With help from Kelsey Tamborrino
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— The Biden administration called for raising royalty rates for oil and gas on federal lands in its long-awaited review of the program.
— Climate-drive migration is already having impacts on the political landscape, in ways both large and subtle.
— The Senate Environment and Public Works committee is considering some EPA nominees this week and putting the Nuclear Regulatory Commission under the microscope.
WELCOME TO MONDAY! I’m your host, Matthew Choi. I hope everyone had a restful Thanksgiving! Congrats to SVLG’s Tim McRae and for sending in a banger sweet potato daal recipe. Back to trivia: Where did Jennifer Granholm study abroad in college? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.
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WELCOME BACK! I hope everyone had a restful holiday away and managed to unplug from their work screens. If you did, you probably missed the major news dump from the long weekend.
The Interior Department decided that Black Friday was the right time to release its much anticipated review of the federal oil and gas leasing program, and called for raising leasing rates for the first time in century. The report was long overdue, since Interior Secretary Deb Haaland first promised its release in early summer, but things seemed to get held up at the White House. The report didn’t have any major shocks and largely reflected the priorities that the administration has been pointing to for months.
The 18-page report said the current leasing program fails to deliver a reasonable return for taxpayers due to low lease rates, fosters speculation and shuts out a lot of public and Indigenous participation from the process. It includes several recommendations for increasing royalties and more targeted leasing on lands that aren’t environmentally and culturally sensitive — and that have demonstrable extraction potential.
It stopped short, however, of calling for a sunset on federal oil and gas leases and didn’t dive into how the direct climate impacts of continuing fossil fuel extraction should impact the program. That irked a lot of environmentalists who were hoping for a heavier hand on the industry, especially after President Joe Biden called for the transition from fossil fuels both on the campaign and on the world stage at COP26.
“Greenlighting more fossil fuel extraction, then pretending it’s OK by nudging up royalty rates, is like rearranging deck chairs on the Titanic,” said Randi Spivak, public lands director at the Center for Biological Diversity, in a statement just after the report dropped. “There’s no time left for baby steps that let the fossil-fuel industry wreak even greater havoc on the Earth.”
Republicans and oil and gas supporters also blasted the report for calling to hike costs on the industry during a global energy pinch. The American Petroleum Institute said the administration’s was sending contradictory messages by calling for higher leasing rates while also asking for greater output from OPEC+ to address rising domestic fuel costs.
“During one of the busiest travel weeks of the year when rising costs of energy are even more apparent to Americans, the Biden Administration is sending mixed signals,” Frank Macchiarola, API’s senior vice president of policy, economics and regulatory affairs, said in a statement. “Days after a public speech in which the White House said the president ‘is using every tool available to him to work to lower prices and address the lack of supply,’ his Interior Department proposed to increase costs on American energy development with no clear roadmap for the future of federal leasing.”
Interior’s report points out, however, that the current 12.5 percent leasing rate is well below what states or private landowners receive from drillers, and that nearly 53 percent of acreage under lease to the oil and gas industry are non-producing. Meanwhile, U.S. crude oil production is up 500,000 barrels per day since Biden took office in January, according to EIA data. Read more on the report from Pro’s Ben Lefebvre and your host.
NOT ALL OFFSHORE IS FOR OIL: Just two days before releasing its oil and gas review, the Interior Department approved America’s second ever commercial-scale offshore wind project in federal waters. The South Fork wind project off the coast of Rhode Island follows in the footsteps of the Vineyard Wind 1 project just south of Martha’s Vineyard.
The project is a joint venture between Denmark’s Ørsted and the homegrown Eversource. Wind turbines are expected to begin going up in summer 2023, Kelsey Tamborrino reports for Pros.
ICYMI: THE POLITICAL CLIMATE SHIFTS: Climate change is already spawning migrations inside the U.S. and causing demographic shifts that are changing local politics — and that trend is only likely to grow. Ben looked at the changes in a handful of places across the country, from Kissimmee, Fla., where thousands of Puerto Ricans moved after Hurricane Maria devastated the island and Chico, Calif., where residents displaced by the state’s wildfire landed, to Boise, Idaho, where transplanted Californians of both political parties are riling up the locals.
“We’re seeing it now,” said Carlos Martín, a David M. Rubenstein fellow with the Brookings Institution’s Metro program. “It’s not a managed retreat, it’s an unmanaged retreat. And any demographic change usually brings about political change.” Read more from Ben here.
NOMS AND NRC ON TAP: The Senate Environment and Public Works Committee is meeting Wednesday to consider several nominees, including the president’s pending picks for key EPA spots. The panel will vote on the nominations of Carlton Waterhouse to be EPA’s assistant administrator of land and emergency management, Amanda Howe to be assistant administrator for mission support, David Uhlmann for assistant administrator for enforcement and compliance assurance and Christopher Frey for assistant administrator for research and development.
