Climate Orders up: It's Climate Day at the White House.

January 27, 2021

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by Kelsey Tamborrino (Politico's Morning Energy) It's climate day at the White House. President Joe Biden will unveil executive orders today designed to make climate change a national security priority for years to come, while reshaping the U.S. oil and gas industry.

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The new orders will also address "environmental justice" issues, including by establishing new commissions to address the concerns of so-called fenceline communities that are disproportionately people of color or low-income families that live near pollution sources. Biden will also call for meeting a campaign promise to place 30 percent of U.S. federal land under conservation protection by 2030.

Yet, the order that has generated the sharpest opposition from oil companies is one that promises to re-write the relationship between the industry and public lands. Biden will order an open-ended freeze on offering public land for oil and gas drilling and coal mining, pending reviews of whether such leases were in the public interest.

Under that review, the administration is expected to consider whether to add language to new government lease agreements to tighten standards on greenhouse gas emissions and increase the royalties that companies must pay for minerals they produce on public land, Zack and Ben report.

Keep in mind: It's likely you'll hear opponents of the order cite a recent Wyoming taxpayer-funded study that warned about the economic impact from Biden's freeze on oil and gas development on federal land. Reporting by POLITICO and watchdog group Documented found neither Wyoming Gov. Mark Gordon nor state lawmakers disclosed that an oil and gas industry group helped to finance the outreach campaign for the study, Zack also reports for Pros. READ MORE

Exxon, Shell Face Rating Cuts on Greater Climate Risk, S&P Says (Bloomberg/Yahoo! Finance)

Biden’s Climate-Change Policy Targets Oil Industry: President to suspend new oil and gas leasing on federal land, setting stage for confrontation with energy sector (Wall Street Journal)

As Biden vows monumental action on climate change, a fight with the fossil fuel industry has only begun -- ‘This is not the time for small measures,’ the president said Wednesday, as he unveiled seeping executive actions to cut emissions to fight global warming. (Washington Post)

It's the climate economy, stupid (Politico's Morning Energy)

Biden to place environmental justice at center of sweeping climate plan (Washington Post)

One coal state senator holds the key to Biden’s ambitious climate agenda. And it’s not McConnell. (Washington Post)

How Joe Biden Can Cut Off The Fossil Fuel Industry’s Federal Funding (Huffington Post/Yahoo! News)

Stop Investing in Pollution: President Biden and Congress Must End All Fossil Fuel Subsidies (Evergreen Collaborative)

With Democrats in power, an emboldened environmental movement confronts them (Los Angeles Times)

Battle Lines Being Drawn on Biden Climate Plan (Our Daily Planet)

Biden administration delays Trump rule allowing companies to pay less money for drilling on federal lands (The Hill)

Excerpt from Bloomberg/Yahoo! Finance: “S&P Global Ratings believes the energy transition, price volatility, and weaker profitability are increasing risks for oil and gas producers,” it said in a statement on Tuesday. To factor this change, the rating agency said it had revised its industrywide risk assessment for the oil and gas sector to “moderately high” from intermediate.

If oil producers’ rating is cut, their cost of capital would likely increase, as debt investors demand a higher yield for the risk, potentially putting new projects at risk. Big Oil is already struggling to deliver strong returns on its investments, but so far has benefited from debt investors willing to lend it money at low interest rates.

Beside Exxon and Shell, S&P singled out Chevron Corp., Total SE and several other major Canadian and Chinese oil companies. It cut the outlook for BP Plc to negative. READ MORE

Excerpt from Huffington Post/Yahoo! News: The 11-page Evergreen Action memo highlights the limits of what the Biden administration can do unilaterally. At least a dozen ideas proposed in the document require Congress to act, including nearly all steps to cut off financial benefits to fossil fuel producers.

There’s the intangible drilling deduction, which lets oil companies deduct the cost of drilling new wells from their year-end tax bills, valued at $1.59 billion annually or $13 billion over the next 10 years. There are roughly $530 million in deductions for royalty payments to foreign governments for drilling overseas, and as much as $8.8 billion over the next 10 years in incentives for using captured carbon emissions to extract the dregs from oil wells. Then there’s the “first out, last in” accounting trick that allows companies to reduce their tax bills by selling off the most expensive fossil fuel reserves first, artificially reducing the inventory on which they pay taxes by an estimated $1.7 billion per year. All that would require lawmakers to enact new statutes.

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So, too, would blocking oil and gas companies from using a tax structure known as Master Limited Partnership, or MLPs, which are exempt from corporate income tax. Nearly three-quarters of MLPs were fossil fuel companies as of 2016, according to data from the nonprofit Oil Change International, representing some $1.6 billion in lost annual tax revenue.

Congress would also need to give Biden the authority to yank existing drilling leases on federal lands, though the president’s advisers ― either recognizing their limitations or tempering activists’ expectations ― showed little appetite for that on Wednesday.

“The opportunity for states to continue to accrue royalties from coal and natural gas that’s properly done on federal lands can continue,” Gina McCarthy, Biden’s national climate adviser, said during a White House press briefing.

That doesn’t mean there’s no hope for legislation. Rep. Ilhan Omar (D-Minn.) and Sen. Bernie Sanders (I-Vt.) proposed a bill last year to strip fossil fuel companies of subsidies. The Evergreen Action memo calls on Biden to champion some version of that proposal.

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With Democrats in control of both chambers of Congress, Biden could also press allies to pass the bill Sen. Jeff Merkley (D-Ore.) and Rep. Nanette Barragán (D-Calif.) introduced last spring to permanently block the federal government from aiding fossil fuel companies during a crisis like the coronavirus pandemic by taking steps such as slashing royalty rates owed for drilling on public lands.

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Among the executive orders Wednesday was a directive to agency heads to “identify steps” to “promote ending international financing of carbon-intensive fossil fuel-based energy” through the U.S. Export-Import Bank, the federal government’s main overseas financing arm. That language seems to leave open the door to natural gas projects and other lower-carbon fossil fuel infrastructure.

Evergreen Action’s proposal goes further, calling for an end to all fossil fuel financing.

The group urges Biden to “examine appropriate repayment from oil corporations for the costs to the U.S. Treasury for protecting their shipping lanes ― and thus their profits,” pointing to the $81 billion per year the nonprofit Securing America’s Future Energy estimates the military spends defending global oil supplies. READ MORE

Excerpt from Our Daily Planet: It is really rich to call ending subsidies and other government goodies for fossil fuel companies an “attack” on kids and the economy. It also ignores the market forces that are at work — clean energy is creating more jobs than it is supplanting. Just like the COVID stimulus, clean energy policies that address climate change are very popular with the public. Similarly, the only trick is to not move so far to the left that Senator Joe Manchin, who represents coal country, can’t go along. READ MORE