Amy Harder
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Top coal lobbyist expected to be No. 2 at EPA

Top coal industry lobbyist Andrew Wheeler is likely to be tapped as the No. 2. official at the Environmental Protection Agency, according to two people familiar with the decision-making process.

The expected appointment for deputy EPA administrator is a turnaround from last month when the White House was poised to tap Jeff Holmstead, a former top EPA official under President George W. Bush. Holmstead is considered to be a more moderate conservative compared to Wheeler and other officials inside the Trump administration.

Why it matters: Wheeler's likely nomination shows the influence of conservatives, both inside and outside the administration, over environmental and energy policy. Wheeler has been more outspoken in questioning the science behind climate change than Holmstead.

Wheeler's bio: Wheeler, now a principal at firm Faegre Baker Daniels Consulting, is a top lobbyist for Murray Energy, the coal mining company whose CEO, Bob Murray, is close with President Trump. Wheeler has steadily lobbied on behalf of the private coal producer since at least 2009, according to lobbying disclosure data. His most recent filing for the company was posted July 20, according to the federal disclosure website.

Wheeler has worked on Capitol Hill, including for Sen. James Inhofe (R., Okla.), when he was a leader on the environment committee. Many top officials at EPA and the White House have worked for Inhofe, who in turn has a long-standing relationship with EPA Administrator Scott Pruitt. Pruitt was attorney general of Oklahoma before getting the EPA job.

For the record: Reached by email, Wheeler had no comment. Spokespeople for the EPA and White House did not immediately respond to requests for comment.

What's next: No final decision has been made on the nomination, which would require Senate confirmation and is certain to face intense pushback from Democrats.


Featured

Al Gore's climate movie sequel ignores political reality

Amy Harder / Axios

A lot has shifted in climate change issues over the last 11 years, but you might not be able to tell by watching former vice president Al Gore's sequel to his 2006 Academy Award-winning "Inconvenient Truth."

  • As one attendee told me after the film's Wednesday night premiere in D.C.: "The film was an unusual combination of electoral self-deprecation and climate narcissism."
  • Despite its name ("Inconvenient Sequel: Truth to Power), it's the film that actually ignores the inconvenient reality climate change advocates are now facing with the Trump administration. Instead, we saw mostly more of what we saw in the first film, which is to say: Gore himself and the impacts of climate change (albeit marginally worse).
  • Why it matters: The film, and its Washington premiere, showed how much of the climate movement is out of touch with political reality right now — Republicans control Congress and the White House is run by a president who doesn't acknowledge climate change is real, let alone a problem worthy of addressing.

Indeed, the film had a few jokes about how Gore didn't win the presidential election in 2000, and whether he plans to run again for the highest office. ("I'm a recovering politician," Gore says in the film, indicating but not expressly saying no.) Before the film, someone in the audience shouted he should run for president in 2020, Gore replied: "I'll answer that in the movie."

One level deeper: Reports surfaced last month that Gore was changing the ending to accommodate Trump's Paris withdrawal, but it was clearly tagged on at the end of a film focused elsewhere, a complaint some attendees made afterward. That's the risk you run with making films whose endings are dictated by real life. It was only in the end credits that the words flashed on the screen that Trump withdrew from the Paris deal, prompting hisses from the audience.

The mood: Cheerful, if not defiant of the political realities. The who's who of progressive climate politics were there, including House Minority Leader Nancy Pelosi of California and Sen. Sheldon Whitehouse of Rhode Island. In the pre-film reception, attendees noshed on vegetarian fare, like mini watermelon squares with feta cheese.



The film will be released nationwide on Aug. 4.

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Generate

Good Monday morning! Did you have a good weekend? I hope so!

My latest Harder Line column reveals how the American Petroleum Institute is diving into the power fights against coal, nuclear power, and renewables. It's a timely piece in anticipation of the Energy Department's study on the electric grid due out soon.

I'll give you a preview of my column, and then hand things back to Ben who will host you the rest of the newsletter. Questions, comments, complaints, tips, etc., you can always reach me at amy@axios.com.

Big oil's electric fight against coal and nukes

Rebecca Zisser / Axios

The American Petroleum Institute, the nation's biggest and most influential lobbying group for the oil and natural gas industry, is fighting nuclear power subsidies across the U.S., plans to oppose any efforts to expand renewable electricity, and is telling the Trump administration that its study on the power grid better not hurt natural gas in an effort to help coal and nuclear energy.

