By Emily Holden (@emilyhholden)
Today’s Washington Brief:
- A dozen states led by West Virginia are suing the EPA over its proposed rule to limit carbon emissions from coal-fired power plants, Bloomberg's Andrew Zajac and Mark Drajem report. The states say a Supreme Court ruling prohibits the agency from issuing rules under Section 111(d) of the Clean Air Act because it has already regulated power plants under another section.
- Washington Post's Juliet Eilperin reports on a memo from Senate Budget Committee Chairman Patty Murray, D-Wash., that urges colleauges to start talking about how climate change will hurt the federal budget.
- Environmental groups want a federal court to review an EPA rule that pushes back deadlines for state plans to reduce fine particle pollution, E&E's Amanda Peterka reports.
- Delays in building a wind farm in Kenya signal problems with a U.S. program called Power Africa, Wall Street Journal's Heidi Vogt reports.
Today’s Business Brief:
- After two companies got permission to export ultra-light oil known as condensate, others are seeking similar rulings, but it could be a while, Houston Chronicle's Jennifer A. Dlouhy reports. A Morning Consult poll shows likely voters worry exports would increase prices in the U.S., Emily Holden reports.
- A dispute over natural gas flaring rages on in North Dakota, where one of the biggest oil producers--Continental Resources--wants to pay state taxes and royalty payments on nautral gas it improperly burned off, but lawyers for land owners say the company is only trying to minimize its liability, Wall Street Journal's Chester Dawson reports.
- The Obama administration's eight-month delay in issuing a renewable fuel mandate is "leaving investors wary about the govenrment's commitment to the program," according to Bloomberg's Mark Drajem.
Today's Chart Review:
As Industry Pushes for Exports, Voters Fear Price Increases
from Morning Consult by Emily Holden
Mark Your Calendars (All Times Eastern):
Monday: Quarterly Earnings- Marathon Oil Corp, Pioneer Natural Resources Co
Tuesday: Center for Strategic and International Studies discussion on solar energy @ 10 am
Tuesday: United States Energy Association forum on scrubbing carbon from atmosphere @ 2 pm
Tuesday: Energy Department webinar on national energy literacy @ 3 pm
Tuesday: Quarterly Earnings- Oasis Petroleum Inc, First Solar Inc, Northern Tier Energy LP
Wednesday: Quarterly Earnings- CenterPoint Energy Inc, Energy Transfer Partners, EP Energy Corp, Devon Energy Corp
Thursday: Quarterly Earnings- Consolidated Edison Inc, Chesapeake Utilities Corp, NRG Energy, Atlas Energy LP
Friday: Quarterly Earnings- PDC Energy
19-20: Natural Gas
OPINIONS, EDITORIALS, PERSPECTIVES
26-27: Morning Consult
28-30: New York Times
RESEARCH REPORTS, ISSUE BRIEFS, CASE STUDIES
1) EPA Coal Plant Emissions Limits Challenged by 12 States
from Bloomberg by
A dozen states led by West Virginia sued the U.S. Environmental Protection Agency to block a proposed rule that would limit carbon dioxide emissions from coal-fired power plants. The states said a U.S. Supreme Court ruling prohibits the EPA from issuing power-plant rules under one section of the Clean Air Act, known as 111(d), when it has already regulated them under a separate section. The agency previously used the act to regulate hazardous air pollutants in 2012, according to the filing. The high court ruled in 2011 that the “EPA may not employ section 111(d) if existing stationary sources of the pollution in question are regulated under...the ‘hazardous air pollutants’ program,” the states said in their filing in federal court in Washington. Regulation of mercury and other toxics in 2012 “does not deprive EPA of the authority regulate CO2 emissions” under section 111(d), the EPA said in a memo accompanying the June rulemaking for carbon dioxide reduction.
2) Goldman’s Icy Arbitrage Draws Interest to Meet EPA Rule
3) White House hands gavel to LaFleur, as Bay stands by
from E&E by Katherine Ling
President Obama officially named Cheryl LaFleur today to lead the Federal Energy Regulatory Commission until next April. The White House has designated Norman Bay to take over the chairmanship on April 15, 2015. LaFleur had been FERC's acting chairwoman since the resignation of former Chairman Jon Wellinghoff last November. The unusual measure of having a chairman-in-waiting is the result of a tumultuous confirmation process for Bay, currently the head of FERC's Office of Enforcement, and for LaFleur for a second term. LaFleur was officially sworn in this week. Bay still hasn't been sworn in, according to FERC.
