Energy

Trade tensions tangle LNG projects


With help from Alex Guillén and Annie Snider

Editor’s Note: This edition of Morning Energy is published weekdays at 10 a.m. POLITICO Pro Energy subscribers hold exclusive early access to the newsletter each morning at 6 a.m. Learn more about POLITICO Pro’s comprehensive policy intelligence coverage, policy tools and services at politicopro.com.

At least three U.S. liquefied natural gas export projects have experienced setbacks this year tied to ongoing trade tensions between the Trump administration and China, raising concerns of further potential trouble for the gas industry.

Carbon tax plans abound on the Hill today. Lawmakers from both parties will introduce plans to tax fossil fuel producers.

2020 Democratic presidential hopeful and New York Sen. Kirsten Gillibrand released her climate change plan this morning, calling for neutralizing nationwide carbon emissions by 2050.

GOOD THURSDAY MORNING! I’m your host, Kelsey Tamborrino. Neste’s Alex Menotti gets the win for identifying Vermont as the first state to join the United States after the 13 original colonies. For today: Which state has the highest number of local governments? Send your tips, energy gossip and comments to ktamborrino@politico.com.

TRADE TENSIONS TANGLE LNG PROJECTS: LNG companies and their allies on the Hill are warning the White House about the implications of trade tensions with China — a nation expected to surpass Japan to become the world’s largest gas importer, Pro’s Ben Lefebvre reports.

At least three U.S. export projects have seen setbacks tied to the ongoing tensions, sources told Ben, and a prolonged trade war would put billions of dollars of potential investment in the LNG industry at risk.

“I think we have made it very clear to the administration that trade tensions with China are not helpful,” said Micah Hirschfield, a spokesman for the Magnolia LNG project in Louisiana.

While the trade war has had less of an impact on LNG projects by large, international companies with the means to finance their own plants, it has only added to market woes for smaller companies.

“The problem with the trade war is that it slows people down in finding equity investors,” said Amy Myers Jaffe, senior fellow for energy and the environment and director of the Energy Security and Climate Change program at the Council on Foreign Relations. “A lot of projects were hoping to find their Chinese investors. Sans the Chinese, it’s a much tougher road.”

What to watch: The Trump administration said Wednesday it is sending U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Shanghai starting July 30 “to continue negotiations aimed at improving the trade relationship between the United States and China.”

TUNE IN: Our own Gavin Bade will moderate a panel this morning on electrification with Maine Sen. Angus King; Conner Prochaska, director of the Energy Department’s Office of Technology Transitions; Gil Quiniones, president and CEO of the New York Power Authority; and Gladys Brown Dutrieuille, chairman of the Pennsylvania Public Utility Commission. The conversation will dive into the potential benefits, costs and impacts of consumer-driven mass electrification in the U.S.

LAWMAKERS PREPARE CARBON TAX PROPOSALS: Republican Rep. Francis Rooney (Fla.) will introduce a bill that would place a carbon tax of $30 per metric ton of CO2 equivalent on fossil fuel producers and large industrial emitters. Under the legislation, an automatic $2 per ton increase will occur every two years, if emissions reduction goals are not met.

According to a summary of the bill, Rooney’s legislation will propose using the revenue to reduce payroll taxes for employees and employers, fund research and development for clean energy, and compensate low-income households for increased costs. Modeling done via Resources for the Future suggests the carbon tax would reduce energy-related carbon pollution by approximately 42 percent by 2030 against 2005 levels, the summary says.

Across the Capitol, Democratic Sens. Chris Coons (Del.) and Dianne Feinstein (Calif.) will announce their own carbon tax proposal. The Climate Action Rebate Act, which will be introduced in the House by Rep. Jimmy Panetta (D-Calif.), aims to reduce U.S. carbon emissions 55 percent by 2030 and 100 percent by 2050, compared to 2017 levels. It would create a gradually rising fee — beginning at $15 per metric ton of CO2e — and would adjust for greenhouse gas potential, according to a summary shared with ME.

Exemptions and rebates would be provided for carbon capture, utilization and sequestration; non-emissive uses such as chemicals production; and nature-based carbon sinks. It would rebate 70 percent of revenue to low- and middle-income Americans as a monthly dividend, and use the remaining funds for investments in clean energy and energy innovation.

DEMOCRATS HEAR FROM REPUBLICANS ON CLIMATE: Senate Democrats’ Special Committee on the Climate Crisis will hold a hearing today to get input from Republicans who back action on climate change. “Conservatives across the country support climate action because of their faith, their commitment to fiscal responsibility, and their conservative values,” Chairman Brian Schatz (D-Hawaii) said in a statement ahead of the hearing.