Why it matters: The entry of API into the debate over power generation is a turning point in an industry long dominated by coal and nuclear energy. It's also a shift at an organization traditionally known for focusing on drilling and the transportation sector. API's members, including Exxon Mobil Corp. and Royal Dutch Shell, are increasingly producing natural gas, and now the group is fighting to make sure that fuel becomes America's dominant source of electricity.

Go deeper: Read the rest of the Harder Line column

More oil notes

A resilient Permian boom: The Dallas Fed's latest snapshot of the Permian Basin released Friday stacks two charts together (see above) that nicely illustrate how the Permian's production surge has just kept chugging along even when oil prices fell.

  • Why it matters: The industry's ability to keep growing production at modest prices — thanks to factors including lower service costs and tech advances — is an important reason why OPEC is struggling to tame the global glut.

Finance: Elsewhere in new research, the Kansas City Fed is out with its latest quarterly survey of oil-and-gas companies in its district, which included the energy-rich states of Colorado, Wyoming, and Oklahoma.

  • It shows that expansion of activity continued, but at a slower pace than the prior quarter.
  • The average price needed for a "substantial" drilling increase is $56 per barrel, lower than the $60 average in the fourth quarter of 2016 but still well above today's prices.
  • 75% of the companies surveyed said that private equity financing has become more available in recent months, while somewhat over half said financing from banks and bond markets has become less available.
The latest: Reuters reports that Brent crude oil prices rose to roughly $49 per barrel in trading Monday as the slowdown in the growth of drilling rig deployment in the U.S. "eased concern that surging shale supplies will undermine OPEC-led cuts."

Buzzing about electricity as DOE study looms

ICYMI: On Friday Bloomberg got its hands on a draft copy of the closely watched upcoming Energy Department study on the power grid.

  • "The findings — which are still under review by the department's leadership — contrast with [Energy secretary Rick] Perry's arguments that 'baseload' sources such as coal and nuclear power that provide constant power are jeopardized by Obama-era incentives for renewable energy, making the grid unreliable," Bloomberg reports.

Quick take: While DOE emphasized that the report is still evolving, the leak of the draft conclusions is significant. If the final report differs substantially from the staff draft, it will fuel allegations that DOE leadership is launching a political attack against renewables that's at odds with expert opinion.

Another look: Amy and Axios Visuals' Rebecca Zisser just published this nifty card deck on U.S. electricity sources.

Climate magazine story really broke through

A couple more notes on the sobering and important New York Magazine climate cover piece.

It really traveled: The magazine's PR staff said Friday that it's the most-read story in the publication's history, getting over 2.5 million readers online and counting.

Why it matters: It's unusual for a climate story to become such a talked about thing beyond wonk and activist circles.

  • Refresher: David Wallace-Wells warns that left unchecked, global warming could make parts of Earth "close to uninhabitable, and other parts horrifically inhospitable" as soon as the end of this century. However, he also says that the worst outcomes are unlikely because people will take more action after "devastation along the way" shakes their complacency.

Scientists and other advocates have a complicated relationship with the piece. Some are happy to see the topic brought into the mainstream, yet there's heartburn over what several scientists call mistakes and contextual problems.

Thought bubble: One thing complicating the reaction is that Wallace-Wells' post-publication framing, such as in this follow-up, is somewhat softer than the underlying story.

My recommendation: Listen to this joint interview with Wallace-Wells and Princeton scientist Michael Oppenheimer on WNYC's Brian Lehrer show. In this, Wallace-Wells emphasizes he's laying out "worst-case scenarios." He told Lehrer he's describing what could occur if there's "absolutely no action" and if warming effects land on the outer margin of scientists' projections.

Polling focus: Trump and climate change

Data: POLITICO/Harvard T.H. Chan poll conducted June 14-18, 2017; Chart: Chris Canipe / Axios

Midterm motivation: In case you missed it, a joint Harvard-Politico poll released Friday explored topics that are important to voters' 2018 midterm election decisions. As the chart above notes, there's a very wide gap over Trump's decision on the Paris climate agreement.

The pollsters found that it's "extremely important" to almost half the people who intend to vote for a Democratic candidate, compared to just 12% of respondents who plan to vote for GOP candidates.

Do we care: A Bloomberg poll released Monday showed that 10% of respondents listed climate change as the "most important" issue facing the country right now, which ranks it far below health care but on par with immigration and terrorism.

Thanks for reading! Here's a couple items on our radar screen in the days ahead...

What we're watching in the Senate: Trump's nominees for several top Energy and Interior Department positions will appear before the Senate Energy and Natural Resources Committee on Thursday.

Warm up with a separate hearing before the same committee on Tuesday, where International Energy Agency executive director Fatih Birol will broadly discuss North American energy topics. Also on Tuesday, Birol will appear with Perry for a press conference focused on U.S. natural gas exports (among other issues).