4) Sen. Patty Murray provides climate costs talking points
from Washington Post by Juliet Eilperin
Senate Budget Committee Chairman Patty Murray (D-Wash.) is sending a memo Friday to her Democratic colleagues urging them to start talking about how climate change will hurt the federal budget.
The memo, obtained by The Washington Post, details how global warming impacts will affect four key sectors of the federal budget: disaster relief; transportation and infrastructure; national security and agriculture. It comes three days after the Budget Committee held a hearing on the subject, and the White House published an economic analysis saying that delaying carbon emissions cuts will cost the U.S. billions.
5) Ending crisis for now, Highway Trust Fund fix goes to Obama
from E&E by Sean Reilly
Congress gave final approval last night to a Highway Trust Fund bailout, bypassing a crisis that could have jeopardized road-building projects across the country. Senate passage of the almost $11 billion House-passed measure, H.R. 5021, came on an 81-13 vote a few hours after the House had rejected, 272-150, an amended Senate version that would have changed both the timetable and the funding level. The final measure, which is supposed to keep the trust fund solvent through May, now goes to President Obama for his signature. The congressional sign-off arrived one day before Department of Transportation leaders had planned to begin rationing reimbursements to states to keep the trust fund's road-building account from running out of money.
6) Group Earns Oil Income Despite Pledge on Drilling
from New York Times by Justin Gillis
The nation’s largest environmental group is earning money from an oil well on land it controls in Texas, despite pledging a decade ago not to permit new oil and gas drilling on land supposedly set aside for conservation. That revelation is contained in a forthcoming book about climate change by the writer and activist Naomi Klein, and the essential facts of the case were confirmed last week by the Nature Conservancy, the environmental group in question. The Nature Conservancy — which says it helps protect about 20 million acres in the United States — argues that it has had no choice in the case of the well. Under the terms of a lease it signed years ago with an oil and gas company and later came to regret, the group says it had to permit the drilling of the well in 2007. But the lease contains termination clauses, and Ms. Klein argues in the book that the Nature Conservancy could most likely have stopped the 2007 drilling. The group has earned millions of dollars over the years from gas and oil production on the property, though the 2007 well was not especially lucrative.
7) Enviros sue EPA, accuse agency of resetting deadlines for soot curbs
from E&E by Amanda Peterka
Environmental groups have asked a federal court to review a recent U.S. EPA rule that establishes a new deadline for states to submit plans to reduce fine particle pollution. The groups allege that the rule violates the Clean Air Act, which lays out deadline schedules for addressing areas that do not meet federal pollution standards. They want the court to toss the rule and for EPA to issue sanctions to states that have not already taken steps to meet the 1997 and 2006 particulate matter standards. The Clean Air Act is "very clear about when plans are due, when areas have to meet the standards and what happens when they don't," said Paul Cort of Earthjustice, who submitted the petition yesterday to the U.S. Court of Appeals for the District of Columbia Circuit on behalf of the environmental groups. "You don't need an EPA rule to figure it out."
8) Billionaire climate-change supporter pledges to spend big to beat Florida Gov. Rick Scott
from Miami Herald by Marc Caputo
The billionaire is ready to take out Florida’s multi-millionaire governor. In a nationwide push to fight Republicans who deny the existence of man-made climate change, investor-turned-activist Tom Steyer has founded a Florida political committee, seeded it with $750,000 of his own money, and says he’ll spend far more to help Democrat Charlie Crist defeat Gov. Rick Scott. Florida Democrats are buzzing about Steyer spending $10 million, which he won’t discuss. Republicans say the California Democrat is a phony environmentalist, but they nevertheless worry that his financial commitment could be real in Florida.
