Daily on Energy: China backs away from oil tariffs against the US

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EUROPE SAYS IT’S MAKING GOOD ON TRUMP’S DEAL TO IMPORT MORE U.S. NATURAL GAS: The European Commission said Thursday that it has already been increasing its imports of U.S. liquefied natural gas since 2016, and will continue to do so as long as the U.S. honors its side of the bargain on cutting “red tape.”

Big boost: “Since the arrival of the first U.S. LNG carrier in the Portuguese port of Sines April 2016 and today, EU imports of liquefied natural gas from the U.S. have increased from zero to 2.8 billion cubic meters,” Thursday statement read. By comparison, Russia exported about 194 billion cubic meters of natural gas to Europe by pipeline last year.

Climate change: Miguel Arias Canete, a European commissioner for climate change, welcomed increased use of U.S. natural gas as a positive development. Increasing imports of “competitively priced liquefied natural gas” would increase diversification and security, and “is therefore to be welcomed.”

Running out of natural gas: Canete pointed out that the shift to American gas is happening at a time when European natural gas production is “declining more rapidly than foreseen and there is an accelerated phase-out of coal power plants in the EU.”

Trump’s meeting: The statement of support comes just a few weeks after Trump’s July 25 agreement with European Commission President Jean-Claude Juncker to strengthen EU-U.S. strategic cooperation with respect to energy.

Red tape reiteration: Juncker said the European Union stands ready “to facilitate more imports of liquefied natural gas from the U.S. and this is already the case as we speak.” The European Commision on Thursday also reiterated Juncker’s stance that the U.S. needs to “play its role in doing away with red tape restrictions” on natural gas exports.

“Both sides have much to gain by working together in the energy field,” Juncker said.

Welcome to Daily on Energy, compiled by Washington Examiner Energy and Environment Writers John Siciliano (@JohnDSiciliano) and Josh Siegel (@SiegelScribe). Email dailyonenergy@washingtonexaminer.com 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.

WHY CHINA REALIZED TARIFFS ON US OIL WOULD HARM ITSELF: China abruptly changed course Wednesday and removed oil from a list of American products it is subjecting to tariffs, as the energy-hungry country acknowledged the limits on trade war losses it can absorb.

Beijing announced on Wednesday that it would impose retaliatory 25 percent tariffs on $16 billion worth of U.S. imports, a response to the Trump administration after it issued similar tariffs against China on Tuesday.

Change up: China’s new tariffs will target U.S. automobiles, steel products, medical equipment, and some energy products, including coal, diesel, gasoline, and propane.

But for now, China will not put tariffs on U.S. crude oil. An early draft of potential tariff targets published by China in June did include crude oil.

China is the largest U.S. market for crude exports. Experts say China spared U.S. oil because it may struggle to get it elsewhere due to disruptions from other major suppliers.

“China’s decision to take crude oil off the list may signal its realization that the country would have more to lose from a 25 percent tariff on U.S. crude as the supply related uncertainty deepens in the global oil market,” Jane Nakano, a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies, told Josh. “Denying itself access to U.S. crude would have made crude oil imports more expensive for China and may have triggered energy security concern, especially if world developments drive up the global oil prices.”

Among the most pressing supply issues for China, and other major buyers, is that Iran is facing renewed oil sanctions imposed by the U.S., and Venezuela is suffering from a political and financial crisis that has dramatically limited production there.

‘Win-win’: U.S. crude oil exports to China went from nothing before 2016 to a record 15 million barrels in June.

The surging U.S. shipments of oil to China has helped reduce America’s trade deficit with the country, while also providing fuel for Beijing’s growing energy demand.

“Crude oil trade should be an easy win-win for Washington and Beijing,” Nakano said.

TRUMP’S SANCTIONS WILL HAVE AN UNCERTAIN EFFECT ON IRAN OIL EXPORTS, GOVERNMENT SAYS: Trump’s oil sanctions may not be enough to take Iranian crude oil off the global market, according to a new report from the Energy Department’s analysis arm.

It’s all about degrees: “Uncertainty remains regarding the degree to which the U.S. sanctions will take Iranian crude oil off the market,” the Energy Information Administration said Wednesday, even while predicting that the sanctions would limit Iran’s crude oil production and exports.