What we're watching in the House: Representatives will vote on bills aimed at speeding up permitting of cross-border pipelines and other energy infrastructure (check out the bills on the Rules Committee website here).

At the committee level, the Appropriations Committee will mark up Interior Department spending legislation on Tuesday; and, on the same day, an Energy and Commerce Committee panel will have a hearing on electricity markets.

Column / Harder Line Featured

Big oil's electric fight against coal and nuclear

Rebecca Zisser / Axios

The American Petroleum Institute, the nation's biggest and most influential lobbying group for the oil and natural gas industry, is fighting nuclear power subsidies across the U.S., poised to oppose any efforts to expand renewable electricity, and telling the Trump administration that its study on the power grid better not hurt natural gas in an effort to help coal and nuclear energy.

Why it matters: The entry of API into the debate over power generation is a turning point in an industry long dominated by coal and nuclear energy. It's also a shift at an organization traditionally known for focusing on drilling and the transportation sector. API's members, including Exxon Mobil Corp., and Royal Dutch Shell, are increasingly producing natural gas, and now the group is fighting to make sure that fuel becomes America's dominant source of electricity.

A decade ago, coal powered almost 50% of U.S. electricity. By last year, that figure had dropped to 30%, and natural gas has made up most of the difference. Here's an Axios card deck primer on America's electricity sources.

Fueled by the oil and natural gas boom over the last decade, API began moving into the electricity business in late 2015, when it acquired another trade group, America's Natural Gas Alliance, whose sole mission was to pump up demand for natural gas. API's broader mission has come into clearer focus over the last few months in three ways.

Trump's grid study

The Energy Department is set to issue as soon as this week a study looking at the electric grid, with a focus on what the government could do to stop coal and nuclear plants from shutting down. Energy Secretary Rick Perry talks a lot about how environmental rules and renewable subsidies are hurting coal and nuclear, but the biggest driver is the bounty of cheap natural gas in stagnant electricity markets. That puts API, a typical ally of the new administration, in an ironic position.

"We certainly want to make sure there isn't some inadvertent message coming out of this study that maybe we should be worried about having too much natural gas," said Marty Durbin, executive vice president and chief strategy officer at API.

Starting last year, API began hearing concerns from utility officials and others about fuel diversity. "To us that was a buzzword to say don't be too dependent upon natural gas," Durbin said. Which is exactly what the coal industry is doing. "We have not beat up on natural gas I would say, but we certainly have pointed to an over-reliance on the fuel," said Paul Bailey, president of the American Coalition for Clean Coal Electricity.

Nuclear war

Having largely won the battle against coal, oil and gas producers are now targeting nuclear.

Since late last year, API has been fighting efforts in a handful of states to keep financially struggling reactors from shutting down before their operating licenses require. As reactors shut down, they're being replaced mostly by natural gas. Illinois and New York have already issued policies keeping some reactors running despite API's efforts, but the group says it's been successful so far in keeping proposals at bay in Ohio, Pennsylvania and Connecticut.

In response to criticism that API is blatantly grabbing market share from nuclear power, Durbin replied: "It's nuclear that is very transparently trying to keep competitors away."

John Kotek, a vice president at the Nuclear Energy Institute, a trade group for nuclear-power companies, said nuclear provides carbon-free electricity and diversifies the grid in a way other fuels, including natural gas, don't.

Eyeing renewables

Another battle is on the horizon between API and renewable companies.

The oil group has done internal modeling concluding the five-year extension of tax credits for wind and solar companies, which Congress passed at the end of 2015, would cut demand for natural gas by 2.4 billion cubic feet a day in 2020. That's a little under 9% of the daily amount of natural gas used for electricity in the U.S. last year.

API doesn't currently have plans to lobby against the existing tax deal or to try to get states to repeal mandates that require renewable energy, which has been one of the biggest drivers for wind and solar over the past decade.

"But as states are looking at expanding or put new ones in place," Durbin said, "yes, we would want to engage in those conversations."

Featured

How America makes electricity

The Energy Department is gearing up to soon release a study on America's power grid. The anticipation has highlighted the inherent conflict between different electricity sources, and its release will exacerbate those tensions.

Here is what you need to know about America's different electricity sources.

Featured

Trump is right about Hillary, energy & Russia

Mikhail Metzel, Pool via AP

President Trump said Wednesday that Vladimir Putin would have preferred Hillary Clinton win the 2016 election, in part because the U.S. is exporting more energy than it would have under Clinton.

