Daily on Energy: UN climate talks and European energy crisis juxtaposed

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UN climate talks and Europe’s energy crisis juxtaposed World leaders are facing pressure during this week’s United Nations General Assembly and related Climate Week in New York City to demonstrate progress on strengthening emissions reduction commitments ahead of the critical UN climate summit later this fall.

But the conversations are being juxtaposed by an energy shortage crisis in Europe that threatens to get worse by the time November’s COP26 in Glasgow happens, a problem that could produce a popular backlash against aggressive climate policies.

“The simple reality is you can’t achieve some of these ambitious, almost herculean, energy transition targets without imposing massive and abrupt increases in costs of energy,” said Bob McNally, a former top energy official in the George W. Bush administration who now leads the research group Rapidan Energy. “How political leaders respond to the energy emergency in Europe this winter will offer some clues on whether they will be willing and able later this decade to accept massive transition costs,” McNally told me.

It’s not a direct line, but the crisis is a reminder of transition costs: Europe is facing an energy crunch caused by surging wholesale prices for natural gas, raising the prospects of higher utility bills for customers and forcing some manufacturers to halt operations.

The spike in natural gas prices is causing pain across Europe, where the fuel is used for home heating and cooking, as well as power generation, forcing governments of some countries, including Spain, Italy, France, and Greece, to take action to lower consumers' power bills.

While there is no evidence to support the idea that Europe’s climate policies are causing the natural gas shortage (see below for more on what is actually to blame), the European Union is guarding against the possibility that anti-green critics use it as fodder.

“The one thing we cannot afford is for the social side to be opposed to the climate side. I see this threat very clearly now that we have a discussion about the price hike in the energy sector,” Frans Timmermans, the European Commission's vice president in charge of climate issues, said at a parliament meeting last week.

Climate is still top of mind: To be clear, McNally said he doesn’t expect Europe’s energy crisis to disrupt climate talks this week, given the urgency for enhanced action.

The UN itself underscored the degree of the gap between current emissions reduction commitments and what’s needed, issuing a report Friday finding the global average temperature will rise by a “catastrophic” 2.7 degrees Celsius by the end of the century under pledges that countries have made so far.

“It’s always been the case we need smart, well-designed government policies that can speed the transition as cost effectively as possible in ways that promote economic growth,” Nat Keohane, president of the Center for Climate and Energy Solutions, told me. “That remains the case, no matter what’s happening in Europe.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email jsiegel@washingtonexaminer.com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

SO, WHAT’S CAUSING EUROPE’S ENERGY PRICE SURGE? A complex brew of forces is causing the European gas market’s unprecedented surge, creating a “perfect storm” of higher-than-expected demand and low supply, as I report for a story published over the weekend.

“We have never seen prices like this,” Ira Joseph, the global head of generating fuels and electricity pricing at S&P Global, told me. “We expected some sort of recovery after COVID because prices were so extremely low last year, but this is really extreme stuff.”

Global demand is up as economies open from the coronavirus pandemic, while a cold snap that occurred in the latter part of winter this year drained storage levels below normal levels, meaning there is little spare capacity.

There are other factors at play. Stronger demand for liquefied natural gas exports in more competitive Asian markets has diverted cargoes away from Europe.

Europe has also experienced unusually calm weather in recent weeks, leading to less wind power output and creating additional strain on gas supply, particularly in the United Kingdom, where wind normally provides 20% of the country’s electricity. Additionally, Russia, the top exporter of natural gas to Europe, is not sharing as much as would be expected when gas is at such high prices, even as its production has remained steady at home.

“You ended up with almost a perfect storm with lots of things put together,” said Anna Mikulska, a nonresident fellow in energy studies for the Center for Energy Studies at Rice University's Baker Institute for Public Policy.

REAL ESTATE COMPANIES INVEST IN $140 MILLION FOR CLIMATE TECH FUND: A group of large real estate companies is making an early splash to coincide with Climate Week in New York City.

