Jun 22, 2018

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning from nearby San Francisco, where I’m filling in for Ben while also at a conference hosted by The Breakthrough Institute to moderate a panel on carbon capture technologies.

Situational awareness: We have a late send today while we wrap up the latest OPEC news, where ministers agreed in principle to raise production.

1 big thing: U.S.'s oil boom & gas prices

U.S. oil production has more than doubled over the last decade, but American drivers haven't always reaped the benefits.

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Note: Prices reflect the average annual price for one gallon of regular unleaded gas; Data: Energy Information Administration; Chart: Chris Canipe/Axios

Why it matters: U.S. gasoline prices are priced largely on the global oil market, where America's oil boom has been one of many complex factors affecting prices over the last several years. Casual observers may link our increased oil production with what they pay to fill up their cars' tanks, but they shouldn't, experts say.

"It illustrates how the U.S. is part of a larger global system and how U.S. production levels are only one variable among many that affect the final price of gasoline."
— Jonathan Chanis, senior vice president of policy, Securing America's Energy Future

One level deeper: U.S. gasoline prices are perched at the end of a long pendulum of global oil prices swinging back and forth.

  • Domestic pump prices spiked in 2008 when global oil prices were over $140 per barrel, and then they fell when oil hit $30 per barrel in 2016.
  • Gas prices rose again when OPEC members and Russia agreed to cut production in November 2016.
  • We're now seeing the pendulum swing back toward boosting production, in response to rising oil prices.
  • The price of oil neared $80 per barrel in May, and the average price for a gallon of gas neared $3.00.

Go deeper: Who's to blame for high gasoline prices.

2. House climate change caucus grows
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A bipartisan House caucus on climate change has added four new members, bringing its total to 82, nearly 20% of the House of Representatives.

The big picture: The caucus, whose stated mission acknowledges climate change and works to address it, has grown significantly under President Trump, whose administration mostly dismisses climate change as an issue. Of the 82 members, 70 have joined since Trump's election.

Details: It’s a “Noah’s Ark” caucus, meaning members must join in bipartisan pairs. New members, per each lawmaker's office:

  1. Bill Posey (R.-Fla.)
  2. Bobby Scott (D.-Va.)
  3. Lynn Jenkins (R-Kan.)
  4. Stephen Lynch (D-Mass.)

Between the lines: Critics say the caucus is mostly an empty effort giving political cover to Republicans without pushing substantive policies. That overlooks a significant, albeit subtle, shift in Washington’s gridlock in this space — the sheer fact Republicans see a need or desire to join an effort supporting, not opposing, climate change. That’s notable given the party as a whole has dismissed or denied outright mainstream climate science for most of the past decade.

What we're hearing: Danny Richter, VP for government affairs at Citizens' Climate Lobby, an advocacy group supporting the caucus, said Republicans are joining the policy group because their constituents are asking them. "It's up to those constituents to help them grab the next rung, which is to sponsor meaningful legislation," Richter said.

3. Three big trends in micro electricity grids

Photo: Andy A. Widmer/EyeEm via Getty

Axios' intern Henrietta Reily reports ... As America's power mix undergoes big changes, a new trend is taking off: microgrids.

Why it matters: Microgrids are what their name indicates — small, mostly isolated and equipped with their own power supply. This technology has the potential to make electricity more flexible and resilient, as intermittent renewable energy becomes more widespread and weather becomes more extreme.

What we're hearing: Mike Gravely, a top official at the California Energy Commission, has developed microgrids around the Golden State for more than a decade. He spoke to Axios about where the industry is going.

Three highlights, and click here to go deeper into each:

  1. Who's buying: Gravely has seen increased interest from ports, housing communities, and universities in developing their own microgrids. Particularly in the wake of mudslides and fires in California, more private investors have expressed interest. But his largest-scale client has been the U.S. military and the Department of Defense.
  2. California as model: California funds microgrid investments through a retail ratepayer charge on consumers' electricity bills, called the Electric Program Investment Charge (EPIC).
  3. Testing viability: Critics say microgrids are unrealistic given their high upfront cost. Gravely is hopeful their investment will pay off. The California Energy Commission isn't required to invest the EPIC funds into microgrid projects, but has decided it's one of the most cost-effective ways to meet policy goals of reducing emissions.

What's next: Gravely and his team plan to release a report in the coming months that will help other states learn about investing in the structures.

4. Study: High methane emissions from natural gas

Excess natural gas is burned off in a process known as "flaring." Photo: Robert Daemmrich/ Photography Inc/Corbis/Getty

Axios' science editor Andrew Freedman reports ... A new study out yesterday in the journal Science finds that methane emissions from the U.S. oil and gas industry are nearly 60% more than current EPA estimates.

