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REPUBLICANS’ WARNING TO POWELL: Republican lawmakers are warning Federal Reserve Chairman Jerome Powell to tread carefully around the issue of climate change.
In hearings in the House and Senate over the past two days, Republicans have called on Powell to stick to the Fed’s mandate, in which they don’t see climate change included.
“As noble as the goals might be, issues such as climate change, racial inequality are simply not the purview of our central bank,” said Sen. Pat Toomey, the top Republican on the Senate Banking Committee, during an oversight hearing with Powell yesterday.
Should the Fed go beyond that mandate, as Republicans say Democratic lawmakers and President Biden want it to, the GOP lawmakers fear it would jeopardize investments in fossil fuel companies.
“I do worry that injecting climate risk scenarios into stress tests could perpetuate the trend of the de-banking legally operating businesses like fossil fuels,” said Rep. Andy Barr, a Kentucky Republican who chairs the House Financial Services subcommittee on oversight and investigations, during a full committee hearing this morning.
Barr led a letter with dozens of his GOP colleagues to Powell in December raising alarm at recent moves from the Fed dipping its toes into climate change discussions. That included the Fed’s formal joining of a network of global central banks working to address climate change risks and promote clean energy investments.
The Fed also recently created a new Supervision Climate Committee to build on its climate work, recruiting Kevin Stiroh of the New York Federal Reserve to lead the effort.
Climate stress tests: Barr and other Republican lawmakers are warning the Fed against incorporating climate change into its financial stress tests. Even if the Fed doesn’t direct banks to drop fossil fuel investments, they may be inclined to do so “to satisfy the spirit of the tests,” Barr told Powell during the hearing.
“I would like the Fed to keep in mind that choking off capital to fossil energy will not only produce the kind of reliability challenges we saw last week in Texas, it will undermine the Fed’s maximum employment mandate,” Barr said.
Powell, in response to questions from Barr and others, said the Fed was in the very early stages of examining how climate change affects financial markets. He reiterated several times that the Fed members are not “climate policymakers,” and aren’t seeking to weigh in on how capital is allocated.
Banks and Treasury Department already moving: Even so, Powell also said climate change is a “very important issue,” and he noted that large and medium-sized banks are already having discussions about how climate change might affect their business model.
“Our role is really that of assuring that we are using our powers to carry out our mandate in supervising financial institutions to make sure that they’re resilient to all risks, including that of climate change,” Powell said in response to questions from Democratic Rep. Nydia Velázquez of New York.
Meanwhile, the Treasury Department is preparing to do more than dip its toes into the water on climate. Treasury Secretary Janet Yellen said Monday, during remarks at the New York Times DealBook conference, that her agency might be able to help facilitate climate stress tests that would then be carried out by the Fed and other financial regulators.
“I think it’s not envisioned that this would have the same status in terms of limiting payouts and capital requirements,” Yellen said in her remarks, referring to the Fed’s annual bank stress tests. “But I think they would be very revealing both to regulators and to the firms themselves in terms of managing their own risks.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] 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.
HAALAND SHIFTS A BIT ON LEASING PAUSE: Interior secretary nominee Deb Haaland said today that Biden’s administration’s pause on new oil and gas leasing on public lands and waters won’t be a “permanent thing.”
“It’s a pause,” Haaland said in the second day of her confirmation hearing before the Senate Energy and Natural Resources Committee. “It’s not going to be a permanent thing where we are restricting all these things from something.”
Haaland’s comment goes a step further than how she described the policy yesterday in the first day of her hearing.
Under questioning from Republicans who oppose the leasing pause, Haaland had said, “I don’t believe it is a permanent ban” but she did not definitely say it would end at some point.
But today, Haaland said Biden’s “indefinite” review of the oil and gas leasing program “is not going to last forever.”
BIDEN ORDERS REVIEW OF CRITICAL MINERALS SUPPLY CHAIN: Biden will sign an executive order this afternoon directing federal agencies to identify vulnerabilities in U.S. supply chains, including for critical minerals and batteries that power electric vehicles.
The order will set a 100-day deadline for federal agencies to complete a review of the risks to those supply chains, as well as those for pharmaceuticals and semiconductors. Federal agencies would then conduct a more in-depth review over the next year to strengthen the U.S. supply chains for various industries, including energy and transportation.
Many Republican lawmakers, as well as some Democrats, have raised alarms that the United States is too dependent on foreign nations, especially China, for critical minerals and materials.
