Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
Over the past week government agencies made an array of announcements on climate and infrastructure that could affect our sector.
Late last week, Interior Secretary Deb Haaland released Secretarial Order SO 3399, which prioritizes action on climate change throughout the Department of Interior. The order establishes a Climate Task Force with cross-department jurisdictional power to accelerate renewable energy development. It directs the agency to ensure that a National Environmental Policy Act analysis is conducted for all department actions, where applicable.
The new task force is charged with coordinating work across the department, including speeding up renewable energy projects and identifying actions to stimulate investments in energy communities.
We anticipate the task force will be a major part of the department’s ongoing review of oil and gas leasing on federal lands, and it will have a say in what metrics are used to determine when oil and gas leasing can resume during this administration.
At the same time, Haaland issued Secretarial Order SO 3398, rescinding a number of major Trump Administration initiatives covering coal leasing, oil and gas leasing priorities and environmental reviews.
U.S.-China Statement on Paris Agreement
In a somewhat surprising move considering the rocky meeting between U.S. and Chinese officials in Anchorage last month, the countries released a joint statement reaffirming the goals of the Paris Climate Agreement. This followed three days of talks between Special Presidential Envoy for Climate John Kerry and the Chinese team led by Xie Zhenhua in Shanghai.
This moment of cooperation comes at a time of heightened tensions as China has alarmed analysts with aggressive moves towards Taiwan and in the South China Sea. U.S. officials and foreign policy experts are concerned the situation could soon escalate.
Nationally Determined Contribution
Many in Washington are wondering what the Biden Administration will choose as the U.S.’s new nationally determined contribution (NDC) climate target, under the Paris agreement.
Speculation in the nation’s capital is that the Administration will target 50% below 2005 levels by 2030.
Meanwhile, some in President Biden’s party are pushing back on some of the Administration’s actions towards fossil fuel workers.
“For them to be chastised the way they have been, attacked unmercifully and trying to attack their way of life is wrong,” said Sen. Joe Manchin (D-WV). “If there’s a transition, fine, we understand that. They expect to be treated fairly and given an opportunity.”
Negotiations on President Biden’s infrastructure package continues with Democrats objecting to several elements. Pro-business Democrats are urging the corporate tax rate to be set at 25% instead of the proposed 28%. Manchin told reporters he doesn’t think a deal is possible without the rate at 25%.
Several northeastern Democrats want the SALT deduction added back to the package, which would reinstate the ability of companies to deduct state and local income taxes from their federal returns.
FERC Pipeline Decision
In a dramatic about face from prior practice, the Federal Energy Regulatory Commission (FERC) used a formula to weigh greenhouse gas emissions in the permitting process for a Northern Natural Gas Co. pipeline replacement project running 87 miles from northeast Nebraska to Sioux Falls, SD. The independent agency approved the project, however they issued an order that took into account greenhouse gas emissions from the product flowing through the pipeline.
This reevaluation could have major effects for our sector and the ability to get future pipelines approved through FERC. Since adopting its natural gas pipeline policy about 20 years ago, FERC has approved roughly 475 pipelines and rejected two. For the past two decades, the agency considered only direct emissions from a proposed pipeline, and not anticipated emissions from the movement of the product to new markets.
The potential effect is enormous because of the significant need for new pipelines in the U.S., especially in the northeast. The ruling signals that applications for new pipelines will need to show that natural gas is replacing a dirtier fuel source to gain approval.
Additionally, depending on how FERC formulates this downstream climate change analysis, we could see a similar approach throughout federal permitting agencies in President Biden’s “all-of-government” approach to climate policy. This kind of analysis has crept into federal direct lending for foreign infrastructure projects, and we can expect it to spread to other areas of the government as well.
For more information on the Council’s advocacy efforts or to get involved, contact SVP Government Affairs & Counsel Tim Tarpley.