Fifth Wall, a venture capital firm focused on clean energy technology for the real estate industry, announced this morning its Climate Tech Fund raised $140 million from industry players such as Equity Residential, Hudson Pacific Properties, Invitation Homes, and Ivanhoe Cambridge.

The fund is looking to raise a total of $500 million with the goal of organizing the largest pool of capital ever assembled to invest in technologies to decarbonize the $9 trillion real estate industry. The building sector is responsible for almost 40% of greenhouse gas emissions globally.

“We hope that more real estate organizations will follow their lead and equally commit to climate tech that is so critical to mitigating the real estate industry's contributions to climate change,” said Brendan Wallace, co-founder and managing partner of Fifth Wall.

NATIONAL CLEAN ENERGY WEEK KICKS OFF: Not to be outdone, today is also the official start of National Clean Energy Week, an annual pow-wow involving government officials, businesses, and advocates coming together to recognize the growth of clean energy in the U.S.

In conjunction with the celebration, 26 states and D.C. are officially recognizing this week as National Clean Energy Week.

The Policy Makers Symposium, the flagship event of National Clean Energy Week, will feature remarks from top Biden administration officials, including Deputy Energy Secretary David Turk; Jigar Shah, director of the Energy Department’s Loan Programs Office; and Sue Biniaz, deputy to climate envoy John Kerry; along with GOP Sens. Lisa Murkowski and Dan Sullivan of Alaska.

MORE PARLIAMENTARIAN PROBLEMS FOR DEMOCRATS: The Senate parliamentarian has issued a ruling saying that immigration-related provisions cannot be included in Democrats’ go-it-alone budget legislation, raising questions on whether other policy priorities can survive the complex rules of the reconciliation process.

In her ruling on Sunday, Senate Parliamentarian Elizabeth MacDonough said “the policy changes of this proposal far outweigh the budgetary impact scored to it and it is not appropriate for inclusion in reconciliation.”

Bills in that process are not allowed to concern measures “extraneous” to the budget. It comes after the Senate parliamentarian earlier this year blocked Democrats from adding a $15-an-hour minimum wage provision to a COVID-19 spending bill that also went through the reconciliation process.

So, what does that have to do with climate? Democrats have taken pains to design their centerpiece clean electricity payment program in a way that can survive. They hope structuring the plan as an investment program involving federal expenditures, in the form of providing grants to utilities, will allow it to pass muster with the Senate parliamentarian.

But Republicans could look to argue that certain provisions within the program violate reconciliation rules, as Politico reported this morning.

For example, the program's design would restrict how utilities could spend the federal payments, requiring them to use it in areas such as direct assistance to consumers, worker retention, and clean energy investments, which could be seen as a policy-related dictate that doesn’t have a budgetary impact.

NATIONS JOIN US-EU METHANE PLEDGE: Seven countries from across the world signed on to a novel U.S.-EU Global Methane Pledge aiming to cut global emissions of the gas 30% by 2030.

The United Kingdom, Argentina, Ghana, Indonesia, Italy, Mexico, and Iraq, a key OPEC member, all joined the agreement, which was formally announced over the weekend and seeks to reinforce the Paris Agreement goal of keeping global warming below 1.5 degrees Celsius.

A 30% global reduction in emitted methane, a gas that the EPA judges to be 25-fold more efficient at trapping heat than carbon dioxide over a 100-year period, would achieve a reduction in warming of at least 0.2 degrees Celsius by 2050, according to U.S. and EU estimates.

“The pledge represents an important test for countries heading into the November climate talks in Glasgow,” Environmental Defense Fund President Fred Krupp said in a statement supportive of the pledge. “A 30% reduction in methane pollution is the entry point for this critical conversation. Many countries can and should aim even higher.”

Arvind Ravikumar, a professor in the petroleum engineering department at the University of Texas, said it was the United States that should have aimed higher and pointed to the Obama administration's goal of cutting methane emissions by 40% to 45% from 2012 levels by 2025.

