Energy

Calming European energy nerves


With help from Jordan Wolman, Jonathan Custodio and Kelsey Tamborrino.

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— The Russia-Ukraine situation is putting energy markets on edge, and the Biden administration is working the phones to assure stability.

— Justice Stephen Breyer is retiring from the Supreme Court, ending a long career of defending the environment while compromising with conservative colleagues.

— The Biden administration canceled two mining leases in Minnesota adjacent to the Boundary Waters Canoe Area Wilderness, heralding a victory for environmental groups.

WELCOME TO THURSDAY! I’m your host, Matthew Choi. Féliciations to EPRI’s Rachel Gantz for knowing Céline Dion represented Switzerland in the 1988 Eurovision Song Contest. For today: What is the least populous state in Mexico? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.

Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today’s episode: Breyer’s environmental legacy.

A LIQUID EUROPEAN GAS SITUATION: The Biden administration is hoping to diffuse the energy market turmoil that’s come from the rising tensions around Moscow’s threat to Ukraine, and U.S. officials are working the phones to ease the shocks that a disruption in Russian oil and gas deliveries to Europe would bring.

Talking a good LNG game: Administration officials reached out to the CEOs of liquefied natural gas companies on Wednesday to game out whether cargoes could be re-routed to Europe in case Russia turned off its gas shipments, a LNG industry executive familiar with the calls told Pro’s Ben Lefebvre. The Biden administration is asking other governments to lean on their domestic companies to allow their contracted deliveries to instead head to European destinations, this person said.

“Definitely happening,” this person said of the calls, with the plan appearing to point toward diverting cargoes from Asia with some possible European government financial support for the inconvenience. A State Department spokesperson did not respond to questions.

But energy talk only goes so far: Even if the companies wanted to help, technical issues abound. LNG cargoes take time to reach their final destination, and European gas pipelines are struggling to accommodate the volumes they already have.

Analysts were also not convinced Russia would actually cut off a significant amount of gas, given that its own economy depends on fossil fuel sales. And every day gas continues to flow into Europe, the threat of a cold winter fades and the need for more gas into Europe dwindles.

“A disruption in January is not the same as a disruption in April,” said Nikos Tsafos, energy and geopolitics analyst at the Center for Strategic and International Studies. “Every day that passes, the challenge goes down.”

What’s actually happening: Europe is shifting how it views its dependence on Russia for fuel, analysts said. The EU depends on Gazprom and other Russian companies for a third of its imported natural gas and a quarter of its imported oil, according to government statistics. Russian President Vladimir Putin’s saber rattling, complete with amassing thousands of troops around Ukraine’s borders and the implicit threat that energy supply could be disrupted, has Germans and others rethinking how beholden they are to one country to keep their lights on.

“It’s a very fluid situation,” Leslie Palti-Guzman, co-founder and chief executive at gas analysis firm Gas Vista, told Ben. “But it’s already the case that there are discussions about Europe being too dependent on Russian gas.”

On the other side of the Atlantic, it could also mark a major development for a U.S. LNG industry that barely existed even a decade ago. “This is an important moment for the LNG industry, where it can show it can be a source of stability and security,” said David Goldwyn, a former Obama administration State Department energy envoy, head of Goldwyn Global Strategies and chair of the Atlantic Council’s energy advisory council.

BREYER EXITING SCOTUS:Justice Stephen Breyer is ending his nearly three decades on the Supreme Court after expressing his intent to retire last week, POLITICO’s Josh Gerstein and Jonathan Lemire report. Breyer, a member of the court’s minority liberal wing, had a track record of voting for environmental and public health protections, though he also didn’t shy away from making overtures and compromises with some of his more conservative peers. Breyer and President Joe Biden will appear together at the White House today, CNN reports.

“He will be remembered for guiding the Court in upholding protections for our environment, workers’ rights, voting rights, abortion and much more,” said Sen. Sheldon Whitehouse (D-R.I.).