He's right that the U.S. is probably going to export more natural gas and oil under his administration than it would have under Clinton — as for the broader point about Putin wanting Clinton to win, I'll leave that to others to debate.

Why it matters: The never-ending story of the day seems to be how deep ties run between Trump and Russia. On energy, Trump doesn't seem to be softening plans that go against what Putin wants. The president appears genuinely serious about encouraging more oil and natural gas production and exports that will hurt Russia, whose economy is heavily dependent upon such exports.

The quote: "We're going to be exporting energy – he doesn't want that," Trump said in an interview with CNB published in part on Wednesday. "He would like Hillary where she wants to have windmills. He would much rather have that because energy prices would go up and Russia as you know relies very much on energy."

The other candidate: As secretary of state, Clinton was actually quite aggressive in touting how American oil and natural gas can be used as a geopolitical tool influencing other nations. But during the presidential election, Clinton adopted more liberal policies against fossil-fuel production as she responded to Bernie Sanders' campaign. Maybe Clinton would have moved back to the center on this issue as president, but she nonetheless would have been more susceptible to giving into pressure from environmental groups in a way Trump isn't.

To be sure: It's still early in the Trump administration, and its policies toward energy exports could still evolve. What's more, the administration's power over Russia's influence in energy is limited, as I reported in my Harder Line column this week about natural-gas exports.
Featured

Generate

Good Monday morning, and welcome back to Generate. I hope everyone had a nice weekend. We had beautiful, humidity-free weather in Washington, D.C., so I made the most of it with a long run on Sunday. OK, let's get to the news.

My latest column looks at the problems with President Trump's push on natural gas exports. Check it out below, and then I'll hand things back to Ben to get you up to speed on everything else you need to know.

The problems with Trump's natural gas exports push

Rebecca Zisser / Axios

President Trump and his top advisers are talking a big game about how American natural gas can help Europe lessen its dependence on Russian gas. But the administration is running into some obstacles, like cheap fuel prices and a pair of Russian-backed pipeline projects.

Why it matters: Exporting America's bounty of natural gas to central and eastern European nations has emerged over the last few weeks as a key part of Trump's energy and foreign policies. But the administration's influence in this area is limited, and the president faces risk of backlash if he goes too far in pushing American natural gas over other nations' resources.

Read the rest of my Harder Line column here.

Energy and climate notes from Trump-world

Sanctions: Axios' Jonathan Swan has an inside look at the White House maneuvers to soften Russian sanctions legislation that's moving through Congress, a measure that targets Russia's energy sector.

  • He reports that the White House is making the case that the bill approved overwhelmingly in the Senate would be bad for American energy companies who would be punished for doing international business with Russian firms.
  • Go deeper: Listen to this recent podcast from Platts Capitol Crude, which breaks down the stakes for the energy business.

Climate: Here's a couple follow-up thoughts to the G20 summit that laid bare U.S. isolation on climate, with the other nations jointly calling the Paris agreement "irreversible" in the closing communique on Saturday.

  • The next round: French President Emmanuel Macron said on Saturday that he hopes to change Trump's mind about leaving the Paris agreement. Trump will meet with Macron in France late this week.
  • Dissonance: One theme that has emerged in U.S. climate policy and diplomacy under Trump is the simultaneous heralding of U.S. progress in cutting CO2 emissions while breaking with the scientific community by questioning whether those emissions even drive global warming.

Recent days brought fresh evidence of those dueling trends. "If you look at what we've achieved environmentally in the United States, our numbers are pretty good," White House economic adviser Gary Cohn said on Air Force One Saturday in defending the U.S. decision to abandon the Paris agreement.

Yes, but: Cohn touted U.S. progress just a week after E&E News broke the story that EPA will lead a "formal initiative to challenge mainstream climate science" using "red team, blue team" exercises.

The latest in oil

OPEC: Deepening the production-cutting deal between the cartel and several non-OPEC producers won't be on the table at a meeting to be held later this month, top officials said in Turkey on Sunday, even though the arrangement hasn't stabilized prices or cut inventories as much as hoped.

  • The International Business Times adds more on what OPEC Secretary General Mohammed Barkindo told reporters on the sidelines of the World Petroleum Congress.
  • And via Bloomberg, Kuwait's oil minister Issam Almarzooq said at the same event that it's "too early to discuss deeper output cuts by OPEC/non-OPEC producers participating in the agreement to curb production."

Libya and Nigeria limits eyed: Almarzooq confirmed that OPEC members Libya and Nigeria, which aren't covered by the deal and have been boosting output, may be asked to cap their production, Bloomberg reports.

