Daily on Energy: How proponents are defending the EPA power plant rules

Jan 25, 2024

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THE CASE FOR THE EPA POWER PLANT RULES BASED ON THE IRA: Proponents of the Environmental Protection Agency's draft greenhouse gas regulations for power plants are hanging their hat on the Inflation Reduction Act, saying that the law shores up the economic and legal foundation on which the proposed rules are based.

Lawmakers on Energy and Commerce's Environment, Manufacturing, and Critical Materials Subcommittee hearing questioned witnesses on the viability EPA's proposed rules this morning, where Republican members and several witnesses representing utilities criticized the proposal for being too aggressive, including for relying on carbon capture and sequestration — a technology that's not currently in use at scale in the power sector.

Those in favor of the rulemaking pointed to the IRA, particularly its new and enlarged tax credits for clean energy and related tech, to defend the proposed standards as some that can now be feasibly met.

A two-sided argument: The IRA makes carbon capture and sequestration cheaper, increasing tax credit values to $85 per ton for industrial facilities and power plants that capture carbon and store it in geologic formations.

EPA, in justifying its reliance on CCS as a basis for developing its guidelines and standards in the proposed rule, cited these IRA's enhancements to the 45Q tax credit: "These changes support the EPA's proposed conclusion that CCS is the [best system of emissions reduction] for a number of subcategories in these proposals."

On the other hand, where plants retire rather than install CCS or implement co-firing to comply with the emissions rules, the federal government is subsidizing their replacements.

"The grid is being supported in a way where replacement generation is more and more affordable," Jay Duffy, litigation director for Clean Air Task Force, said of the IRA during the hearing this morning.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). 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.

LATEST ON NORD STREAM BLASTS – US RECEIVED INTEL OF UKRAINIAN PLOT: The latest, and perhaps most definitive, update on the Nord Stream pipelines explosions is that the U.S. was told by a European Intelligence agency, three months before the blasts, that the Ukrainian military planned to covertly attack them.

That is from new reporting by the Washington Post based on intelligence shared with the CIA and revealed in the documents allegedly leaked by the Air National Guard member Jack Teixeira in a Discord chat.

The report said the divers who had planned to carry out the attack were all members of Ukraine's special military forces team and reported directly to the commander in chief of the Ukrainian armed services – and that Ukrainian President Volodymyr Zelensky was kept out of the loop for plausible deniability.

Read more from Breanne here.

WHITE HOUSE OPPOSES GAS STOVE BILLS BUT WITHHOLDS VETO THREAT: The Office of Management and Budget announced its opposition to both the Gas Stove Protection and Freedom Act and the Save Our Stoves Act, which would limit the ability of both the Department of Energy and Consumer Product Safety Commission to regulate or ban natural gas stoves, but OMB's statement did not include a veto threat as its statements on administration policy often do.

ITALY COULD SHUT DOWN COAL PLANTS AS EARLY AS 2024: Italy could shut its coal-fired plants down in 2024, a year earlier than originally planned, if natural gas prices in the European Union remain at recent lows, Italian Environment and Energy Minister Gilberto Pichetto Fratin said yesterday.

The announcement would be a major accomplishment for Italy, which has struggled to find new suppliers to replace lost Russian gas supplies. After Moscow throttled its gas deliveries last year, Italy was forced to increase its coal production—which accounted for 7.5% of its energy mix in 2022, compared to just 4.6% the previous year.

"The intention is to abandon coal by 2025 or even earlier... I hope to succeed by 2024, if gas prices hold at the current [low] levels," Pichetto Fratin said at an event in Milan. He added that in his view, natural gas—considered to be the least polluting fossil fuel—should accompany Italy's transition to renewable sources through 2050.

HOUSE NATURAL RESOURCES SUBCOMMITTEE PROBES RIGHT WHALE DEATHS: Members of the House Natural Resources subcommittee convened for a hearing this morning to examine a NOAA's new proposed vessel strike reduction rule. The rule in question seeks to limit vessels over 35 feet long from traveling from more than 10 knots within designated geographical areas— compared to its previous limit, which applied only to vessels at or above 65 feet—and which NOAA said has received more than 90,000 comments since it opened the regulation to public comment.