“Over the past five years, our understanding of methane emissions, and technology to address emissions, have significantly improved. And I think there's no reason why countries cannot be more ambitious than a 30% reduction in emissions,” Ravikumar told the Washington Examiner’s Jeremy Beaman last week.

OSHA TO DEVELOP WORKPLACE HEAT STANDARD: The Biden administration is dispatching multiple federal agencies to combat the public’s exposure to excessive heat, with a particular focus on countering threats that heat waves pose to workers who perform manual labor both in- and outdoors.

OSHA announced today it launched a rulemaking process for the development of a workplace heat standard and detailed a new enforcement initiative on heat-related occupational hazards, which will prioritize interventions and inspections of work activities when the heat index exceeds 80 degrees. Heat illness killed 43 workers and injured at least another 2,410 in 2019, per OSHA numbers, and summer heat waves in the Pacific Northwest reinforced the administration’s urgency to act.

“Rising temperatures pose an imminent threat to millions of American workers exposed to the elements, to kids in schools without air conditioning, to seniors in nursing homes without cooling resources, and particularly to disadvantaged communities,” Biden said in a statement.

Other heat-related initiatives involve the employment by EPA of funding allocated in the American Rescue Plan to develop cooling centers in school facilities and the launch of an “innovation challenge on heat protection” by the Department of Homeland Security, which will use prize competitions to pursue initiatives aimed at developing resilience against heat.

BLM HEADQUARTERS TO RETURN TO DC: The Interior Department is moving the headquarters of its Bureau of Land Management back to Washington, D.C., from Grand Junction, Colorado, in a reversal of a Trump administration decision.

“The Bureau of Land Management is critical to the nation’s efforts to address the climate crisis and expanding access to public lands. The bureau must have access to the policy, budget, and decision-making levers to best carry out its mission,” Interior Secretary Deb Haaland tweeted Friday, explaining the decision.

Interior said the Trump administration’s move, intended to bring BLM’s leadership closer to where most federal lands are located, had failed to deliver promised jobs across the West and drove hundreds of people out of the agency.

Of the 328 positions moved out of Washington, D.C., only 41 of the affected people chose to relocate to Colorado.

BLM will keep the Colorado office, however, to minimize “further disruption to employees and their families,” who did relocate there under the Trump administration.

HOUSE GOP TARGETS NEW HHS CLIMATE OFFICE: Twelve House Republicans are accusing the Biden administration of injecting “climate hysteria” into the Department of Health and Human Services in creating its Office of Climate Change and Health Equity.

HHS announced the new office last month and said assisting in efforts “to reduce greenhouse gas emissions and criteria air pollution throughout the health care sector” will be among its functions.

“This office has absolutely nothing to do with the stated mission of HHS and poses a threat to healthcare providers’ ability to provide care,” the GOP members, led by Texas Rep. Chip Roy, wrote in a recent letter to HHS Secretary Xavier Becerra exclusively obtained by the Washington Examiner.

“This administration has shamefully sought to expand the role bloated federal agencies already play in the lives of Americans by injecting climate hysteria into every aspect of government,” the letter said.

The Rundown

New York Times This powerful Democrat linked to fossil fuels will craft the U.S. climate plan

Washington Post Janet Yellen faces climate test as environmentalists push for more aggressive financial action

Reuters BP gambles big on fast transition from oil to renewables

Wall Street Journal Biden push to replace America’s lead pipes faces challenges

Calendar

TUESDAY | SEP. 21

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to consider the nominations of Laura Daniel-Davis to be an assistant secretary of the Interior for Land and Minerals Management, Camille Touton to be commissioner of reclamation, and Sara Bronin to be chairman of the Advisory Council on Historic Preservation.

WEDNESDAY | SEP. 22

9:30 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to consider several nominees, including Jeffrey Prieto to be General Counsel of the Environmental Protection Agency and members of the Chemical Safety and Hazard Investigation Board.

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