Slash: Via Reuters' Christopher Johnson, a top analyst at BNP Paribas just significantly cut their crude oil price forecast, lowering the Brent crude projection for 2017 by $9 to $51 and cutting the 2018 projection by $15 to $48 per barrel.

Fresh warning on long-term supply: Saudi Aramco's CEO reiterated warnings Monday that insufficient industry investment in new projects could create a supply shortfall years down the line.

  • "If we look at the long-term situation of oil supplies...the picture is becoming increasingly worrying," Amin Nasser said at the WPC, via Reuters.

Big days for EVs

Twitter

The last few days have been pretty busy on the electric vehicles front...

Crystal ball: Analysts at Bloomberg New Energy Finance released their latest long-term electric vehicles forecast. It predicts EVs will be 54% of new light-duty vehicles sales in 2040, a huge jump from the 35% in last year's projection.

  • What changed: Their rosier numbers are based on steeper-than-expected declines in lithium-ion battery prices and automakers stepping up their plans for EV offerings.
  • Reality check: Statoil's recent long-term energy forecast models a suite of huge changes in the global energy mix needed to avoid blowing past 2 degrees Celsius of global warming, and the EV portion requires significantly steeper market penetration than BNEF's forecast shows will occur based on existing policies.

Tesla: The Model 3 has begun rolling off assembly lines over the last couple of days, with actual customer deliveries slated to begin later this month. Tesla CEO Elon Musk tweeted the photo above over the weekend.

  • Why it matters: "[O]f the dozens of electrics to reach the global market in the coming five or so years, the Model 3 probably stands the best chance of popularizing a new mass-market electric car age," writes my Axios colleague Christopher Matthews.
  • The rollout also arrives during a somewhat rough patch for the Silicon Valley automaker, which has seen its share price drop recently amid news that it delivered fewer vehicles than expected in the second quarter (among other factors). Read Christopher's breakdown here.

Volvo: Starting in 2019, it will no longer produce any fully internal combustion models — everything will have some form of electric power, either via hybrid form or as a full EV.

  • "Volvo's move vastly escalates the commercial and geopolitical contest to dominate electric cars," writes Axios' Steve LeVine.

France: The country plans to end sales of gasoline- and diesel-powered vehicles by 2040.

On my screen

Lobbying: The White House Office of Information and Regulatory Affairs has begun posting records of meetings with outside parties on EPA's Clean Power Plan.

  • Why it matters: That's a sign that EPA is getting closer to unveiling its proposal to unwind the big Obama-era rule to cut carbon emissions from power plants. The agency sent the plan to the White House in early June.
  • OIRA doesn't make it easy, but click here to bring up the meeting calendar, then scroll back one month to the June listings, and you can find records of meetings on June 22, June 26, June 28 and June 29. More will likely be added soon.

Semantics: Some energy experts don't think the Trump administration's mantra of achieving energy "dominance" is the greatest messaging idea.

The latest breakdown of the phrasing around the exports push comes via Foreign Affairs, where Jason Bordoff, a former Obama aide, calls it a "terrible marketing slogan."

  • "Consumer countries are wary of suppliers that seek to dominate them — for example, Eastern Europeans buying their natural gas from Russia, or Mexico, which has sharply increased its reliance on U.S. natural gas and now frets about political risk in its dominant supplier," writes Bordoff, who now runs Columbia University's Center on Global Energy Policy.

Solar: Over the weekend the New York Times ran a deep dive into the headwinds facing the rooftop solar market, which has seen its growth stall.

  • One of the hurdles: "a concerted and well-funded lobbying campaign by traditional utilities, which have been working in state capitals across the country to reverse incentives for homeowners to install solar panels."

What we're watching in Washington

Nominations: On Monday evening, the Senate is slated to confirm Neomi Rao to head OIRA.

  • Why it matters: OIRA wields a powerful, largely behind-the-scenes influence over federal rulemaking. Rao will have the power to make key decisions about administration efforts to unwind and rewrite environmental and energy regulations — efforts that will face certain litigation.

More nominations: On Wednesday, the Senate Environment and Public Works Committee will vote on Trump's nominees for two slots on the Nuclear Regulatory Commission and his pick for EPA's top enforcement official.

Appropriations: On Wednesday, the full House Appropriations Committee will mark up Energy Department spending legislation, while a subcommittee will consider the Interior Department's spending bill. Details here.

House floor: The big annual defense policy bill arrives on the floor later this week and could feature some climate-related amendment fights. The House Rules Committee is slated to meet Wednesday to decide which proposed amendments will actually be debated on the floor.