Is China the reason? The new analysis does not say explicitly what the reasons are for the uncertainty, although reports that China will likely continue to import Iranian crude oil indicate a lack of compliance with the sanctions.

90-day clock ticking: A senior White House official told reporters on Monday that the president’s order begins a 90-day clock to impose secondary sanctions to bar other countries from importing oil from Iran. The official said the administration is working with other countries to comply with sanctions, but that it plans to enforce the sanctions “aggressively.”

Prices climbing from last year: The sanctions on Iranian oil do not kick in until midnight on November 5. Already, oil spot prices have climbed to as high as $74 per barrel in June, which is $10 more the price in December 2017, according to EIA’s Wednesday analysis of its latest outlook data.

TRUMP OFFERS MORE WATER FOR CALIFORNIA WILDFIRES, BUT CRITICS SAY IT’S A STUNT: The Trump administration issued a directive Wednesday to allow California easier access to water to fight wildfires. But state officials, and firefighters, say more water isn’t helpful, and some observers and environmentalists are calling the move a political stunt.

Commerce Secretary Wilbur Ross directed the National Marine Fisheries Service to allow for redirecting water set aside in California for endangered species protection to be used for fighting wildfires.

Ross said the wildfires represent an emergency, allowing agencies to bypass protections of wildlife under the Endangered Species Act.

Policy by tweet: Environmentalists and water experts said the move smacks of political posturing, since Ross appears to be acting in response to a pair of much-criticized tweets from Trump this week, in which he said California wildfires “are being made so much worse by the bad environmental laws which aren’t allowing massive amount of readily available water to be properly utilized.”

“This is an attempt by the Trump administration to side run environmental protection by pretending it will help fight the wildfires,” Peter Gleick, president emeritus of the Pacific Institute for Studies in Development, Environment, and Security, told Josh. “It won’t. There’s no shortage of water.”

Pouring cold water: State officials say water access is not a problem for California’s firefighting efforts. Hotter and drier weather from climate change is what’s making the fires worse, Gov. Jerry Brown and others say. And water is not even the primary means to fight wildfires.

Firefighters do use water as a secondary resource to put out wildfires. But mainly, firefighters extinguish wildfires by building fire lines around them to contain their spread.

TRUMP TO NOMINATE DOE POLICY CHIEF AS NEW FERC NOMINEE, REPORT SAYS: Trump plans to nominate Bernard McNamee, the head of the Energy Department’s Office of Policy, to fill a vacancy on the Federal Energy Regulatory Commission, Politico reported Wednesday.

McNamee would replace Robert Powelson, a Republican FERC commissioner and Trump nominee who is resigning effective Friday. The move would replace an opponent of Trump’s efforts to subsidize money-losing coal and nuclear plants with someone involved in drafting the plans that the panel has so far rejected.

Coal bailout implications: Powelson, who has been in office for about a year, became known as a fierce defender of competitive markets, and especially outspoken against coal and nuclear subsidies.

‘Distortions’ in market: FERC, an independent agency, in January unanimously rejected a proposal from Energy Secretary Rick Perry to provide special payments to coal and nuclear plants for their ability to store fuel on-site for 90 days. McNamee helped write the proposal and sell it to Congress.

“A lot of the organized markets have distortions in them that aren’t representative of an actual free-serving market, so the thought is you need to remove some of those distortions and get some more parity,” McNamee said in response to a question from Sen. Maria Cantwell, D-Wash, at a July 19 Energy and Natural Resources Committee hearing.

New plan: Now, the Energy Department is considering a new proposal that may come before FERC, potentially using executive national security powers to force wholesale power operators to buy power from a list of coal and nuclear plants deemed “critical” to the grid.

Fossil fuel fan: McNamee has been chief of DOE’s policy office since May. Before that, he led the Tenth Amendment center at the Texas Public Policy Foundation, a conservative think tank from Perry’s home state.

“We have been told that fossil fuels are wrecking the environment and our health,” McNamee wrote. “The facts are that life expectancy, population and economic growth all began to increase dramatically when fossil fuels were harnessed — and have continued to do so for the 200 years since the beginning of the Industrial Revolution.”