Pro’s Alex Guillén took a deep dive into Breyer’s track record on environmental issues, including his 2020 ruling on Clean Water Act jurisdiction — an issue again at play after the high court agreed this week to take up a case involving the scope of WOTUS. Breyer is expected to sit through the rest of this term, meaning he is still slated to rule on a case regarding EPA’s ability to regulate power plants’ greenhouse gas emissions. Read more from Alex here.

SETTING MINING BOUNDARIES: The Biden administration canceled two leases for a proposed copper-nickel mine in northeastern Minnesota on Wednesday, dealing a blow to a project environmentalists had long raised concerns about. Twin Metals Minnesota, the company proposing the mine, has vowed to challenge the decision and claims the move is political.

The project would be situated within the Superior National Forest adjacent to the Boundary Waters Canoe Area Wilderness, the most visited wilderness area in America near the Canadian border. The underground mine would extract copper, nickel, platinum group metals and cobalt from the Duluth Complex, which Twin Metals says holds 95 percent of U.S. nickel and 88 percent of its cobalt.

“We support mining in Minnesota, but we also understand that the Boundary Waters is an irreplaceable resource that we have an obligation to protect,” Sen. Tina Smith (D-Minn.) said in a statement joining environmentalists applauding the decision. Sen. Amy Klobuchar (D-Minn.) did not return a request for comment on her reaction to the lease cancellations. She had been noticeably quiet on the mine proposal during her 2020 presidential campaign and appeared frustrated with Obama officials for working to protect the Boundary Waters area from mining in late 2016.

The National Mining Association and Republicans including Sen. John Barrasso (R-Wyo.) and Rep. Pete Stauber (R-Minn.), whose district includes the site of the proposed mine, slammed the administration. They argue the decision leaves American workers behind by further increasing the country’s reliance on foreign minerals. House Republicans also highlighted the Twin Metals mine in a recent hearing earlier this month.

CBD SUES TO PAUSE CALIFORNIA OFFSHORE OIL AND GAS: The Center for Biological Diversity sued the Interior and Commerce departments Wednesday to stop authorizations for new oil and gas activities on the Pacific Outer Continental Shelf. The lawsuit comes in the aftermath of last year’s oil spill that stained the Southern California coast, leading to a parade of state and federal investigations into the pipeline at the center of the spill and its operator.

The CBD lawsuit goes further, saying the administration is violating the Endangered Species Act and Administrative Procedure Act in its authorizing of oil and gas activities off the California coast to begin with. The lawsuit says the agencies based their approvals on a 2017 ESA review by Commerce’s National Marine Fisheries Service, which the suit alleges was shoddily done. A spokesperson for NOAA declined to comment on pending litigation. CBD threatened to sue the administration last October in the first major legal challenge against the administration in the spill’s aftermath.

Curbing offshore oil and gas activities in the nation’s oceans is a key priority for several progressive and environmentalist lawmakers. The House-passed version of Democrats’ reconciliation package would ban future leasing off the Atlantic, Pacific and Eastern Gulf coasts, though the Senate Energy bill text did not include the ban. Read the lawsuit here.

BIPARTISAN INFRASTRUCTURE PACKAGE TAKES PARTISAN TURN: House members of both parties are trying to sway Mitch Landrieu, the former New Orleans mayor tasked with executing the bipartisan infrastructure law, to make sure the package is executed along their priorities.

Reps. Nanette Diaz Barragán (D-Calif.), Donald McEachin (D-Va.) and Pramila Jayapal (D-Wash.), co-chairs of the United for Climate and Environmental Justice Task Force, urged Landrieu to keep the administration’s environmental justice commitments and climate change mitigation front of mind when carrying out the package, which includes funding for programs they say could mitigate — or exacerbate — climate change. Among the examples they cite is funding for clean hydrogen hubs, which the lawmakers said should prioritize hydrogen produced from electrolysis rather than from fossil fuels. The legislation offers some wiggle room in its definition of clean hydrogen, though it mandates two of the hubs be placed in areas with the largest natural gas reserves. Read the Democrats’ letter here.

