With help from Eric Wolff, Sarah Cammarata and Alex Guillén
Editor’s Note: Morning Energy is a free version of POLITICO Pro Energy’s morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
— FERC is back today for a big-ticket open meeting, with a decision likely on whether aggregated distributed energy resources can enter into the wholesale energy market.
— Daniel Yergin, the vice chairman of IHS Markit, spoke to POLITICO about the current state of the oil and gas industry amid the turmoil of the past six months and looming questions about its role in addressing climate change.
— The Trump administration approved a federal permit for a proposed LNG export project that’s struggled to attract customers or financial backers.
GOOD MORNING! IT’S THURSDAY. I’m your host, Kelsey Tamborrino. Climate Nexus’ Nathan Kauffman gets the trivia win. Glaciers exist on every continent except Australia. For today: How many current and former senators have received the Nobel Peace Prize? Send your tips, energy gossip and comments to [email protected].
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: Why CEOs are embracing (some) climate change policies
THE FERC-SHIRES SEEM DREAM-LIKE ON ACCOUNT OF THAT FROSTING: FERC’s newest nominees are wending through the confirmation process (see below), but the three sitting commissioners will come back big today with its first meeting in two months, making key decisions on whether aggregated distributed energy resources like rooftop solar can enter into wholesale energy markets, how to provide some guidance of President Donald Trump’s executive order on the bulk power grid, and a follow-up to June 30’s bombshell D.C. Circuit decision on FERC’s use of delaying tactics on rehearing decisions. Let’s dive on in:
All together now: The commission is expected to issue a final rule on whether energy markets will be required to allow aggregated energy resources to bid into their markets. FERC proposed the rule in 2016 to allow small, behind-the-meter power products, like batteries or rooftop solar installations, to band together and participate in power markets. If the final rule resembles the proposal, it would kick open the doors to a new revenue stream for small power producers and could incentivize companies to install batteries or residential solar en masse. But it’s also worth remembering that exactly none of the commissioners who signed off on the 2016 proposal are still on the commission, so the final rule could easily look different than the proposal. But as ClearView Energy Partners points out, the DER proposal bears some of the same characteristics as the energy storage rule that Chairman Neil Chatterjee championed and finalized early in his tenure as chairman.
Eh? What’s that? I can’t rehear you! FERC plans to provide at least some guidance on how it will cope with the D.C. Circuit’s rejection of its use of delays to push off making rehearing decisions — delays that kept case participants from taking the commission to court. The court put a stay on its own decision so FERC could decide whether to appeal to the Supreme Court. FERC-watchers are hoping the commission will give some guidance on how it will deal with its rehearing backlog. And maybe it will tell everyone whether it’s going to petition the high court before its late September deadline.
Keep it secret, keep it safe: The commission is also expected to provide some information on how it plans to start implementing Trump’s May 1 executive order on keeping the bulk power grid safe from cyber intruders. The order calls for a full grid review to remove gear produced by nations the administration considers dangerous. No one knows whether this will mean ripping out infrastructure and software deemed unsafe, instituting imitations on buying new equipment, or something else. FERC’s guidance will come in handy.
Gas in the pipeline: Other items on today’s FERC agenda: a rehearing request regarding FERC’s approval of the Mountain Valley Pipeline Southgate expansion permit; a rehearing request from Sierra Club on a Sabal Trail compression station permit; and a permit decision on a pipeline expansion that would feed the Sabine Pass LNG plant. That one includes a challenge from the Institute for Policy Integrity, which wants to know why the commission did not include downstream greenhouse gas impacts of the pipelines.
TRUMP ECHOES PEBBLE MINE-BACKED AD CAMPAIGN: Trump late last night tweeted about the Pebble Mine — using almost the same language as an ad paid for by the developer shortly after it aired during Tucker Carlson’s Fox News program. “President Trump, continue to stand tall, and don’t let politics enter the Pebble Mine review process,” the narrator says over an image of Trump boarding Air Force One, with “Paid for by Pebble Limited Partnership” written at the bottom.
