E&E News, January 21, 2021

President Biden delivered remarks yesterday after taking the oath of office on the Capitol steps. Francis Chung/E&E News

President Biden took swift action to deliver on his promise to embrace green energy hours after he was sworn into office yesterday, mandating a review of regulatory rollbacks that were part of the Trump administration’s efforts to boost the fossil fuel industry.

Among the pledges outlined in executive orders: a plan to overturn Trump-era loosening of energy efficiency standards for buildings and appliances and place a temporary moratorium on oil and gas leasing in the Arctic.

At the same time, the fate of some Biden campaign proposals remained unclear. Yesterday’s orders did not include a plan, for example, to end new oil and gas leasing on federal lands. When asked if the administration still has a commitment to that, Biden spokeswoman Jen Psaki said, “We do, and the leases will be reviewed by our team. We just have only been in office for less than a day now.”

The highest-profile oil and gas rules that will be scrutinized are methane regulations President Trump’s EPA enacted as part of wiping out President Obama’s stricter controls on emissions from oil and gas production infrastructure, such as well sites (Climatewire, Aug. 14, 2020).

Obama’s rules had been unpopular in the oil and gas industry, particularly with smaller companies who chafed at the cost of leak detection and repair. But since Obama left office, large oil and gas companies had started supporting stricter rules and opposing Trump’s rollbacks. The industry’s larger players feared it looked bad in an increasingly climate conscious world to oppose regulations on a potent greenhouse gas.

At the Transportation Department, the Biden administration also will review a Trump plan that allowed liquefied natural gas to move on rail cars, according to administration documents. Before Trump acted, LNG could be hauled on rails only with a special permit or conditions established by the Federal Railroad Administration. Safety advocates and environmental groups cried foul at the prospect of rail cars filled with methane supercooled to minus 260 degrees Fahrenheit chugging through cities and towns. House Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.) blasted the rule last year as “reckless” (Energywire, June 23, 2020).

Green groups welcomed yesterday’s moves, including Biden’s decision to rejoin the Paris climate accord and revoke the permit for the Keystone XL oil pipeline.

“We’re pleased to see President Biden, Vice President Harris, and their team get swiftly to work in rolling back Trump’s pile of giveaways to the fossil fuel industry,” David Turnbull, strategic communications director at Oil Change International, said in a statement. “Ensuring that decision-makers account for the full climate impacts of proposed fossil fuel projects will allow our government to make the right decisions to reject these projects. We hope these actions signal what the American people need, an administration leading the transition to a clean energy economy.”

Oil industry groups, meanwhile, signaled a willingness to work with the Biden team, while making clear their interest in preserving markets for their products.

The American Petroleum Institute, which represents the oil and natural gas industry, congratulated Biden on his win and offered support for “the ambitions” of the Paris Agreement while stressing that oil and gas are “part of the solution.”

“Models show that this agreement between nations cannot be achieved without access to natural gas,” American Petroleum Institute President and CEO Mike Sommers said in a statement.

The American Exploration and Production Council, which represents independent oil and gas producers, said it had anticipated many of the regulatory changes the administration proposed and said its members want to cooperate in drafting the changes.

“We want to be partners in our nation’s recovery,” CEO Anne Bradbury said in a statement, urging the administration “to work with us on ensuring our communities have access to affordable, reliable energy.”

“Sweeping climate actions that drive up energy prices or cause our workers to lose their jobs and livelihoods should be avoided at all costs,” she said.

Yet some analysts said Biden’s administration could boost the oil and gas industry by passing an aggressive economic stimulus, building infrastructure and speeding up vaccinations to end the pandemic.

“The expected stimulus package includes financial aid to low-income American families, extended unemployment insurance payments, and billions of dollars in support to state and local governments to avoid layoffs of state employees,” Chris Page, oil markets analyst at the analytical firm Rystad Energy, said in a research note.

“Together with a sizable infrastructure package and an increased likelihood of additional short-term stimulus packages down the road, the Democratic policies create a definite oil products demand upside,” Page said.

Oil prices and the broader stock market both rallied yesterday as Biden was sworn in.

