Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
Last week, the U.S. International Development Finance Corp. named Jake Levine as its first-ever chief climate officer, and Aparna Shrivastava as his deputy to help the federal overseas investment agency improve its portfolio’s climate performance.
Levine and Shrivastava will lead the agency towards a net-zero emissions portfolio by 2040 and boost climate-centric investments to 33% by fiscal 2023. This announcement provides some of the clarity our sector has been seeking since President Biden took office about whether U.S. government agencies would support fossil fuel projects abroad. The uncertainty caused some projects to be put on hold or delayed.
The Biden Administration provided additional clarity last week with its release of a financial plan that did not explicitly rule out financing for coal or natural gas projects. The White House’s summary of the plan said U.S. agencies would “… seek to end international investments in and support for carbon-intensive fossil fuel-based energy projects,” though it added that “…in limited circumstances, there may be a compelling development or national security reason for U.S. support for a project to continue.”
While this language is likely to complicate any projects in the hopper, the fact that it does not explicitly prohibit natural gas projects is a welcome development after months-long internal deliberations within the Administration. The Council believes there are significant foreign policy implications for the export of U.S. natural gas, especially when the gas is delivered to our allies in Eastern Europe and Asia.
We can expect more debate on topic of U.S. support for liquid natural gas (LNG) in the coming months. In April, Representatives August Pfluger (R-TX-11) and Henry Cuellar (D-TX-28) introduced The Natural Gas Export Expansion Act, a bipartisan measure that would expedite approval of LNG export permit applications to countries with good trade relationships with the U.S. If passed, this legislation would relieve the logjam of pending LNG export applications and could spur demand for U.S. natural gas.
Redistricting, What Does it Mean for Us?
At the end of April, the U.S. Census Bureau published results from the 2020 Census. The U.S. resident population was 331,449,281 — a 7.4% increase from the 2010 census. The data is used to divide the 435 voting seats in the U.S. House of Representatives among the 50 states. When the margins are as close as they currently are in the House, this process takes on extra importance. The Census Bureau found that:
- Texas will be the only state to gain two seats in Congress.
- Five states – Colorado, Florida, Montana, North Carolina and Oregon – will each pick up one seat.
- Seven states – California, Illinois, Michigan, New York, Ohio, Pennsylvania and West Virginia – will each lose a seat.
- The number of seats in each of the remaining states will stay the same.
The new 435-seat configuration of the U.S. House will take effect when the 118th Congress convenes in January 2023. For our sector, the shifting seats have a negligible effect on representation from oil and gas producing areas. While Texas and Colorado gain two and one seats respectively, California, Ohio, Pennsylvania and West Virginia each lost a seat. Given that both Republicans and Democrats in Texas tend to be at least nominally supportive of the industry, we could have a modest positive, depending on how district boundaries are drawn.
Likely more impactful to us will be the results of redistricting. The 50 state legislatures determine how to allocate congressional representation within their respective states. Republicans currently control 30 state legislatures, which means the GOP will have an advantage in the process. This is important because margins in the House are incredibly slim. We anticipate Republican gains in the next election, even if it’s short of a wave election, which is typical two years into any new administration.
The redistricting process could dramatically affect the Biden Administration’s ability to push through proposals such as energy tax reform. This would include the change suggested last month to remove provisions allowing oil and gas companies to deduct drilling costs early in a project’s life cycle and carry the losses forward for several years.
Changes to the U.S. tax code often take months, if not years, to make their way through Congress. Just a handful of defections in the House could slow or stall the process. We should expect a push by the Biden Administration to make these changes as quickly as possible before an election makes them impossible. Comprehensive energy tax legislation was introduced last month in the Senate, and the Council will continue to track its progress through Congress and advocate for fair treatment of the OFS sector.
For more information on the Council’s advocacy efforts or to get involved, contact SVP Government Affairs & Counsel Tim Tarpley.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.