Meanwhile, House Transportation ranking member Sam Graves (R-Mo.) wrote to Landrieu requesting a briefing for the committee by Feb. 9 on how he plans to implement the law, writing “you have yet to fully engage all relevant Members of Congress on these matters.” Graves particularly singled out how Landrieu’s task force is working with the Department of Transportation, urging the administration not to prioritize public transit if it comes at the expense of funding recipients’ ability to finance other forms of transportation including motorized vehicles. Read Graves’ letter here.

MAY THE CLIMATE TASK FORCE BE WITH YOU: The House Sustainable Energy and Environment Coalition is forming three new task forces targeting climate change in agriculture, national security and the power sector. Vice chair Chellie Pingree (D-Maine) and Rep. Kim Schrier (D-Wash.) will co-chair the Climate and Agricultural Task Force aimed at raising farmer engagement on climate change ahead of the reauthorization of the farm bill. Reps. Jim Langevin (D-R.I.) and Katie Porter (D-Calif.) will co-chair a Climate and National Security Task Force honing in on climate change’s effects on U.S. national security, and Reps. Sean Casten (D-Ill.) and Raja Krishnamoorthi (D-Ill.) will co-chair the Power Sector Task Force focused on potential transmission system reforms to accelerate the renewable energy rollout and decarbonize the power sector.

The task forces will work to ensure that relevant legislative vehicles, including the National Defense Authorization Act, are climate-friendly, and introducing their own legislation is also on the table, according to a coalition spokesperson. Pro’s Kelsey Tamborrino has more.

ON WHEELER’S MIND: Pro’s Josh Siegel had a chat with Andrew Wheeler, the ex-coal lobbyist and controversial nominee for Virginia’s Secretary of Natural Resources, after state senators grilled him on his track record as former President Donald Trump’s EPA administrator. Wheeler defended his time at EPA, particularly his work on issues that directly impact Virginia, such as the Chesapeake Bay, as well as Gov. Glenn Youngkin’s plans to withdraw the commonwealth from a regional cap-and-trade agreement.

“You can make reductions without having to join an interstate pact like this. You can step up for the environment,” Wheeler told Josh, asserting he supported efforts to combat climate change. Read more from Josh.

EMPIRE STATE OF CRYPTOMINING: New York state is facing a showdown on whether to allow fossil fuels to generate the enormous amounts of electricity used in the state’s crypto-mining, POLITICO New York’s Marie French reports. Environmentalists are fearful over the added emissions it would produce while crypto backers are decrying any delay in the blossoming industry. Groups including Earthjustice, the New York Public Interest Research Group and Sierra Club are backing a three-year moratorium on the use of fossil fuel generation, particularly as the state pursues a net-zero economy.

Crypto-mining found welcome territory in upstate New York with low cost hydropower, cheap land and underused transmission infrastructure, Marie reports. New York City’s new mayor, Eric Adams, is also a vocal supporter of cryptocurrency. But with more power demand, the state could be called to tap into reserve fossil power plants usually only used a few times per year.

“It’s an absolute priority,” state Sen. Kevin Parker said of the moratorium. “Anything that does not fall in line with the [climate law] can’t continue to operate and so no one has made an argument to me from the crypto side that their projects are sustainable.” Read more from Marie on the balance state lawmakers are seeking between supporting a booming industry and upholding their climate commitments.

— “JPMorgan fights nuns and activists over climate disclosure proposals,” via The Financial Times.

— “Researchers achieve milestone on path toward nuclear fusion energy,” via Reuters.

— “In major reversal, Arizona utility regulators kill 100% clean-energy rules in the state,” via Arizona Republic.

— “Even Low Levels of Soot Can Be Deadly to Older People, Research Finds,” via The New York Times.

— “Hydro Quebec suspends work in Canada on controversial energy corridor,” via Maine Public Radio.

THAT’S ALL FOR ME!





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