Clean energy moves

Beyond Biden’s immediate moves yesterday, green groups and renewable and electric vehicle advocates said they were expecting far-reaching action on clean energy within Biden’s first 100 days, from more executive action to his support for new legislation.

“We’ve been working for years to prepare to support exactly this kind of agenda,” said Greg Wetstone, CEO of the American Council on Renewable Energy (ACORE).

Over the next week, he predicted, a new chair of the Federal Energy Regulatory Commission would be selected. That could be followed by consideration of an infrastructure package featuring a large-scale expansion of transmission infrastructure. And other renewable-friendly priorities for ACORE, like a clean energy standard or a carbon price, could also get attention within the first 100 days, he added. “It’s a long list of constructive actions,” said Wetstone.

Other clean energy groups listed a similarly voluminous mix of policies that could get attention early on.

Spokespeople for the Solar Energy Industries Association (SEIA), the top trade group for solar, listed six priorities that ranged from a repeal of tariffs on solar imports to new tax incentives. The Zero Emissions Transportation Association’s representatives cited new fuel-economy and greenhouse gas emissions regulations as well as federal charging investments and point-of-sale rebates for electric vehicles. And the American Clean Power Association said it would focus on advancing changes to tax policy.

Clean business group E2 echoed many of those proposals, along with an administration measure that encourages federal procurements of clean energy technologies.

“As we look to the first 100 days of the administration, it is essential that President Biden follow through on his commitment to make clean energy the cornerstone of COVID-19 recovery efforts,” wrote Michael Timberlake, communications director at E2, in an email to E&E News.

Sen. Ron Wyden (D-Ore.), who now chairs the Senate Finance Committee, applauded Biden’s action and said his priorities would include overhauling the energy tax code “to move us toward a carbon-free future.”

Biden directed every federal agency to scrutinize and “take appropriate action” to address Trump-era decisions considered “harmful to public health, damaging to the environment, unsupported by the best available science, or otherwise not in the national interest.” His administration outlined dozens of rule changes at federal agencies but noted the list was not exhaustive and it was unclear how fast — or how much — of each regulation could be reversed.

Energy efficiency advocates welcomed the inclusion of 10 appliance standards on the list to be scrutinized at the Department of Energy — and hoped it means a sharp reversal of the Trump administration. Trump ridiculed tougher standards for toilets, showerheads and sinks on the campaign trail, and 14 states and environmental groups are suing Trump’s Department of Energy for missing legal deadlines to upgrade two dozen appliance standards.

“It’s a very positive sign he gets it,” Joe Vukovich, an attorney with the Natural Resources Defense Council’s climate and clean energy program, said of Biden. He noted Biden’s former boss, President Obama, cited appliance standards in a recent appearance on Stephen Colbert’s “The Late Show” when asked about an important accomplishment that went unheralded.

“President Biden was there when there was this tremendous flurry of activity in the program,” Vukovich said. “It’s a very encouraging sign that we have a president who takes energy efficiency seriously and realizes that it’s an important part of the climate solution.”

The Carbon Capture Coalition also sent a memo yesterday outlining its priorities, including expanding support for workforce training programs targeted at CCS initiatives and coordinating a study evaluating how CCS retrofits at industrial centers and power plants could affect local air quality.

The coalition said the administration should boost funding and resources for EPA’s Underground Injection Control Program to streamline the permitting process for carbon capture projects.

What’s next at Interior?

For the Interior Department, the Biden announcements suggested a fundamental shift in the agency that oversees federal mineral development, at least compared to the last four years, with staffing choices that represent green ambitions.

Biden packed the department’s core political staff and senior aides with former Obama employees and experts that have been engaged in a four-year battle with the Trump administration over energy resources.

That core team will “address the climate and nature crises and build a clean energy future that creates good-paying jobs and powers our nation,” said incoming chief of staff, Jennifer Van der Heide in a statement that didn’t mention fossil fuel management — one of Interior’s primary areas of responsibility.

Staffers sworn in yesterday from the nonprofit sector include the principal deputy assistant secretary for land and minerals management, Laura Daniel Davis, who previously worked for the National Wildlife Federation. Kate Kelly was named the new deputy chief of staff for policy. She previously led the public lands campaign at the Center for American Progress and was a senior adviser to Obama’s second Interior secretary, Sally Jewel.