The mining industry, which has said expanding U.S. production of critical minerals is vital to meeting Biden’s aggressive climate targets, is welcoming the executive order.
“We can’t import our way to economic and national security; we have to establish that security literally from the ground up by using American-mined materials produced by American workers under world-leading environmental standards,” said Rich Nolan, head of the National Mining Association, in a statement.
BIDEN MISSES DEADLINE TO UPDATE SOCIAL COST OF CARBON: The Biden administration has missed its self-imposed, 30-day deadline to publish the updated values, critical to assessing the benefits of policies that reduce greenhouse gas emissions.
The lapsed deadline comes as prominent economists have questioned the social cost of carbon metric, sharply criticizing the Obama administration’s value as too low to prompt the types of policies needed to curb climate change in line with the Paris climate agreement.
Biden had given an interagency working group 30 days to publish an interim value for the social cost of carbon, as well as for methane and nitrous oxide. That deadline passed on Friday, and the White House declined to share details publicly about when an announcement will be made.
The Biden administration is widely expected to at least return to the Obama administration social cost of carbon, set at around $50 per ton, in the near term.
As the Biden team explores longer-term changes to the way the metric is calculated over the next year, however, they’ll have to grapple with competing arguments from economists about whether the social cost of carbon is the most appropriate way to evaluate the benefits of reducing greenhouse gases.
More on the emerging battle in Abby’s story posted this morning.
BIG OIL DEMAND DROP FROM WINTER STORM: U.S. oil demand took a plunge last week to 18.7 million barrels per day from 20.7 million barrels p/d during a winter storm that knocked out power and froze activity, primarily in Texas.
Gasoline consumption took the biggest dive, dropping to 7.2 million barrels p/d from 8.4 million barrels p/d the week before, according to the Energy Information Administration. That’s the lowest level since May.
Oil analyst Tom Kloza noted it’s the lowest February week for U.S. motor fuel consumption since February of 1997. Texas, not uncoincidentally, is normally the nation’s largest consumer of motor fuel.
ROMNEY ‘OPEN’ TO CARBON TAX AND DIVIDEND: GOP Sen. Mitt Romney came closer than ever yesterday to endorsing a carbon tax that would return the revenue to taxpayers.
“I’m very open to a carbon tax, carbon dividend, where there’s a tax on oil companies and coal companies and so forth,” Romney said at the DealBook DC Policy Project hosted by the New York Times.
Romney noted the funds that are raised from the tax go to taxpayers so they could pay for the costs of the higher price of energy.
The Utah Republican has previously flirted with being the first in his conference to endorse a carbon tax and dividend, but not to this extent. He suggested he was newly motivated by recent comments from Bill Gates who has said “don’t play around the edges” on addressing climate change.
“He is suggesting a major investment at the federal level in new technology, carbon capture, perhaps, nuclear energy and so forth,” Romney said.
Romney said he was open to ideas that would enable that innovation to happen. “The carbon tax, carbon dividend, is such an idea,” he said.
BIDEN AND TRUDEAU CHART CLIMATE COORDINATION: Biden and Canadian Prime Minister Justin Trudeau, who share an interest in aggressively combating climate change, charted a course yesterday to work together.
“U.S. leadership has been sorely missed over the past years,” Trudeau told Biden before their virtual bilateral meeting. Both countries promised to update their emissions reduction targets under the Paris Agreement before a planned global climate summit in April.
After the meeting, the White House announced a number of initiatives to coordinate efforts, including encouraging the development of cross-border transmission lines to enable the sharing of clean energy.
That would ease the path for Biden’s goal of carbon-free electricity by 2035 and Canada’s aim of 90% zero-carbon power by 2030.
Transport and trade ties: The leaders agreed to move towards a “zero-emissions vehicle future” given the interconnected road transport, maritime and air travel between the countries.
They also vowed to work with Canadian and American public and private financial institutions to disclose their risks from climate change.
Biden pledged to hold polluters “accountable,” while he and Trudeau agreed to protect businesses, workers, and communities from “unfair trade by countries failing to take strong climate action.”
KERRY WARNS INACTION AKIN TO ‘SUICIDE PACT’: Biden climate envoy John Kerry yesterday declared global warming to be among the “most complex and compelling security” threats facing the world and described inaction as “tantamount to a mutual suicide pact.”
“We bury our heads in the sand at our own peril. It is time to start treating the climate crisis like the urgent security threat that it is,” Kerry said in a virtual session of the United Nations Security Council before presidents and prime ministers from several countries.