9) As Oysters Die, Climate Policy Goes on the Stump
from New York Times by Coral Davenport
Billions of baby oysters in the Pacific inlets here are dying and Gov. Jay Inslee of Washington is busy spreading the bad news. “It used to be the canary in the coal mine,” Mr. Inslee said in a recent interview. “Now it’s the oyster in the half shell. You can’t overstate what this means to Washington.” Or to Mr. Inslee’s ambitions. The Democratic governor, aided by what is expected to be millions of dollars from his billionaire friend Tom Steyer, is using the story of Washington’s oysters — scientists say a rise in carbon levels has spiked the acidity of the Pacific and is killing off shellfish — to make the case for passing the most far-reaching climate change policies in the nation.
10) U.S. Stock-Index Futures Rise as Investors Await Earnings
11) One condensate cargo sails away, but others could take time
from Houston Chronicle by Jennifer A. Dlouhy
A cargo of minimally processed condensate is now sailing away from the port of Galveston, becoming the first known export of that ultra-light oil to a country other than Canada. But Eagle Ford oil producers are hoping it isn’t the last. Some analysts believe there there is an opportunity for Eagle Ford Shale oil producers to eventually sell hundreds of thousands of barrels of condensate per day to overseas buyers, but it will take time for other companies to follow the leads of Enterprise Product Partners and Pioneer Natural Resources, which received the first government classifications opening the door to those exports.
12) As Industry Pushes for Exports, Voters Fear Price Increases
from Morning Consult by Emily Holden
or more than four decades, federal law has prohibited U.S. energy companies from selling unrefined American crude oil abroad without a special license. But that policy is under scrutiny since the Commerce Department approved two applications to export a type of light oil called condensate. A $40 million shipment of oil from Texas departed for South Korea last week, the result of a campaign fueled by “determined energy companies, loophole-seeking lawyers, and an unprecedented boom in American drilling that could create a glut of ultralight oil,” the Wall Street Journal reported. Most of that effort has been behind-the-scenes, but major oil companies have also increased their public calls for an export policy change in recent months. With midterm elections approaching, they may be facing an uphill battle on that front, according to Morning Consult polling data. Although domestic oil production has increased nearly 50 percent since the end of 2011, likely voters worry about the impact that expanding energy exports could have on their wallets. More than half of those polled—55 percent—think more oil or natural gas exports could raise prices in the U.S. Still, 28 percent have no opinion on the matter. Far fewer—17 percent—disagree that exports might increase their electric bills or gasoline prices.
13) Exxon Reports Strong Profit, Despite Drop in Production
from New York Times (Reuters)
Exxon Mobil, the world’s largest publicly traded oil company, reported a stronger-than-expected quarterly profit on Thursday as higher prices for its crude oil and natural gas offset a 6 percent drop in production.
Exxon has struggled in recent quarters to replenish its reserves quickly, investing in new projects in Russia and Papua New Guinea that take years to develop. And many of its smaller peers have developed shale formations around North America with surging production levels that excite investors. “Declining production is a recurring theme for Exxon Mobil,” said Brian Youngberg, an Edward Jones analyst. “The company remains growth-challenged, and a lot of that is due to their large size.” Adding to the company’s challenges are Western sanctions against Russia because Exxon is more involved in that country than any other oil company in the United States.
14) Exxon and Shell mum on business risks in Russia amid strong earnings
from E&E by Joel Kirkland and Nathanial Gronewold
Positive feelings about strong second-quarter earnings yesterday weren't enough to nudge top executives at Royal Dutch Shell PLC and Exxon Mobil Corp. into describing their exposure to U.S. and European sanctions against Russia. "It is very, very hard to judge based on the information we have today in detail how this is going to work out," said Shell CEO Ben van Beurden.
15) What Do U.S. Sanctions Mean for Exxon's Close Friendship With Russia in the Arctic?
from National Journal by Marina Koren
The latest round of sanctions against Russia have the opportunity to hurt Russia's oil industry, its crown jewel. But for that to work, they may have to hurt one of the most valuable companies in the U.S. Sanctions from the Commerce Department's Bureau of Industry and Security will require U.S. companies to obtain licenses in order to export technology to Russian oil production in the Arctic and elsewhere. The measures "are designed not to impact Russian current production, but to impact their ability to produce in more technologically challenging future projects," a senior administration official said Tuesday. One of these future projects, however, involves America's biggest oil company: Exxon Mobil.
