Good morning and welcome back to Generate! A quick reminder to keep an eye on the Axios stream on GOP's health care repeal efforts, budget maneuvers, and, of course, energy.
Ok, let's dive in . . .
Latest from the Beltway
Interior nomination: Senate Majority Leader Mitch McConnell filed for cloture yesterday on the nomination of lobbyist David Bernhardt to be the deputy secretary of the Interior Department, which sets up a vote in the coming days.
- Why it matters: Interior secretary Ryan Zinke needs bodies to help push his agenda to expand energy development on federal lands (among other goals). However, Democrats are wary of Bernhardt's past work with fossil fuel and mining companies as a lobbyist and a former high-level Interior official in the George W. Bush administration.
EPA nomination: The White House said yesterday that it's tapping Michael Dourson to be the Environmental Protection Agency's top chemicals regulator. Dourson is currently a professor in the Risk Science Center at the University of Cincinnati's College of Medicine and is a founder of the nonprofit consulting firm Toxicology Excellence for Risk Assessment.
On tap Tuesday:
- A Senate Appropriations subcommittee will mark up Energy Department funding legislation. It's expected to break with the effort by the White House and House Republicans to kill off DOE's Advanced Research Projects Agency-Energy, and Senate GOP appropriators are also unlikely to make the massive cuts in R&D that the White House wants.
- The Senate Energy and Natural Resources Committee will hear from Fatih Birol, the head of the International Energy Agency, and others in a broad hearing on North American energy.
- Birol will join Energy secretary Rick Perry at a National Press Club event this morning.
- The House Appropriations Committee will mark up Interior Department spending legislation.
- A House Natural Resources Committee panel will hold a hearing about onshore oil-and-gas development in Alaska. The state's oil production has been on a generally downward trajectory for decades, but a number of companies have recently announced large discoveries.
House GOP unveils budget plan
Breaking Tuesday morning: The House GOP released their fiscal year 2018 budget resolution, with aspirational, nonbinding language calling for cuts in applied R&D at the Energy Department and preventing the DOE from issuing new loans under its loan guarantee program. The Budget Committee will mark up the measure on Wednesday.
Elsewhere, it contains a $5 billion reconciliation instruction to the Natural Resources Committee. But it's not immediately clear what legislation that committee's lawmakers might seek to meet it, such as raising money by opening up the Arctic National Wildlife Refuge to oil exploration.
- Natural Resources aides were not immediately available for comment Tuesday. E&E News, in a piece Tuesday morning, noted that moderate Republicans would push back against efforts to open ANWR.
- Reconciliation is important because policy bills crafted to meet those instructions are immune from Senate filibuster.
India’s (potential) EV revolution
India aspires to have all new vehicles being sold by 2030 to be electric ones. A new study take a look at this goal...
Details: A recently published paper from Lawrence Berkeley National Laboratory finds the goal — which is "technically attainable" due to falling battery costs — would add only 6% to the country's peak electricity demand.
Benefits include additional revenue for the nation's power companies to the tune of roughly $10 billion annually, and lowering carbon emissions "significantly," especially if the nation meets its renewable energy goals in the Paris climate deal (check out the "NDC" scenario in the chart above). It would also help smooth the integration of renewable electricity sources onto India's grid, the paper finds.
Why it matters: India is the world's third-largest greenhouse gas emitter behind China and the U.S., and policies that enable economic expansion without a surge in carbon emissions are key to slowing global warming.
Listening notes: Browner talks cap-and-trade
Carol Browner, a top White House climate and energy official under former President Obama, has a wide-ranging chat on the latest Columbia Energy Exchange that should bring back memories for anyone remembering the 2009-2010 fight over cap-and-trade.
In retrospect: At one point she notes the problems with the push for an economy-wide bill (which ultimately collapsed in the Senate after passing the House) and wonders if a different strategy might have worked.
- "That was huge. That was really, really complicated," she said of the sweeping bill. "I think, in retrospect, we should have sort of gone sector by sector, we should have broken off some big sectors."