Kerry also decried the “inexcusable absence by our country” from the climate change debate during the four years of the Trump administration.
MARYLAND COUNTY TO ELECTRIFY ENTIRE PUBLIC SCHOOL BUS FLEET: The Montgomery County public school district, just outside D.C., is switching its bus fleet over to electric models at no additional cost in a first-of-its-kind move that could serve as a model for Biden.
The fleet deal, which will fully replace Montgomery County’s more than 1,400 diesel-fueled bus fleet with electric models over 12 years, is one of the largest in the United States to date. Biden, in his campaign climate plan, pledged to convert all 500,000 school buses in the U.S. to zero-emissions models and ensure all U.S.-made buses are zero-emissions by 2030.
The Montgomery Board of Education voted unanimously last night to approve an initial four-year contract with Highland Electric Transportation, which will purchase more than 300 electric school buses, help build and operate the charging infrastructure, and maintain the buses
Todd Watkins, transportation director for Montgomery County Public Schools, told Abby the county will add 25 electric buses to its fleet this fall and an additional 61 electric buses next year. After that, all of its replacement buses will be electric models, totaling roughly 120 per year. It’s a speed Watkins said he “wouldn’t have even dreamed of two years ago.”
More on the move in Abby’s story posted after the vote last night.
FUTURE USPS VANS MAY OR MAY NOT BE ELECTRIC: The U.S. Postal Service isn’t guaranteeing that all of its next-generation delivery vans will be electric, despite Biden’s directive seeking to electrify the entire federal government fleet of vehicles.
The USPS announced yesterday it had awarded Wisconsin-based Oshkosh Defense a 10-year contract to manufacture the next generation of delivery vans, up to 165,000 vehicles. Those vehicles “will be equipped with either fuel-efficient internal combustion engines or battery electric powertrains,” the USPS said in a news release.
“It is disappointing that today’s announcement does not immediately commit to electrifying one of our nation’s largest vehicle fleets,” said Robbie Diamond, president of Securing America’s Future Energy. He added the USPS contract is a “golden opportunity to stimulate the domestic EV market and supply chain.”
BIDEN BACKS HOUSE PUBLIC LANDS BILL: The Biden administration yesterday endorsed a conservation bill being voted on by House Democrats this week that would withdraw areas of the West from energy development.
The Protecting America’s Wilderness and Public Lands Act combines eight previously introduced measures, led by a provision to permanently protect more than 1 million acres around the Grand Canyon from new mining claims. In total, it creates about 1.5 million acres of public lands as new wilderness areas, withdraws 1.2 million acres from mineral production, and designates over 1,200 miles of wild, scenic, and recreational rivers.
The White House says the legislation would further Biden’s goal of conserving at least 30% of U.S. lands and ocean by 2030.
It would help align “the management of America’s public lands and waters with our nation’s climate, conservation, and clean energy goals,” the White House said. Republicans oppose the bill, considering it to be a partisan attempt to lock up more public land from fossil fuel development and mining.
BOARD MEMBERS OF TEXAS GRID OPERATOR RESIGN: All four out-of-state board members of the Electric Reliability Council of Texas, or ERCOT, submitted their resignation yesterday after millions lost power for multiple days during a cold snap last week, the Washington Examiner’s Mike Brest reports.
The resignations, which will be effective after today’s ERCOT meeting, including board chairwoman Sally Talberg and vice chairman Peter Cramton.
The four said in their resignation letter that they were resigning “to allow state leaders a free hand with future direction and to eliminate distractions.”
Texas Gov. Greg Abbott, who was sharply critical of ERCOT’s role in last week’s power outages, welcomed the resignations. “While Texas were in desperate need of electricity, ERCOT failed to do its job and Texans were left shivering in their homes without power,” Abbott said in a statement. He added ERCOT leadership’s assurances that Texas’ power grid was ready for winter weather “proved to be devastatingly false.”
The Rundown
Wall Street Journal Texas electric bills were $28 billion higher under deregulation
Washington Post The battle over climate change is boiling over on the home front
Calendar
THURSDAY | FEB. 25
12 p.m. CRES Forum will hold a virtual event to review the “Energy Act of 2020” and discuss what its passage means for clean energy and climate action.
2 p.m. The House Appropriations subcommittee on Energy and Water Development, and Related Agencies will hold a virtual hearing entitled “Strategies for Energy and Climate Innovation.”