Less than two hours after the Pebble-backed ad aired during Carlson’s show — on which the Fox News host has at least twice dedicated segments in the past month to opposing Pebble Mine — Trump tweeted: “Don’t worry, wonderful & beautiful Alaska, there will be NO POLITICS in the Pebble Mine Review Process. I will do what is right for Alaska and our great Country!!!”
It’s hard to say what this means for Pebble Mine. It’s unclear whether Trump was merely echoing the ad’s rhetoric or actually endorsing the developer’s viewpoint. It’s the first time Trump has substantively weighed in on the issue since his eldest son and other prominent conservatives started publicly lobbying him to block the massive copper and gold project because of potential threats to Bristol Bay’s critical salmon fishery. As with all things Trump, it ain’t over til it’s over.
ONE ON ONE WITH IHS’ DANIEL YERGIN: The oil and gas industry is facing increasing scrutiny about its role in addressing climate change, including whether U.S. companies’ business plans will protect them in an investment climate that seems to be shifting toward climate-friendly models. In a recent conversation with POLITICO’s Ben Lefebvre, Daniel Yergin — the vice chairman IHS Markit, who is out with a new book on the energy world — spoke about the state of the industry:
— On forecasts that the world has reached peak demand: “I think that we still have about another 10 to 12 years of demand rising before we hit the peak. Then when we hit the peak it’s not a plummet and collapse, it just starts to decline. Just one number to keep in mind is that the average car in the United States now stays on the road for 12 years, so those cars aren’t going away. But it is a time of uncertainty. A big uncertainty is how the world will change when Covid is behind us.”
— On downturn in the industry, post-pandemic: “I think this is one time when this time is different. To begin with, it was a demand shock of a kind that’s never happened before, where basically governments shut down their economies. I call it an economic dark age, which we’re still really struggling to get out of. But then there are these larger secular forces out there, too, which is the shift in investor sentiment compounded by low returns for investors. I think that the shale industry and the [energy] industry in general have two different sets of issues with investors: One is returns and the other is the [environmental, social and governance investment] agenda.” Read the full Q-and-A.
HINT, HINT: Two FERC hopefuls appeared to emerge largely unscathed from their confirmation hearing Wednesday before the Senate Energy and Natural Resources Committee, steering clear of making policy commitments while offering some hints on the issues they see as important for the electricity and natural gas regulator.
Former NRDC attorney Allison Clements avoided making any promises on how she would address questions around carbon dioxide emissions that come before the commission, but she did highlight the need to ensure reliability. “The commission is not a climate regulator,” she said. “But one place where it is important, and it’s incumbent on the commission to ensure the ongoing reliability of the system in light of the best predication about the future weather patterns the country might be facing going forward.”
Senators also piled on to California’s decision to cut off power to parts of the state last month amid a heat wave as cause for concern about the state’s management of the grid. The nominees both said they wanted to wait to see what investigations turned up, and Virginia Corporation Commission Chair Mark Christie hinted that perhaps FERC would need to take a more active role in monitoring California’s transition to renewables.
“FERC’s role specifically is to ensure these ISOs and RTOs have the appropriate generating resources,” he said. “I think every state should have a balanced portfolio to fill the gaps and hit the peak demand when they come on, and what happened in California is they didn’t meet peak demand and didn’t have sufficient generation and FERC should make sure those things shouldn’t happen.”
BIPARTISAN DRAFT AIMS TO TACKLE CLIMATE CHANGE: Bipartisan Reps. David McKinley (R-W.Va.) and Kurt Schrader (D-Ore.) are planning legislation to decarbonize the power sector over 30 years. The two members of the House Energy and Commerce Committee previously penned an op-ed this year calling for realistic solutions to tackle climate change that can earn bipartisan support. An ensuing discussion draft, shared with ME, calls for creating a clean energy standard for the electric power sector that would reduce carbon emissions by 80 percent by 2050. It would also invest in clean energy technology; support the deployment of carbon capture, utilization and storage; and provide tax credits for advanced renewables.