  • One to watch: GOP Rep. Scott Perry is floating an amendment that would cut the section of the bill that calls climate change a "direct threat" to U.S. national security and requires a Defense Department report on the vulnerabilities of military installations.
On our radar: The Senate schedule is in flux amid all the health care drama, but the big energy bill co-authored by Energy Committee Chairwoman Lisa Murkowski and ranking Democrat Maria Cantwell could be coming to the floor soon. A committee summary is here.

Column / Harder Line Featured

The problems with Trump's push on natural-gas exports

Rebecca Zisser / Axios

President Trump and his top advisers are talking a big game about how American natural gas can help Europe lessen its dependence on Russian gas. But the administration is running into some big obstacles, like cheap fuel prices and a pair of Russia-backed pipeline projects.

Why it matters: Exporting America's bounty of natural gas to Central and Eastern European nations has emerged over the last few weeks as a key part of Trump's energy and foreign policies. But the administration's influence in this area is limited, and the president faces risk of backlash if he goes too far in pushing American natural gas over other nations' resources.

Obstacle 1: Cheap prices

Russian gas is cheaper than American gas, and that isn't likely to change any time soon because it's expensive to liquefy U.S. natural gas so companies can ship it around the world. This dynamic is keeping Russia as the dominant gas supplier to many parts of Europe.

Leading up to and during Trump's trip to Poland last week, he and his administration made much fanfare about a state-owned Polish company's first purchase of American natural gas, received in June. But this was a one-off purchase and not a long-term contract. That's like buying a guest pass to a gym instead of signing up for a more permanent membership: It feels nice in the moment, but it doesn't do anything to change the bigger picture.

A spokesperson for the Polish gas company, PGNiG, said in an email to Axios that its long-term contract with Gazprom expires in 2022, and that it doesn't comment on its long-term contracting plans. Gazprom didn't return requests for comment.

While many U.S. firms are poised to export natural gas, Cheniere Energy is currently the only American company currently exporting the fuel in a liquefied form. Of Cheniere's roughly 140 deliveries since last year, 13% of them have gone to Europe, according to the company, most of that to Western European nations.

No long-term contracts have yet been inked between American firms and energy companies in Eastern and Central Europe, a region most dependent upon Russian gas that has in the past seen its fuel supplies temporarily cut off amid tension with its neighbor. These trends are due almost entirely to price considerations.

"Liquefied natural gas -- due to the high costs of liquefaction, shipping and regasification -- is hard pressed to compete against Russian pipeline gas on a cost basis," said David Koranyi, a director at the Atlantic Council who was in Poland for Trump's visit. Koranyi said Russia makes money at $4 to $5 per 1 million British thermal units, while U.S. companies need closer to $7 or $8 to recoup their fixed costs.

Obstacle 2: Russia-backed pipeline plans

A pair of pipeline projects that would funnel even more Russian gas to Eastern and Central Europe are in the works. If built, they would exacerbate obstacle 1 for American natural-gas companies by making Russian gas even more available and comparatively cheaper.

The Obama administration was opposed to both projects: Nord Stream 2 and TurkStream going beyond Turkey. Top Trump administration officials have maintained a similar position, despite Trump's friendly relationship with Russian President Vladimir Putin.

The U.S. government has no direct control over deciding the fates of these pipelines, but the Senate recently passed a bill on broader Russian sanctions that allows the Treasury Department to levy sanctions on investment in Russian pipelines built to export natural gas. If Trump signs a bill with that provision, it could have a chilling effect on backing for those projects.

Obstacle 3: Perceptions of self-interest

Some European officials are worried that Trump is pushing American natural-gas exports in Europe purely to benefit American companies, as opposed to encouraging Europe to wean itself off of Russian gas, according to interviews with multiple experts in touch with European officials.

"That impression, valid or not, could backfire, if Europeans start to see U.S. LNG [liquefied natural gas] as just another politicized fuel source," said Tim Boersma, a natural-gas expert at Columbia University's Center on Global Energy Policy.

Boersma said that when he traveled with a trade delegation of mostly Germans in Russia a few weeks ago, some of the German officials said the United States was opposed to the Nord Stream 2 pipeline mainly because it would eat into a potential market for U.S. companies.

A senior government official acknowledged that perception exists but pushed back on it, saying instead that American natural-gas exports can be a win for both the United States and Europe. Trump himself addressed this head-on while speaking in Poland, indicating the concern has reached the top within the administration.

"Let me be very clear about one crucial point," Trump said in Warsaw on July 6. "The United States will never use energy to coerce your nations, and we cannot allow others to do so."