Biden’s chosen adviser to the Bureau of Ocean Energy Management, the subagency that manages offshore energy leasing for the Interior, is Marissa Knodel, previously a lawyer for Earthjustice. Knodel once ran a campaign for Friends of the Earth to halt oil and gas development on public lands and waters, according to the Biden press announcement.

Several advocates said they were closely watching oil and gas leasing and anticipated further executive action in the coming weeks to limit oil and gas exploration on federal lands. A pause on the practice was a central Biden-Harris campaign promise and part of a commitment to reach net-zero emissions for the country by midcentury.

But the administration only started modestly on that front yesterday, with a temporary moratorium on leasing activity for the Arctic National Wildlife Refuge, where the Trump administration recently sold the first-ever drilling rights.

The impact of that move is not fully clear, but it signals a direction for the administration on energy development in sensitive areas.

Mark Squillace, a natural resource law expert at the University of Colorado Law School, said it appeared to be more of “a political statement than anything else” — signaling Biden’s opposition to development in ANWR, if not action to fully prevent it.

John Leshy, former Interior solicitor and professor at the University of California’s Hastings College of the Law, said the moratorium appeared to inhibit any activity on the leases that industry currently holds in the refuge and believed it was unlikely that a moratorium would be challenged in court unless it was dragged out for years.

“I think the president clearly has such authority,” he said.

Biden’s mandate that agencies consider recent regulations for climate and environmental effects, include NOAA Fisheries’ recent greenlight for hundreds of whales to be harmed by the oil and gas industry’s geotechnical surveys in the Gulf of Mexico. Other Trump-era moves to be reviewed include Interior’s sage grouse management plans in the West, the final development plan for ConocoPhillips Willow project in the National Petroleum Reserve-Alaska and well control regulations for offshore oil and gas operators.

The first-day activity bolstered green groups’ hopes of more aggressive action to target energy development on federal lands and waters.

“We must stop the expansion of dirty and dangerous offshore drilling and shift to clean, renewable energy sources like offshore wind,” said Jacqueline Savitz, chief policy officer for Oceana.

The Petroleum Association of Wyoming, home to a significant portion of federal oil and gas development, said it would work with Biden, but “vehemently challenge the administration when its policies seek to impede the natural gas and oil industry.”

Manchin pushback?

Many of Biden’s ambitious green energy and climate goals will need congressional action, but that will be a tough sell, even with a razor-thin Democratic majority in the Senate. He lacks a supermajority of senators, and more conservative Democratic senators may be leery of sweeping green legislation.

Sen. Joe Manchin (D-W.Va.), who will chair the Senate Energy and Commerce Committee, welcomed Biden’s move to rejoin the Paris climate accord but cautioned that it needs to be reworked to hold every country accountable.

And Manchin — who comes from a coal-rich state — warned that the U.S. will need to use “every tool, natural resource, and technology at our disposal in the cleanest way possible” to reach its climate goals.

“We must create jobs in places like West Virginia and wherever traditional energy workers have been left behind,” he said.

Conservatives assailed Biden’s moves, with American Energy Alliance President Tom Pyle charging that by revoking the Keystone XL pipeline permit and ordering agencies to “unravel President Trump’s pro-consumer regulatory reforms” Biden had “thumbed his nose at half of the country and squarely took aim at affordable energy, the families that benefit from it, and the American workers who produce it.”

Still, Biden, in a proclamation declaring yesterday a National Day of Unity, insisted “we can confront the climate crisis with American jobs and ingenuity.”

Reporters Lesley Clark, Mike Lee, Mike Soraghan, Heather Richards, David Iaconangelo and Miranda Willson contributed.

Biden is making the case for deficit spending on climate

Adam Aton, E&E News reporterPublished: Monday, December 7, 2020

President-elect Joe Biden delivering remarks Thursday. He has proposed massive investments in climate action during a time of high deficit spending. Biden Transition Via Cnp/ZUMAPRESS/Newscom

President-elect Joe Biden was unveiling his economic team when he made an off-script remark that could reveal as much about his climate plans as any staffing pick.

The deficit, Biden said, doesn’t matter. At least for the moment.