NOAA GRANTS ALASKA LNG PERMIT: NOAA approved a federal permit on Wednesday for a proposed liquefied natural gas export terminal in Alaska, Pro’s Zack Colman and Ben Lefebvre report. The agency granted developers of the Alaska LNG terminal authority to incidentally disturb or kill marine mammals, the last step before FERC can decide whether Alaska Gasline Development Corp. can proceed with construction.
The Trump administration has been quickly approving the permits needed for the LNG export terminal and natural gas pipeline. But the $38 billion pipeline project has been dead in the water since last year, when major investors abandoned the project after costs skyrocketed because of the steel tariffs imposed by the Trump administration and trade tensions with China.
GO NORTH, THE RUSH IS ON! The Energy Department is officially reopening an Arctic Energy Office in Alaska to further study the High North’s changing climate and drive international cooperation among the eight countries that occupy it. The move, which was first reported by POLITICO last month, is the latest effort by the Trump administration to increase U.S. influence in the Arctic, a region that has become an area of strategic importance to counter Russian and Chinese influence. It also makes good on a promise by Secretary Dan Brouillette to reopen the office by the end of the fiscal year.
Its primary focus will be on energy, science and national security, with three temporary staff members, according to a release. The effort to restore the office has been helped by Alaska Sen. Lisa Murkowski (R) and was heralded by long-time advocates of the region, like Alaska Republican Sens. Dan Sullivan and Don Young. The Arctic Energy Office was originally created under the National Defense Authorization Act for fiscal 2001 and was originally housed in Washington.
EIA: JUMP IN OIL OUTPUT LAST WEEK: U.S. oil output increased by 900,000 barrels per day last week as U.S. producers reversed a month of declining production, according to data from the U.S. Energy Information Administration. The increase brought total production to 10.9 million barrels a day for the week ending Sept. 11 — the highest amount since the end of July, but still down considerably from the 13.1 million barrels a day the U.S. had been producing just before the Covid-19 pandemic caused a large economic shutdown, Ben reports.
Gut check: But gasoline sales from refineries increased only by 1 percent, to 8.4 million barrels a day, while distillate demand dropped by more than 900,000 barrels a day. Those weak figures may make the boost in oil production short lived.
NORTH CAROLINA TO TRUMP: WHAT ABOUT US? North Carolina Gov. Roy Cooper (D) is calling on the Trump administration to add the state to the expanded offshore drilling moratorium the president announced last week. The moratorium included South Carolina, Georgia and Florida. “I am deeply concerned and disappointed to learn that you did not include North Carolina in the moratorium, despite specifically mentioning that our state would receive benefits from this order and should be congratulated,” Cooper wrote in a letter to Trump. The governor said offshore drilling threatens North Carolina’s coastal economy, with little economic benefit, and has bipartisan opposition in the state.
‘TRUE STORY:’ E&E News’ Scott Waldman reports on how climate-minded Republicans are responding to Trump’s recent open rejections of the basic tenets of climate science while the West burns and Gulf faces yet another severe hurricane. In the report, former Florida Rep. Carlos Curbelo recalled how he and Trump were in the presidential limousine on Key West in 2018, when he asked the president to take climate change and sea-level rise more seriously. Trump replied: “I’ve studied millions of years of history, and you have nothing to worry about,” Curbelo said. Curbelo later confirmed the account in a tweet.
— Alison Prost is the new vice president for environmental protection and restoration at the Chesapeake Bay Foundation. Prost has been at CBF for more than 12 years, most recently as Maryland executive director.
— “Interior IG team used Evil Twins and $200 tech to hack department Wi-Fi networks,” via Nextgov.
— “Trump administration eyes at least $300 million aid to refiners denied biofuel waivers: sources,” via Reuters.
— “Kraft Heinz says it will fall short of 2020 environmental goals,” via Bloomberg.
— “A wildfire destroyed his house. This climate denier blames environmentalists,” via The Daily Beast.
— “Dakota Access oil pipe likely safe from shutdown through 2020,” via Bloomberg Law.
— “How smoke from California wildfires turns the sky red,” via Los Angeles Times.
THAT’S ALL FOR ME!