After that, the committee will move on to an oversight hearing on the Nuclear Regulatory Commission. Keep in mind that the five-seat NRC is operating with a 2-1 Democratic majority. The American Nuclear Society and the U.S. Nuclear Industry Council sent a letter to Biden before the Thanksgiving holiday, pressing him to name nominees for the two open seats. “A well-functioning NRC will support your administration’s policy of sustaining and expanding nuclear power to help achieve your goal of 100 percent carbon pollution-free electricity generation by 2035,” the groups said in a joint letter.
OTHER HEARINGS THIS WEEK: The House Natural Resources Energy and Mineral Resources subcommittee is meeting Thursday to talk about the impact of federal oil and gas leases on the nation’s emissions. About a quarter of U.S. carbon emissions come from fossil fuels extracted on federal lands and waters. Chair Raúl Grijalva said in a statement that Interior’s newly issued leasing review demonstrates the need for more regulations and legislation to reduce subsidies for the oil and gas industry.
“The administration needs to manage public lands and waters consistent with its climate commitments, and today’s report does not offer a plan to do that,” he wrote. “Congress needs to end wasteful subsidies and advance leasing reform bills while that’s happening because every American sees climate change all around them, and we all know that impermanent policy changes at the margins won’t reduce emissions enough to protect our quality of life.”
The Senate Energy Committee is also meeting Thursday to consider several pieces of outdoor recreation and public lands legislation, as is the House Ways and Means Trade Subcommittee, which will be examining the effects of Chinese trade practices on American workers and the environment.
NOPEC: Sen. Chuck Grassley is unimpressed with the Biden administration’s calls to OPEC+ to increase production in hopes of lowering gas prices. In a letter to Biden sent Wednesday, the Iowa Republican re-upped his bipartisan legislation that would allow the Justice Department to sue the international cartel for antitrust law violations. Some iteration of the bill has been regularly introduced in Congress for years, with Grassley introducing the latest version with Sens. Amy Klobuchar (D-Minn.), Mike Lee (R-Utah) and Patrick Leahy (D-Vt.).
“As President today, you have the power to take action on an issue crucially important to the American people that you supported during the Clinton and Bush Administrations,” Grassley wrote. “Your and your administration’s support of NOPEC would help to enact this bill into law and ensure a fair and competitive marketplace.”
BIDEN’S SOLAR CHOICE: Biden will have to decide whether to extend tariffs on Chinese-imported solar panels — a move that backers say would help out struggling U.S. solar manufacturers but that opponents say would drive up the costs to reach the administration’s clean energy deployment goals. The International Trade Commission recommended extending the tariffs Wednesday, giving Biden and U.S. Trade Representative Katherine Tai the chance to accept or reject them.
The tariffs were first imposed by the Trump administration to penalize unfairly priced imports from China. California-based solar manufacturer Auxin Solar and Georgia-based Suniva Inc. filed back in August to extend the tariffs for another four years. But Abigail Ross Hopper, CEO of the Solar Energy Industries Association, countered that an extension would slow the rollout of solar power in the U.S. and urged instead for passage of legislation in Democrats’ reconciliation package that would incentivize domestic solar production. Gavin Bade has more for Pros.
OPEC CALLS IN SICK: OPEC+ is pushing back two of its meetings this week to take stock on last week’s oil price falls and the new omicron variant of Covid, Bloomberg reports. Its joint technical meeting scheduled for today will now be on Wednesday, and its joint ministerial monitoring committee will now meet Thursday instead of Tuesday. The cartel and its allies will discuss Wednesday and Thursday whether to go through with their output increases, Bloomberg reports.
U.S. oil futures prices tumbled more than $10 a barrel on Friday to close below $70, while Brent futures fell $9.50 a barrel to end under $73 as news of the new omicron variant spooked financial markets.
A new shutdown caused by a novel variant could alter the cartel’s calculus if there is a drop off in demand due to travel restrictions. Numerous countries, including the United States, have already imposed travel restrictions on countries in Southern Africa where the variant has been reported, and airlines are shutting down flights to areas with known cases. The U.S. and several other high-consuming countries also volleyed the ball back in the cartel’s court last week after they coordinated a release from their national crude reserves.
— “Canadian regulator rejects Enbridge plan to sell oil pipeline space under contract,” via Reuters.
— “Natural vs. artificial: Which Christmas tree option is better for the climate?” via CNN.
— “Saving History With Sandbags: Climate Change Threatens the Smithsonian,” via The New York Times.
— “‘Cancer has decimated our community.’ EPA’s Regan vows to help hard-hit areas but residents have doubts,” via The Washington Post.
— “EU countries split on sustainable aviation fuel mandate,” via POLITICO.
THAT’S ALL FOR ME!