“You know, the founders were pretty smart. … There’s a reason why all the states and localities have to have a balanced budget, but we’re allowed federally to run a deficit in order to deal with crises and emergencies, as we have in the past,” he said Tuesday in a comment that was not written into his prepared speech. He was even more explicit Friday: “By acting now, even with deficit financing, we can add to growth in the near future.”

Biden, after spending three decades as one of the Senate’s most deficit-minded Democrats, now is laying the groundwork for an administration that will depend on deficit spending — especially for climate programs.

The core of Biden’s climate plan is $2 trillion to fund clean energy research and infrastructure, smoothing the way for possibly costly regulations while creating tangible projects that Republicans couldn’t easily reverse, like a network of electric vehicle charging stations.

He had planned to pay for it by repealing President Trump’s tax cuts, but Republicans likely have retained enough congressional power to block that. Some conservatives already are pointing to the national debt as a reason to oppose Biden’s plans. The deficit for the past fiscal year hit an all-time high of $3.1 trillion, bringing the total U.S. debt to about $27 trillion.

That means Biden’s climate agenda could depend on how hard he pushes for deficit spending. His administration’s debt posture will influence Democratic lawmakers’ appetite for borrowing. It will shape the contours of public debate on the issue. And it will set the boundaries for negotiations with Senate Republicans.

Tapping veteran Democrats, Biden’s economic team includes officials with histories of proposing spending cuts to lower the national debt.

But virtually all of them have recanted or qualified that stance, and no corner of the Democratic coalition is pushing austerity — a sweeping change from even the Obama administration, which entered the White House in 2009 talking about stimulus offset by budget cuts.

Third Way’s Josh Freed, who founded the centrist think tank’s climate and energy program, said deficit spending to stimulate the economy and cut emissions has become the new consensus.

“For all of the stories about internecine conflict amongst Democrats, this is a moment of greater unity … than there’s been in decades,” he said.

Paul Bledsoe, a former Clinton White House climate official who is now with the moderate Progressive Policy Institute, said the party has changed its tune because the economic fears of what deficits might bring — inflation and high borrowing costs for everyone — haven’t come to pass, nor have voters punished either party for big spending.

The coming months will test the resilience of that change. COVID-19 relief spending will precede infrastructure, giving Republicans an opportunity to weaponize the record-high deficit.

“This has been going on since the Reagan era. Republicans give huge tax cuts to the rich and then cry austerity when Democrats take over. And we’ve fallen for it twice. We did it under Clinton for sure, and we did it some under Obama,” said Bledsoe, who was communications director for the Senate Finance Committee in the early 1990s.

“I hope Democrats have learned a lesson or two from that,” he said. “I really think it’s the showdown of the next two years.”

Progressives remain vigilant for backsliding; the political left is engaged in pressure campaigns to shut out deficit hawks from the next administration.

Progressive lawmakers and activists are circulating a petition against Biden hiring his former chief of staff Bruce Reed, who was executive director of the Simpson-Bowles deficit reduction commission. Some counted it as a victory that Biden didn’t name Reed to lead the Office of Management and Budget.

Another target is former White House chief of staff Rahm Emanuel, who advocated for keeping the 2009 stimulus — still the largest clean-energy investment in U.S. history — beneath $1 trillion, despite economists calling for more. Biden is considering Emanuel for Transportation secretary.

“There’s sort of a wariness of deficit hysteria coming back,” said Sam Ricketts, a co-founder of the progressive climate policy group Evergreen Action.

“We can all only hope that everybody has learned the lessons about how … deficit hysteria has been used and abused, and how frankly unimportant — how quaint — concerns over the federal budget deficit are, versus the other crises we face,” he said.

Biden and Brian Deese

Brian Deese illustrates how onetime deficit hawks have won over some climate hawks.

Named last week as chair of the National Economic Council, Deese faced some activist opposition despite his past role as Obama’s climate adviser. Much of the criticism stemmed from his work for the giant Wall Street firm BlackRock Inc. — but some also keyed in on his budgetary record.

Deese was a top economic adviser to Hillary Clinton’s 2008 presidential campaign, formulating her policies under a rubric of deficit neutrality. In the Obama White House, he advocated “fiscal discipline” — including progressive proposals like eliminating oil subsidies, as well as regressive cuts to programs such as Social Security.