Featured

How Trump's 6 energy initiatives will impact the industry

AP

President Trump announced six initiatives as part of his administration's self-described Energy Week. Let's break down these announcements and analyze whether they're a big deal.

These are listed in order of possible broad impact on changing the status quo, with the first one having the most potential to change things.

  1. Ease financing restrictions to back overseas coal projects: Trump is reversing a policy President Obama put in place in 2013 that restricted the Treasury Department's financing of overseas coal plants in coordination with international bodies, including the World Bank. This could have a big impact not only directly in terms of what the U.S. government could fund, but also as a trickle-down effect if other countries follow suit.
  2. Open up new offshore oil and gas leasing program: Trump ordered the Interior Department to do this in an executive order earlier this year, so this isn't exactly new. Thursday's move represents the first procedural step in a years-long process, which could have a big impact on oil and gas companies' ability to access offshore reserves in the decades to come. It won't have an immediate impact given the time it takes to bring on big offshore drilling projects and because companies have a low appetite to drill offshore because of low oil prices.
  3. Issuing a study on how to revive nuclear energy: Politicians often call for studies when there aren't more substantive options available or when they want to delay action. A study won't do much for nuclear power, and Trump isn't doing what would help it the most: regulations or a carbon tax making other energy sources more expensive. That said, if it concludes with specific policy measures that the administration acts on, it could move the needle for an industry desperate for any needle-moving.
  4. Approve the sale of more American natural gas to South Korea: Current law gives a near automatic approval for companies to export U.S. natural gas to countries the U.S. has free trade agreements with, which includes South Korea. But Trump speculated earlier this year he may get rid of that deal, which would go against his own goals.
  5. Approve applications to export natural gas from a terminal in Lake Charles, Louisiana: This is continuing the approval policy started under then-President Obama a few years ago, and isn't a departure from the status quo.
  6. Approve construction of new petroleum pipeline to Mexico: The State Department, which has jurisdiction over cross-border petroleum pipelines, approved an application Thursday to send about 108,000 barrels of refined oil products (like gasoline and diesel) about 50 miles from Texas to Mexico. This is not a big deal, relatively speaking. The Keystone XL pipeline was originally proposed to carry nearly eight times that amount across 1,700 miles.
Featured

Generate

Good morning! It's Amy from the west coast holding down the fort for Ben today.

We might want to call this "the Energy Week that isn't." Most of Washington is paying more attention to other issues, like the health care bill, and most of the news happening this week on energy goes counter to the Trump administration's agenda. What's more, my colleague Jonathan Swan tells me that even some White House officials are skeptical of these themed weeks.

But hey, there isn't a shortage of real news, so let's get to it.

Trump touts natural gas exports Obama approved

President Trump won't admit it, but he's taking credit for something former President Obama did.

Expected today: In a speech at the Energy Department, Trump is likely to tout America's oil and natural gas boom and in particular how his administration is greenlighting exports of liquified natural gas, which has been a recurring presidential talking point of the last few months. But it was actually the Obama administration that approved nearly all of the LNG poised to be exported, and Trump is, so far, just reiterating what his predecessor did.

Why it matters: The Trump administration has displayed a lot of positive rhetoric about LNG exports, but as yet it hasn't made any explicit policy changes to how the federal government reviews applications for LNG. An Energy Department spokeswoman declined on Wednesday to say whether Trump will make any related policy announcements in his speech today.

To be sure: Obama took credit for things his predecessor did, too. In 2011, he was touting increased offshore oil and natural gas production, even though a top official in his administration at the time said such increases were due to policies his predecessor, Republican President George W. Bush, put in place that increased access to federal waters.

Read more of my analysis here.


Pulling the plug on clean coal

giphy.com

Southern Company announced Wednesday it is abandoning its long-touted efforts to capture carbon emissions from its coal plant in Mississippi, and instead is going to keep running Kemper on natural gas for the indefinite future.

Why it matters: The Kemper power plant, economically struggling for years, was supposed to be the model for America's "clean coal" technology, being touted by both President Obama and top officials in the Trump administration as recently as this week. Instead, it's becoming a poster child for all the reasons "clean coal" technology just isn't workable in most scenarios today:

  • Cheap natural gas is flooding the electricity market, hurting coal, nuclear power, and, in many cases, renewable energy too.
  • Electricity demand in the U.S. isn't growing, exacerbating competition among fuel sources.
  • The technology, which captures carbon emissions from a coal-fired facility and stops it from being emitted, is technically feasible but expensive.
  • Without market trends or government policies that make other sources (namely natural gas) more expensive, clean coal technology will remain out of reach in the U.S.
Quoted: Energy secretary Rick Perry praised the plant earlier this week. "I have full confidence the Kemper plant is going to be operational," Perry said. "It's going to be functional." Technically, the plant is operational, but not the part that Perry is referring to.