16) The IMF Wants Your Gas to Be More Expensive
from National Journal by Jason Plautz
Rising gas prices may be the bane of most drivers, but the International Monetary Fund says those costs aren't nearly high enough. In a book released today, the IMF states simply, "Many energy prices in many countries are wrong." The international bank backs tax reform that would peg fuel, coal, natural gas, and diesel prices to the cost of global warming, air pollution, and the impacts of motor-vehicle use. For the U.S., for example, that could mean a $1.60 per gallon corrective tax on gasoline to cover health impacts from car exhaust pollution, traffic accidents, and wear and tear on highways, plus taxes on coal and natural gas to account for the energy sector. But the benefits, the report says, would be felt across the spectrum.
17) Tesla chief predicts price parity with gasoline-powered cars within 10 years
from E&E by Julia Pyper
Tesla Motors Inc. took concrete steps this week toward launching a first-of-its-kind, large-scale battery production facility. CEO Elon Musk told investors yesterday he's confident electric vehicles will match or beat the price of comparable internal-combustion-engine vehicles within the next 10 years. Auto industry experts believe that battery costs would have to drop to $100 per kilowatt-hour in order for electric vehicles (EVs) to have a distinct cost advantage over gasoline-powered cars. Tesla currently produces batteries for its 300-mile-range Model S all-electric sedan at roughly $250 per kWh.
18) BP appeals to Supreme Court on spill settlement
from Houston Chronicle by Collin Eaton
BP is asking the U.S. Supreme Court to intervene in a months-long battle over who can get paid for Gulf oil spill damages. The London oil company on Friday filed a petition asking the Supreme Court to enforce requirements for claimants to prove they can join a class-action settlement that has poured billions of dollars into Gulf Coast pockets to fix the economic wreckage left by the spill.
19) Dispute Flares Over Burned-Off Natural Gas
from Wall Street Journal by Chester Dawson
It isn't every day that an energy company tries to give away cash, but one of the biggest oil producers in North Dakota is trying to do just that. Continental Resources Ltd. says it wants to pay state taxes and make royalty payments on natural gas it improperly burned off at dozens of wells in recent years. The company is asking state regulators to approve its plans, including the value it is assigning to the gas that was burned in the controversial practice known as flaring.
20) Low cost gas, energy efficiency could mean low costs for some manufacturers, report says
from Houston Chronicle by Robert Grattan
Cheap natural gas and energy-efficiency programs may mean low fuel costs for the growing sector of metal-based durable manufacturers, according to a new analysis by the U.S. Energy Information Administration.
The metal-based durables industry includes businesses that make electronics, appliances, machinery and transportation equipment such as aircraft engines. The industry relies on natural gas and electricity for a greater percentage of its fuel than many other manufacturers –which often use other fossil fuels including coal and diesel — so it could stand to see more of a benefit if low gas prices continue and the push for energy-efficient buildings and processes keep costs low, the report states.
21) India Runs Short on Coal, Despite Global Price Slump
from Wall Street Journal by Eric Yep and Saurabh Chaturvedi
India's reliance on domestic coal has left many of its power stations starved for fuel, forcing electricity cuts throughout the country, even as the price of coal imports slumps. Despite having the world's third-largest coal reserves, according to the International Energy Agency, a quarter of India's 100 coal-fired power stations are short of supply with stocks of less than four days, and some hanging onto even lower stockpiles, official and trade data showed. A prolonged summer and below-normal monsoon rains have exacerbated the situation by raising electricity demand. At the same time, global coal prices have fallen to their lowest levels in years, with ANZ predicting in a report last week that prices will drop 10% more over the next two to three years as China slows spending.