Conservative credentials: Previously, McNamee was a deputy general counsel at DOE, chief of staff to Texas Attorney General Ken Paxton, and an aide to Sen. Ted Cruz, R-Texas.

He also has utility law experience, representing electric and gas utilities before state utility commissions in two stints at the firm McGuireWoods LLP.

What now: If nominated, McNamee would have to be confirmed by the Senate to join FERC. He would fill a commission that has two Republicans, Chairman Kevin McIntyre, and Neal Chatterjee, and two Democrats, Cheryl LaFleur and Richard Glick.

COALITION CALLS FOR SENATE TO LEAVE FERC SEAT VACANT: An environmental coalition on Thursday called for the Senate to not confirm a new FERC commissioner until the commission institutes reforms to its pipeline approval process.

“You now have a second chance when it comes to protecting communities from the Federal Energy Regulatory Commission’s (FERC) abuses of power and law, and from the fracked gas pipelines wreaking so much havoc on communities, environments, and the safety of future generations,” wrote the the VOICES coalition (Victory Over InFRACKstructure Clean Energy Instead) in a letter to senators.

‘Rubber stamp’: Fracking opponents say FERC has become a “rubber stamp” for pipeline approvals because the commission’s policy statement encourages the committee to lean too heavily on economic considerations when making decisions.

They note that since FERC adopted its 1999 policy, the commission has approved all but two of hundreds of natural gas pipeline proposals, according to a recent investigation by the Center for Public Integrity and StateImpact Pennsylvania.

TRUMP POLITICAL OFFICIALS EDITED REPORT ON WINTER COLD SNAP TO BOOST COAL: Trump political appointees intervened in the writing of an Energy Department technical report from March to highlight the importance of coal-fired power during the winter cold snap, according to a report Thursday.

The officials prodded one of the Energy Department’s national labs to say coal plant retirements pose a threat to electric grid dependability if deep-freeze “bomb cyclones” such as the one in January become the norm.

Fossil first: Emails obtained by the Sierra Club and shared with Bloomberg show coal advocates in the Energy Department hyping the performance of fossil fuels during stressful times on the grid, and mocking critics who have derided the Trump administration’s plan to subsidize failing coal and nuclear plants.

The emails show that Office of Advanced Fossil Technology Director Angelos Kokkinos encouraged analysts from the Energy Department’s National Energy Technology Laboratory to include information in the March 27 report on how coal plants performed better than natural gas during the 2014 “polar vortex.”

Deriding natural gas: “This highlights the need for system planners to more strongly consider generator performance during extreme weather events, particularly for natural-gas fired units.” Kokkinos said in a Jan. 8 email.

Coal is losing out to cheaper natural gas in competitive power markets, and the oil and gas industry opposes a bailout for its fossil fuel competitors.

Cold snap blessing: Other officials pushed to include information showing past electrical outages from natural gas-fired power, and sarcastically expressed excitement for the next “bomb cyclone” type event to show coal’s importance as an around-the-clock power source that can store fuel on site.

“If the weather blesses us with another cold snap and energy resources get tight, would these daily reports be useful to you again?” Assistant Secretary for Fossil Energy Steven Winberg asked more than two dozen colleagues in a Jan. 10 email.

Authors of the report heeded the advice of political officials.

The main takeaway from the March report was its warning “against overestimating the nation’s ability to respond to weather events if the current rate of coal plant retirements continues.”

MOODY’S DOWNGRADES UTILITY’S CREDIT DUE TO COST OF NUCLEAR POWER PLANT: The credit-ratings giant Moody’s announced it was downgrading the Georgia Power Company’s credit rating from the highest “A3” to a “Baa1” on Wednesday. The credit-rater said it is continuing to review the company that could result in “further downgrade” as it is likely to get stuck with the lion’s share of the construction costs for one of the nation’s only new nuclear plants being built in the Southeast.

Nuclear power gets more expensive: The downgrade was prompted by a $1.1 billion increase in its share of the Vogtle nuclear project in Georgia just 8 months after a revised cost estimate was approved by state energy regulators.

