sectors.

IER: China Getting NatGas from Russia – A 1,800-mile, $55 billion pipeline is delivering Russian natural gas to China according to an analysis from IER. The project is a feat of energy infrastructure and political engineering. The pipeline deal was signed in May 2014 by President Putin of Russia and President Xi of China, for a 30-year, $400 billion gas supply. Under the agreement, Russia will supply about 1.4 trillion cubic feet of natural gas a year to China—about equal to the annual gas consumption of the state of Pennsylvania. The agreement benefits both Russia, which has the world’s largest proven natural gas reserves, and China, which needs the gas to continue to grow its economy with less pollution than coal. Russia has 20 percent of the world’s natural gas reserves and produces 17.3 percent of the world’s natural gas.

ON THE SCHEDULE THIS WEEK

Brookings to Host Climate Forum – Today at 1:30 p.m., the Center for East Asia Policy Studies at Brookings will host experts to discuss climate change and security threats. The panelists will review the climate emergency, delve into its implications for regional governance and security dynamics, and examine mitigation strategies.  This conference is part of the Asia Transnational Threats Forum, an interdisciplinary forum launched by the Brookings Institution Korea Chair to harness the collective expertise of U.S. and foreign partners to tackle key strategic issues affecting all of Asia. Previous discussions were on cybersecurity in Asia in June 2018 and counterterrorism in Asia in December 2018.

WCEE Happy Hour – The Women's Council on Energy & the Environment (WCEE) holds its December 2019 Happy Hour at Kafe Leopold on tonight at 5:30 p.m.

Groups Launch EE Impact Report – The Alliance to Save Energy, along with partners American Council for an Energy-Efficient Economy and Business Council for Sustainable Energy, will release the first-of-its-kind Energy Efficiency Impact Report tomorrow at 9:00 a.m. The report will show the sweeping impacts of energy efficiency investments, policies, and innovation and how EE has transformed our energy use. The Energy Efficiency Impact Report will be your go-to resource for everything EE.  Report authors will discuss highlights from the new report, which covers a variety of sectors including utilities, buildings, industry, and transportation, and explores the impacts of policy and other market tools to further incentivize energy efficiency.

RFF Forum to Look at Healthy Soils – Resources for the Future (RFF) and Cornell University’s Atkinson Center for Sustainability holds a forum tomorrow at 9:30 a.m. to explore the important role of soil health in finding climate solutions.  The event will open with a short primer on soil health, including an overview of the current health of US soils, what healthier soils might look like in future, and how research suggests we can foster such improvements. A panel of experts will share perspectives from various sectors—government, industry, and the conservation community—on how practices, technologies, and policies related to soil health are evolving.

Senate Enviro Vote on NRC IG Nominee – The Senate Environment Committee will hold a Business Meeting to consider Robert J. Feitel to be Inspector General of the Nuclear Regulatory Commission

Senate Energy to Host Surface Mining Nominee – The Senate Energy Committee holds a nomination hearing tomorrow at 10:00 a.m. to consider the nomination of Lanny Erdos to be Director of the Office of Surface Mining Reclamation and Enforcement at the Department of the Interior.

Jane Fonda to Address NPC – Tomorrow at 12:30 p.m., the National Press Club hosts actor and activist Jane Fonda at an NPC Headliners luncheon on her movement to push for political action on climate change.  Inspired by young climate activist Greta Thunberg, Fonda has held a “Fire Drill Friday” climate change protest on Capitol Hill every Friday since October 11, 2019. On Thursday nights, before each protest, Fonda hosts a “teach-in” with a panel of experts.

AAAS to Host Climate, Faith Speakers – The American Association for the Advancement of Science Dialogue on Science, Ethics, and Religion will host a forum tomorrow evening with Dr. Katharine Hayhoe, and Bishop Katharine Jefferts Schori for a discussion on climate change, environmental stewardship, and ways faith communities and scientists are working together to address one of today’s most pressing issues.  Hayhoe and Jefferts-Schori, as scientists and leaders in their faith communities, help build trust and enhance communication between the scientific and religious communities. They connect forefront science with a passion for world service in ways that resonate with both groups, fostering dialogue about shaping effective practices for environmental stewardship.

AAAS Also Looks at Climate Responses – AAAS’s Center for Public Engagement with Science & Technology will also host a coffee and moderated conversation the next day (Wednesday) with Hayhoe, Dr. Katy Hinman (AAAS DoSER: Dialogue on Science, Ethics and Religion), Daniel Barry (AAAS Local Science Engagement Network) and Emily Therese Cloyd (AAAS Center for Public Engagement with Science and Technology). The event will focus on ways of responding to questions about how to take individual and community-level action on climate change. The event will include a short film from the How We Respond project.

Forum to Look at Tax Incentive for Clean Energy Innovation – The Information Technology and Innovation Foundation (ITIF) holds a briefing on Wednesday at 10:00 a.m. to discuss a new report about using tax incentives to drive clean energy innovation and an expert panel discussion of key issues and congressional activity on the issue. Speakers include our friend Jeremy Harrell of ClearPath.

Cato Book Event Looks at Science – The Cato Institute holds a book discussion Wednesday at 3:00 p.m. on the tangled web of public science and public policy, exploring how science has gone wrong with examples from nutrition, radiation, climate and other branches of research.

Senate Energy to Look Wildfire Risk, Grid Reliability – The Senate Energy Committee holds a hearing Thursday at 9:30 a.m. to examine the impacts of wildfire on electric grid reliability and efforts to mitigate wildfire risk and increase grid resiliency.

FERC Public Meeting – The Federal Energy Regulatory Commission will convene an open-to-the-public meeting. The agenda may be found here.

Atlantic Forum to Look at NDAA, Pipelines – The Atlantic Council hosts a public discussion on Thursday at 2:00 p.m. looking at the impacts of the 2020 National Defense Authorization Act (NDAA) sanctions legislation. The panelists will debate the effects of possible US sanctions on the Nord Stream 2 and TurkStream pipelines, the leeway the Trump Administration has in implementing the sanctions, and the likelihood of the bill passing with the sanctions language included.  The 2020 NDAA includes sanctions against companies involved in building the nearly-finished Russian natural gas pipelines to Europe: Nord Stream 2 and TurkStream.

House Oversight Addresses Climate – The House Oversight's Subcommittee on Environment will hold a hearing Thursday on the current economic effects of climate change and the costs of inaction.

Star Wars – December 20^th FRIDAY

IN THE FUTURE

Hanukkah – In 2019, Hanukkah begins at sundown on Sunday, December 22^nd and lasts until sundown on Monday, December 30^th.

Christmas – December 25^th

API Sets State of American Energy – API hosts its annual State of Energy on Tuesday January 7^th. 

State of American Business Event Set – The U.S. Chamber of Commerce holds the 21^st annual State of American Business event on Thursday January 9, 2020 at 10:00 a.m., where they will explore the most important trends, opportunities, and challenges facing the business community in the coming year - and beyond.