A clean coal catch: Perry was on hand at the grand opening of a Texas-based plant that is currently capturing carbon emissions from a coal-fired power plant. It's making things work financially partly because the carbon dioxide is being used as a sellable product to pump oil out of the ground at a nearby operation.

Banks and companies back report on climate disclosures

There's more news breaking today related to my Harder Line column this week, about how investor concern for climate change is increasing.

The Task Force on Climate-Related Financial Disclosures, created in late 2015 by an international body overseeing the global financial system, issued its final report today. Included is a statement of support for its recommendations from a deep bench of companies and financial institutions, including Bank of America, Barclays, and HSBC.

Why it matters: The lengthy list of companies demonstrates wide-reaching support in the global financial community for disclosure related to climate change, regardless of political winds in any particular country, including the U.S.

The details: The report's recommendations create a voluntary framework for companies to disclose climate-related information in their financial filings, focused around four elements of companies' operations: governance, strategy, risk management, and metrics and targets.

Who's missing: The companies highlighted in my column for having record investor support for disclosing the risk that carbon regulations pose to their bottom lines are not among the list of backers. This includes ExxonMobil, Southern Company, and Occidental Petroleum.

The other side: Marlo Lewis, a fellow at the conservative Competitive Enterprise Institute, wrote a piece in response to my column, questioning whether the increase in support is actually surging — or merely peaking in response to anticipation Democrat Hillary Clinton was going to win the presidential election.

Like Obama, like Trump: ethanol delays

The EPA will soon issue the levels of ethanol that refineries must blend into the nation's gasoline supply, but multiple industry officials close to the deliberations say the date keeps slipping, and it now may be a few more weeks at least.

This should sound familiar. The Obama administration was also regularly late in issuing the quotas, which current law requires EPA to issue each year. One time it even justified one delay with an earlier delay. (Check out page 73008 of this document for proof.) Trump's EPA still has time to issue final standards by the required November deadline, but it's getting tougher by the day, industry sources tell me, because it first must go through a public comment period that typically takes a few months.

Why this matters: The renewable fuel standard is a complex law that brings with it a host of political, market, and policy implications touching everything from corn and oil markets, to environmental issues, to politics (election battleground Iowa is also the nation's top corn producer). These delays by Trump's EPA show these issues are as thorny as ever, even with the administration change.

The obligation fight: Multiple industry officials say that when EPA issues the draft 2018 ethanol levels, it will be unlikely to issue a decision about a pending request to change what categories of companies must comply with the mandate.

The little energy bill that tried

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Bipartisan leaders of the Senate energy panel are introducing today an energy bill similar to the measure that both chambers passed last Congress but that didn't make it to the finish line before the congressional session was over.

Why it matters: Congress has been trying for years to do something on energy, and this modest bill is the best chance it has in the foreseeable future. Whether Congress can pass it -- and whether Trump will sign it — could indicate the appetite for Congress to do important if not sweeping policy reforms on a host of issues, including energy.

What's in it: Similar to what was passed the Senate last year, including provisions on the following issues:

  • LNG exports
  • Electric reliability impact statements
  • Cybersecurity
  • Hydroelectric licensing reforms
  • Nuclear research and development
What's next: A Senate aide said the bill is being placed directly onto the Senate floor calendar, which could expedite its passage, assuming Senate leaders agree to it and other issues don't demand attention (big assumptions none of us should bank on).

Lightening round: FERC nominee, Dallas Fed report & more

Some items that caught my eye:

  • The White House is going to nominate Richard Glick, Senate staffer and former lobbyist for a renewable energy company, as a commissioner of the Federal Energy Regulatory Commission.
  • Energy Executives told the Dallas Fed businesses is still expanding, but pace is slowing.
  • South Korea is planning to buy American gas and build new factories in the U.S.
  • Oil prices are rising to two-week highs.
  • CSIS commentary: How Trump's new slogan of energy dominance could actually work in practice.


One fun thing: Burning Man party goes on (probably)

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Given the unpredictability of this new Trump administration, I thought I would check to see if it would still issue a permit for Burning Man, the week-long festival of art (and more), which needs a federal permit to party in Nevada desert lands owned by the federal government. The answer is: Probably, yes, it will.

The Interior Department is set to soon greenlight a permit for the event, according to federal documents posted Wednesday and an official at the Bureau of Land Management.

Read more here.

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