The right whale is one of the most endangered large whale species in the world, with just 340 whales remaining and fewer than 75 reproductive females.

But Republicans and some witnesses, including fishing and marine manufacturing association leaders, said NOAA's proposed rule was not the correct fix for the species—and also said the proposed changes restrict access to the Atlantic Ocean, making fishing nearly impossible. Others said that it also increases the dangers faced by pilots and pilot boat crews looking to navigate through Federal Navigation Channels.

National Marine Manufacturers Association CEO and president Frank Hulgelmeyer said NOAA's proposed regulations "represent the greatest restriction of public access to our nation's waterways in our time."

And American Pilots Association Director Clayton Diamond said the proposed restrictions are simply "unworkable" for pilots and ships, who need to go faster to keep control while passing other large vessels, and could "even suggest criminal charges for good faith safety decisions."

Watch the full hearing here.

CITI BREAKS WITH BULLISH OIL FORECASTS FOLLOWING SAUDI PRODUCTION CUTS: Saudi Arabia's announcement that it will deepen its existing oil production cuts in July is unlikely to cause oil prices to rise between high $80s-$90s per barrel, Citi said today, breaking with other banks who suggested prices could climb much higher in the second half of the year and into 2024.

The bank forecast Brent prices to average around $81 per barrel this year, due to weaker demand, including from China, and stronger supply from non-OPEC producers. Potential recessions in the U.S and Europe could also play a factor in limiting oil's rise, Citi said.

Their prediction is more conservative than those of other analysts who forecast Brent prices to rise toward $100 per barrel by the year's end as supply tightens. ANZ analysts Daniel Hynes and Soni Kumari said the potential for a strong increase in crude prices had increased "significantly" following yesterday's announcement, putting their year-end targets for Brent at $100 per barrel.

UBS forecast Brent around $95 per barrel by the year's end, predicting a supply deficit of around 2 million bpd. And Barclays said in a note it expects Saudi Arabia's voluntary reduction to slightly increase oil deficits in the second half of the year. Read more from Reuters here.

COMMITTEE INVESTIGATING HAALAND FOR CHACO CANYON ORDER: The House Natural Resources Committee announced an investigation yesterday into whether Secretary Deb Haaland maintains conflicts of interest associated with the administration of the Interior Department's mineral leasing program, as well as the land withdrawal she signed last week covering areas surrounding Chaco Canyon National Historical Park.

The committee, in a letter addressed to Haaland yesterday, details her connections to the Pueblo Action Alliance, a grassroots organization that opposes oil and gas development and has campaigned in favor of a land withdrawal around Chaco Canyon, as well as her husband's consulting work for a federally recognized tribe that is eligible to receive federal funding from Interior's Bureau of Indian Affairs.

It also relays the involvement of Haaland's daughter, Somah Haaland, with Pueblo Action Alliance and participation in visits to Capitol Hill with environmental justice activists to lobby members to end oil and gas leasing and drilling.

The committee requested all communications between Haaland and her daughter about leasing on federal lands, Pueblo Action Alliance, and the land withdrawal, as well as documents and disclosures made to Interior's ethics officials about her daughter's and husband's activities with the groups mentioned in the letter.

An Interior department spokesperson declined to comment on the investigation.

EPA SETTLES WITH BEER GIANT OVER CLEAN AIR ACT VIOLATIONS: Anheuser-Busch agreed to pay $537,000 in penalties to the Environmental Protection Agency and implement a safety review at its breweries as part of a settlement for multiple violations of the Clean Air Act's chemical accident prevention requirements.

Inspections by the agency determined accidental releases of anhydrous ammonia, a chemical refrigerant that can be damaging to the body. The incidents occurred at three of Anheuser-Busch's 11 breweries, including the one in Fort Collins, where two employees were injured in 2018.

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