22) Plan unveiled to dismantle San Onofre
from U-T San Diego
Owners of the San Onofre nuclear plant on Friday made public for the first time a detailed road map for dismantling the site’s twin nuclear reactors and safeguarding highly radioactive waste. Southern California Edison hopes to remove the plant, sandwiched in the 800-foot gap between Interstate-5 and the ocean 50 miles north of San Diego, and restore the Navy-owned property over the course of two decades. The first dismantling work would start in early 2016, with large reactor components removed by 2022, according to the plan, which spells out schedules, budgets and environmental impacts. Spent nuclear fuel will remain indefinitely at San Onofre while the U.S. government comes up with a nationwide solution for storing the highly-radioactive waste.
23) Kenya Wind Farm Signals Hurdles for Obama Program
from Wall Street Journal by Heidi Vogt
On a plateau above Kenya's Rift Valley, farmer David Kinyanjui looks over his cabbage field and the house he refuses to abandon to make way for the country's first private wind farm—a telling snag for an ambitious U.S. aid program in Africa. "This is my ancestral land," said Mr. Kinyanjui, who has joined other farmers blocking the Kinangop wind farm. "I have buried my father there. I have buried my mother there." The delay threatens the Kinangop project and much more. The wind farm is an early test of a U.S. program called Power Africa aimed at redefining aid by teaming with private investors to provide what the continent desperately needs: Power.
24) Obama’s Delay on Renewable Fuel Puts Producers in Bind
from Bloomberg by Mark Drajem
In the arid Imperial Valley of California, Tim Brummels is trying to turn an agricultural cousin of sugarcane into low-carbon ethanol. It’s the kind of climate-friendly project supporters have pined for since Congress in 2005 ordered refiners to use more renewable fuel. Even so, Brummels’ company -- Canergy LLC -- is being stymied by an unlikely culprit: the Obama administration. The Environmental Protection Agency is eight months past the deadline for issuing its mandate of how much ethanol, biodiesel and other petroleum alternatives must be blended into motor fuels this year, leaving investors wary about the government’s commitment to the program. At the same time, cuts EPA proposed last year, and a surprise regulatory rewrite last month, may undercut demand for Canergy’s ethanol.
25) Legislature deals setback to Patrick on energy bills
from Boston Globe by Jay Fitzgerald
Governor Deval Patrick and renewable-energy advocates suffered setbacks early Friday when high-profile solar and hydropower bills failed to pass before the Legislature adjourned for the year. The state’s solar industry eked out a partial victory when lawmakers approved an increase the number of large-scale solar projects that can qualify for a popular financial incentive program designed to boost solar generation in Massachusetts. But industry officials had sought total elimination of caps on the number of participants in the program, known as net metering. Net metering allows electric customers to effectively resell surplus power from rooftop systems back to utilities, which makes solar energy more attractive for developers.
OPINIONS, EDITORIALS, PERSPECTIVES
26) New York Offers Alternative Approach to Becoming a Clean Energy Economy
from Morning Consult by Rory Christian, NY Clean Energy Director for Environmental Defense Fund
For several years utility industry strategists and public utility officials have been trying to come to grips with a potentially lethal threat to the utility business model. Now New York is taking the lead in finding an approach that may serve as a useful model for other states. In fact, New York — which has been long been part of the Regional Greenhouse Gas Initiative that places caps on power plants in the Northeast — is quickly becoming one of the most effective states in the country when it comes to promoting clean energy solutions. In the year and a half since the devastating impact of Hurricane Sandy, New York Gov. Cuomo has appointed strong leadership and devoted large-scale investment to develop a resilient energy infrastructure that can withstand the extreme weather events brought on by climate change. And the state is now digging into a major evaluation of how energy is produced, distributed, and priced.
27) Why Tariffs on Chinese Solar are Good News for U.S. Manufacturing
from Morning Consult by Brad Mattson. CEO of Siva Power
The Department of Commerce (DOC) has announced big, new anti-dumping tariffs on Chinese-made solar panels. The American solar industry’s trade body, the Solar Energy Industries Association (SEIA), has worked actively to avert further tariffs on imported Chinese panels, arguing that it will do irreparable harm to the nascent industry, cause a slowdown in what has been one of the fastest-growing job markets in the country, and delay the timeline for making solar cost competitive with coal and natural gas. And while SEIA’s argument is correct that cheap Chinese solar modules have been instrumental in bringing down the cost of solar and creating parity between coal-fired electricity and renewables, the group has also reinforced the unfortunate trend in the United States of focusing on the service economy at the expense of advanced manufacturing. And the artificial, government-subsidized plunge in Chinese solar modules prices over the past 10 years has further aggravated that short-sightedness. Let’s be clear – cheap Chinese panels have been a boom for the U.S. solar industry only when it comes to the “downstream” – i.e. the service side of the business including installation, finance, etc. But they have largely been a bust for the “upstream”, i.e. solar manufacturing. And that has been driven by unfair (and well documented) government-backed support in China.