Why it matters: With natural gas now the dominant fuel for generating electricity in the U.S., determining its environmental footprint is crucial. Although burning natural gas for energy emits fewer long-lived greenhouse gases, it does release considerable amounts of methane — a potent, short-lived global warming agent.

The background: During the past decade, as the U.S. energy market has increasingly favored natural gas as a power source over coal — think of the "fracking" boom that transformed the landscape in several states — numerous studies have attempted to estimate its climate change ramifications.

What they found: Using ground-based measurements as well as data gathered from aircraft, researchers found that the current leak rate from oil and gas operations in the U.S. is 2.3%, compared to the EPA's estimate of 1.4%.

  • The volume of natural gas lost during its production could fuel 10 million homes, according to an Environmental Defense Fund press release.
  • The study, which represents the largest effort yet to quantify methane emissions from oil and gas operations, states such gas is worth $2 billion, giving the energy industry an incentive to act.

The big picture: Methane can have more than 80 times the global warming impact of carbon dioxide during the first 20 years after its release, though it declines after that.

Drill down: Read the rest in the Axios stream here.

5. California dispatch: carbon capture key

The Golden Gate Bridge. Photo: Amy Harder/Axios

I mentioned at the outset I'm here in California (that's my Golden Gate Bridge running photo above!) to moderate a panel on carbon capture technologies at a conferenced hosted by The Breakthrough Institute.

Driving the news: I asked the five panelists the following question: On a scale of one to 10, 10 being absolutely yes and one being absolutely not, how essential is technology capturing carbon emissions to cutting greenhouse gas emissions to the level scientists say is needed?

Their answers:

  • Eight was chosen by three: Julio Friedmann, CEO of a company called Carbon Wrangler and former official in President Obama’s DOE; Deepika Nagabhushan, energy policy associate at Clean Air Task Force; and Erin Burns, senior policy advisor at Third Way.
  • Ten was selected by Bill Brown, who is CEO of NET Power, a company with a pilot carbon capture project on a natural gas plant in Texas.
  • Five for electricity use, according to Tyler Norris, who is manager at Cypress Creek Renewables. He gave it a nine for emissions from industrial sources that are much harder to transition to renewables.

The bottom line: The experts generally agreed the technology is proven to work, but political and economic hurdles loom large. One point that kept coming up in the discussion is how carbon can be used as a product so there's an economic incentive to suck it out of the air. "Carbon is the new black," Friedmann said, noting that carbon can be used in fuels, concrete, clothes — even diamonds.

6. On my radar: ethanol, power markets & more

Ethanol:

  • A House committee holds a hearing on the renewable fuel standard beginning at 9:15am ET.
  • An anticipated potential Friday announcement by the Trump administration related to the mandate appears to be delayed, per Bloomberg.

Electricity markets:

  • PJM Interconnection released a report Thursday contradicting arguments the Trump administration has made in favor of propping up less-efficient electric generators, namely certain nuclear power and coal plants. Bottom line: It says the price tag of such an intervention would be $3.8 billion for consumers in PJM's region.
  • How renewables could affect power pricing as they become a bigger part of the electricity mix, per Utility Dive.

EPA:

  • Environmental Protection Agency Administrator Scott Pruitt spent $1,500 on "tactical pants," per documents obtained by The Intercept. EPA said the clothing wasn't used for Pruitt's protection, Vox reports.
7. From my notebook: latest in carbon tax fight
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Since the news broke earlier this week that a new political group, Americans for Carbon Dividends, formed to push for a carbon tax, I've gathered more intel on what might be next steps.

Driving the news: Americas for Carbon Dividends, which is backed by energy-industry money and pushed by former Republican lawmakers, is going to lobby Washington to support a carbon tax whose revenue is returned to most Americans in the form of a dividends check.

On the one side: Former Sen. Trent Lott (R-Miss.), one of the co-chairs of the group, says he’ll seek meetings with the White House and former colleagues on Capitol Hill, including Republican Rep. Steve Scalise of Louisiana, who holds a leadership position in the House.

  • Scalise has re-introduced a resolution opposing a carbon tax, which the Republican-controlled House voted to support a couple years ago. A spokesman for Scalise referred Axios to the lawmaker’s resolution and said Thursday he wasn't aware of any meeting request from Lott.

On the other side: Americans for Tax Reform, an influential conservative group whose pledge of not raising taxes has the support from most congressional Republicans, is planning an off-the-record summit on this topic in Washington this summer for an “invited group of influential college and young political leaders,” according to a spokesman.

  • Its purpose will be to “discuss the consequences of reckless energy policies like this," spokesman John Kartch said.
Ben GemanAmy Harder