Yes, but: Browner also muses about a silver lining:
- "When you go back and look at the bill that passed the House and then we were unable to pass in the Senate, it had so many carve-outs by the end in an effort to secure votes — which is the legislative process, it's the way things are done — if the Obama regulations, executive actions, stay on the books, you are probably going to get more reductions sooner than you would have gotten under a new law."
There's also plenty from Browner, who also was former President Clinton's EPA chief, on the economic case for the kinds of regulations that President Trump's EPA is trying to scuttle.
More listening notes
OPEC: The new edition of the Platts' OPEC Outlook podcast explores what former Oasis frontman Liam Gallagher's new song has to do with OPEC's current quandary.
But seriously, stay for a smart and concise preview of the upcoming July 24 meeting of the monitoring committee overseeing the production-cutting deal between OPEC and other producers, notably Russia.
- Bottom line: Host Herman Wang explains why the cartel is unlikely to deepen the agreement anytime soon, even though there's still a glut of crude worldwide.
Gulf of Mexico shallow waters: A pair of new Wood Mackenzie podcasts (available here) look at recent developments in the shallow water Gulf, both on the Mexico side, where a number of firms have announced some big discoveries, and on the U.S. side.
- One takeaway is that Interior's decision to lower royalty rates for in shallow-water leases to be auctioned soon has a real effect on the economics of regional projects.
- Another is that Chevron's recent sale of its shallow water Gulf assets to the company Cantium is part of a broader trend of private equity-backed companies expanding their holdings there while the major and big independents exit the region.
Russia: The latest offering from the Center for Strategic and International Studies' podcast series is a wide-ranging discussion of the geopolitics of Russian energy. One of the things it talks about is Russia's work with OPEC producers on the production-limiting agreement. Several things are motivating Russia's involvement.
- "This is a carrot, I suppose, that Russia can offer to the cartel countries in exchange for other kinds of things that may or may not be specifically tied to the energy industry," notes Jeffrey Mankoff, a Russia expert with the think tank.
From Amy’s notebook: It’s natural gas, stupid
Axios reporter Amy Harder has a stark reminder for all the talk about the Energy Department's grid study coming up. Take it away...
Quoted: "It's pretty clear to everyone that right now in the PJM region, and it's also true elsewhere, that the lowest cost set of resources are natural gas, combined cycle, power plants," said Stu Bresler, senior vice president for operations and markets at PJM Interconnection, an East Coast regional electric transmission organization.
Why it matters: Bresler's comments echo almost every expert everywhere, including those in the DOE, according to its own leaked draft of the grid study. The only people who can't seem to admit this truth is Trump administration officials, who have said many times that it's environmental regulations and subsidies for renewable energy that are driving the knife into coal and nuclear power.
My thought bubble: The administration will have a hard time simultaneously backing competing fuel sources in the zero sum game that is America's power market. Check out my latest Harder Line column on this topic for more.
On my screen: Oil, Tesla, climate change
Oil: The latest Energy Information Administration monthly report on U.S. shale oil anticipates that production will be 113,000 barrels higher per day in August than July, with increases forecast in all the major shale-producing regions.
- Total U.S. shale output is slated to be nearly 5.6 million barrels per day.
- "The increase comes amid market concerns that rising shale output will dampen the Organization of the Petroleum Exporting Countries' efforts to curb a global supply glut," Reuters reports.
OPEC: "Ecuador has dealt a blow to OPEC unity by announcing it will start raising oil production this month, arguing it needs the money," Bloomberg writes.
Tesla: The company announced yesterday that it has two new board members. They are Linda Johnson Rice, chairman and CEO of Johnson Publishing, and 21st Century Fox CEO James Murdoch.
- Fortune notes that the move follows "months of pressure" from investors in the Silicon Valley company to add independent members to the board.
Climate change: California lawmakers approved a plan Monday slated for Gov. Jerry Brown's signature that will extend the state's cap-and-trade program until 2030. The Los Angeles Times reports that the vote "included unprecedented Republican support for fighting global warming."
Solar: More California news — the Financial Times has a deep dive into the state's big solar market and how regulators deal with excess supply that sometimes arrives on the grid.
- "To mop up some of the surplus, California's grid operator has formed a new marketplace that automatically dispatches power across the US west," the story notes.