Who’s testifying: GOP pollster Frank Luntz, Kiera O’Brien, vice president of Students for Carbon Dividends, and Nick Huey, founder of the Climate Campaign.

HOUSE OVERSIGHT CALLS PFAS MANUFACTURERS: The House Oversight Environment Subcommittee has scheduled a Sept. 10 hearing on what major PFAS manufacturers knew about the toxic chemicals that are contaminating millions of Americans’ drinking water supplies and when they knew it — and at least one major producer of the chemicals has agreed to testify. 3M Co. said in a statement that “we look forward to sharing our perspective and research” with the panel.

Subcommittee Chairman Harley Rouda (D-Calif.) told POLITICO the hearing will seek to uncover “what did they know, when did they know about it and why did they cover it up?” Documents showing 3M and other companies knew about the chemicals’ dangers for decades have come to light in recent years through court proceedings, and legal experts have been quietly speculating for months about what additional documents a congressional probe might be able to uncover, since companies have fewer abilities to shield documents from Congress than they do during court proceedings.

Rouda said he is asking several other manufacturers, including DuPont to testify, and that he thinks “there’s a strong possibility” that the panel will seek to compel testimony or documents from companies if they don’t voluntarily comply — although he cautioned that, “We haven’t gotten that far because we don’t need to get that far yet.” Of course, as House Democrats have learned since retaking the chamber, their options for forcing compliance with subpoenas are limited, if a party doesn’t do so voluntarily.

LET’S TRY THIS AGAIN: The Senate Foreign Relations Committee will hold its rescheduled markup today on S. 1441 (116) — a bill to sanction companies that provide the ships used to lay the pipe for the Nord Stream II pipeline — and the nomination of Kelly Craft to be U.S. ambassador to the U.N.

Republicans on the panel appear willing to advance the nomination of Craft, who is married to Oklahoma coal magnate Joe Craft, despite new details about how she spent the majority of her time as U.S. ambassador to Canada away from her post, Pro’s Lauren Gardner reports.

INSIDE GILLIBRAND’S CLIMATE PLAN: Gillibrand unveiled today her $10 trillion climate change plan to tax and phase out fossil fuels while fighting regulations, Pro’s Zack Colman reports this morning.

The details: Gillibrand wants to impose a $52 per metric ton carbon tax, spending the $200 billion of annual revenues on renewable energy, and a separate fossil fuel “excise tax” to generate $100 billion per year for projects to adapt to climate change. She also proposes reducing the federal government’s carbon footprint through purchasing and infrastructure permit requirements.

BERHNARDT INKED NEW IZEMBEK DEAL: Interior Secretary David Bernhardt signed a new land swap deal three weeks ago that will allow King Cove to build an access road through the Izembek National Wildlife Refuge, Alaska Public Media first reported Wednesday. The previous deal was tossed out by a judge who said the Trump administration made “serious errors” in reversing the Obama-era decision not to build the road through the refuge. But the new version includes a 20-page analysis explaining why Interior is reversing course.

From Bernhardt’s conclusion: “I choose to place greater weight on the welfare and well-being of the Alaska Native people who call King Cove home. I value the well-being of an entire community over the impacts derived from the change in ownership of these various parcels of property which are an incredibly small percentage of Alaska’s Wilderness.”

Trustees for Alaska, the group that successfully challenged the first land swap, said it will continue to work to protect the refuge. “This was done completely behind closed doors without public knowledge or input, despite the fact that these are public lands,” the group said in a statement.

DOE IG FINDS CYBER WEAKNESSES AT WASTE SITE: An unnamed Energy Department-managed radioactive waste site has significant weaknesses in its cyber defenses, DOE’s inspector general said in a letter released Wednesday. The IG is not making its report public, but it noted numerous risks in the site’s computer systems, Pro’s Eric Wolff reports.

Matthew Davis has joined the League of Conservation Voters as legislative director. Davis previously was a congressional liaison specialist at EPA and a health scientist in the Office of Children’s Health Protection.

— “Moody’s buys climate data firm, signaling new scrutiny of climate risks,” via The New York Times.

— “Three EPA advisory panels could be slashed under Trump order,” via Bloomberg Environment.

— “U.S. coal miners discouraged by black lung meeting with McConnell,” via Reuters.

— “‘No doubt left’ about scientific consensus on global warming, say experts,” via The Guardian.

— “This Texas oil town actually wants the nation’s nuclear waste,” via Bloomberg.

THAT’S ALL FOR ME!



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