Critics have highlighted Deese’s 2013 confirmation hearing for OMB deputy director, when he said one of his top priorities would be cutting the deficit and outlined ideas to restrict agency spending.

By 2015, though, he was using White House blog posts to decry “mindless austerity.” Obama veterans said that was closer to Deese’s true vision, and several notable liberals have come to his defense.https://platform.twitter.com/embed/index.html?creatorScreenName=AdamAton&dnt=true&embedId=twitter-widget-0&frame=false&hideCard=false&hideThread=false&id=1333092825315954688&lang=en&origin=https%3A%2F%2Fwww.eenews.net%2Fstories%2F1063720017%3Futm_source%3DEnergy%2BNews%2BNetwork%2Bdaily%2Bemail%2Bdigests%26utm_campaign%3D91dbfdecf2-EMAIL_CAMPAIGN_2020_05_11_11_46_COPY_01%26utm_medium%3Demail%26utm_term%3D0_724b1f01f5-91dbfdecf2-89295160&siteScreenName=EENewsUpdates&theme=light&widgetsVersion=ed20a2b%3A1601588405575&width=550px

Minimizing Deese’s deficit record cleared the way for climate advocates to highlight other parts of his White House tenure, like helping to negotiate higher fuel standards as part of the 2009 auto industry bailout and his role in sealing the 2015 Paris climate agreement. He also advised Biden on his campaign’s climate plan.

“Brian Deese is great. We should be so lucky to have a climate leader running the NEC,” Leah Stokes, a climate policy expert at the University of California, Santa Barbara, wrote on Twitter.

“The climate movement should be careful not to shoot our friends,” she said.

A shift in ‘deficit politics’

Other officials with relatively progressive reputations have also faced scrutiny, such as Janet Yellen, Biden’s Treasury secretary-designate.

Yellen serves as a director of the Committee for a Responsible Federal Budget, a self-described “budget watchdog” that works to cut the deficit. In February, she said U.S. debt is “completely unsustainable.”

The deficit record of Neera Tanden, Biden’s pick to run the Office of Management and Budget, also has been picked up by her critics on the left.

As president of the Center for American Progress, Tanden supported the Obama administration’s proposal to cut social spending as part of a “grand bargain” with Republicans. Citing “deficit politics,” she also privately proposed paying for the U.S. military by expropriating Libyan oil, according to a leaked 2011 email.

Yellen and Tanden also demonstrate how much the past few years have changed deficit politics. Both have called for big government spending in response to the pandemic and economic downturn.

Earlier this year, Yellen singled out climate programs as an example of debt-worthy government investments.

In March, Tanden and Heather Boushey, whom Biden tapped for his Council of Economic Advisers, co-wrote a commentary that said “now is not the time” to worry about federal deficits.

Cecilia Rouse, Biden’s incoming chair of the CEA, and Jared Bernstein, soon to be one of its members, have likewise urged policymakers to massively boost spending.

“I’ve got every indication that the transition team is building an administration to prioritize the confrontation of [climate and other] crises, not a made-up deficit crisis,” said Ricketts, who is also a senior fellow at the Center for American Progress.

That’s not to say Biden’s team will ignore deficits. Many do say debt is important. But they distinguish between the limited, if large, stimulus spending Biden has proposed on climate and the ongoing obligations of social programs such as Medicaid.

“Yes, there will be a reckoning [on debt],” Rouse said in March. “But it will be worse if we don’t provide workers and firms with the help they will need to get to the other side of the pandemic.”

Bernstein last year told the House Budget Committee that deficits do matter, but policymakers should differentiate between “good debt” — like long-term infrastructure investments or stimulus during a recession — and “bad debt” that’s not productive, such as Trump’s tax cuts.

“Considering the set of unmet needs we observe in communities across the country, along with the threat from climate change, there exists a deep, rich set of [good debt] investment opportunities,” he wrote in his testimony.

POWERSHIFT

Key stories you may have missed:

• Early test for Biden: Car emissions rules
• Biden, once a critic, may boost nuclear power
• How Biden might win allies in the oil patch