28) Nuclear Lessons for the World
from New York Times
The United States National Academy of Sciences has identified the main lessons that nuclear operators around the world should learn from the devastating accident at the Fukushima nuclear power plant in Japan in 2011. The primary lesson is to be ready for events that happen outside the plant. The Fukushima plant was disabled by the twin effects of a large earthquake and the huge tsunami it generated, causing the plant to lose internal and external power and making it impossible to cool the reactors to prevent a meltdown and release of radiation...The Japanese won’t learn much from the report that they don’t already know from their own extensive investigations. The academy’s panel of about 20 part-time experts and its supporting technical staff lacked the language skills to read deeply into the Japanese accident reports, but, in any case, it had not been tasked by Congress to recommend changes in plant operations in Japan or other countries, suggest changes in the design of nuclear plants in America or assess whether American nuclear plants are safe.
The panel did, however, suggest various precautions that can and should be taken against an unexpected disaster. Industry is already implementing some of these ideas on a voluntary basis — providing additional backup power and water, scattering vital emergency equipment in multiple locations throughout a plant site, and the like.
29) New Study Sees Atlantic Warming Behind a Host of Recent Climate Shifts
from New York Times by Andrew C. Revkin
Using climate models and observations, a fascinating study in this week’s issue of Nature Climate Change points to a marked recent warming of the Atlantic Ocean as a powerful shaper of a host of notable changes in climate and ocean patterns in the last couple of decades — including Pacific wind, sea level and ocean patterns, the decade-plus hiatus in global warming and even California’s deepening drought. The study, “Recent Walker circulation strengthening and Pacific cooling amplified by Atlantic warming,” was undertaken by researchers at the University of New South Wales and University of Hawaii.
30) Shattering Myths to Help the Climate
from New York Times by Robert H. Frank
Each new climate-change study seems more pessimistic than the last. This May and June, for example, were the hottest ones on record for the planet. Storms and droughts occur with increasing frequency. Glaciers are rapidly retreating, portending rising seas that could eventually displace hundreds of millions of people. Effective countermeasures now could actually ward off many of these threats at relatively modest cost. Yet despite a robust scientific consensus that greenhouse gas emissions are at the root of the problem, legislation to curb them has gone nowhere in Congress. In response, President Obama has proposed stricter regulations on electric utilities, which some scientists warn may be too little, too late. Why aren’t we demanding more forceful action? One reason may be the frequent incantation of a motley collection of myths, each one rooted in bad economics.
RESEARCH REPORTS, ISSUE BRIEFS, CASE STUDIES
31) Recent Walker circulation strengthening and Pacific cooling amplified by Atlantic warming
An unprecedented strengthening of Pacific trade winds since the late 1990s has caused widespread climate perturbations, including rapid sea-level rise in the western tropical Pacific, strengthening of Indo-Pacific ocean currents, and an increased uptake of heat in the equatorial Pacific thermocline. The corresponding intensification of the atmospheric Walker circulation is also associated with sea surface cooling in the eastern Pacific, which has been identified as one of the contributors to the current pause in global surface warming. In spite of recent progress in determining the climatic impacts of the Pacific trade wind acceleration, the cause of this pronounced trend in atmospheric circulation remains unknown. Here we analyse a series of climate model experiments along with observational data to show that the recent warming trend in Atlantic sea surface temperature and the corresponding trans-basin displacements of the main atmospheric pressure centres were key drivers of the observed Walker circulation intensification, eastern Pacific cooling, North American rainfall trends and western Pacific sea-level rise. Our study suggests that global surface warming has been partly offset by the Pacific climate response to enhanced Atlantic warming since the early 1990s.