Further downgrades: Moody’s said its ongoing review for further downgrade reflects a “near-term risk” that one or more of the utility’s partners in the power plant project will decide to opt out of the project.

Better to shed power plants: At the same time, Moody’s smiled upon the utility firm Entergy for announcing the sale of its Pilgrim and Palisades nuclear power plants to a subsidiary of HolTec International.

Credit positive: The credit-rater called it a “credit positive” step because it reduces business risk from Entergy Wholesale Commodities, a high-risk business segment that has been cash-negative for the past few years, said Moody’s. This does not mean it is changing the company’s credit rating.  

Getting out of the nuclear business: “The sale furthers Entergy’s plan to exit the merchant nuclear generation business, which has been suffering from low customer demand and weak power prices,” Moody’s continued. “It also removes roughly $1.5 billion of decommissioning liabilities that could otherwise have been on Entergy’s books for decades.”

Trump’s support for nuclear power: The Trump administration continues to tout state efforts to keep nuclear plants from retiring prematurely. Perry visited the Exelon Generation’s James A. FitzPatrick Nuclear Power Plant in New York last week, where he praised Democratic Gov. Andrew Cuomo’s subsidy program to keep the plants open longer before ultimately retiring.

Green pushback: The visit prompted a letter to Cuomo by environmental activists and supporters of renewable energy calling on him to drop his support for nuclear power.

“New Yorkers should not be forced to buy nuclear power or support aging reactors via charges on their utility bills if they are willing to buy 100 percent renewable energy,” the letter sent this week by the Alliance from Green Economy stated.

WHEELER PUSHES BACK AGAINST GREENS OVER ASBESTOS RULE: The Environmental Protection Agency has found itself in a full-fledged battle with environmentalists over their characterization of the agency’s new rule on asbestos. EPA acting administrator Andrew Wheeler tweeted that the reporting on the goals of the rule have been “inaccurate.”

“The facts is @EPA is proposing a new rule that would allow for the restriction of asbestos manufacturing and processing of new uses of asbestos,” Wheeler tweeted.

‘Half measures’: A spokesperson for Environmental Working Group tells John that the EPA rule is a “half measure,” requiring the agency to approve any uses of asbestos in the United States. The group wants the government instead to adopt the same sort of outright ban that many industrialized nations have done.

The EPA tweeted out FAQ sheet Wednesday afternoon that explains that the rule will “restrict” the use of asbestos, not expand or preserve it as some have contended..

First question: “Will EPA’s new regulation allow EPA to restrict new uses?” is the first question in the FAQ. EPA’s answer is an unequivocal “yes.”

“EPA’s new significant new use rule (SNUR) proposed on June 1, 2018 broadens EPA’s restrictions on asbestos products,” EPA explains.

‘Prohibited’: “EPA is proposing to ensure that manufacture, import, or processing for the currently unregulated new uses identified in the SNUR are prohibited unless reviewed by EPA. EPA’s proposed new review process empowers EPA to take action, including prohibiting or limiting its intended use.”

CALIFORNIA SETTLES WITH UTILITY OVER RECORD METHANE LEAK: A California utility has reached a $120 million settlement with state law enforcement officials for a massive natural gas leak that forced thousands of people from their homes three years ago.

Leak problem: Southern California Gas Co. agreed to pay civil penalties, and help fund environmental projects, and programs to better detect methane leaks. The months-long natural gas leak at a storage facility in Los Angeles was the largest methane leak in U.S. history.

Methane, the main component in natural gas, is more potent than carbon dioxide because it traps 100 times more heat. However,  its molecules are relatively short-lived in the atmosphere, whereas carbon dioxide is very stable.

‘No excuse’ In addition to contributing to climate change, methane leaks can also cause illness.

“There is no excuse for what happened,” California Attorney General Xavier Becerra said in a statement. “For over four months, this leak exposed our communities to natural gas emissions that resulted in adverse health impacts and disrupted the lives of tens of thousands of Californians — displacing two area schools and driving residents from their homes.”

The settlement agreement must be approved by a court.

PUERTO RICO GOVERNMENT REVEALS MORE THAN 1,400 WERE KILLED IN HURRICANE MARIA: The government of Puerto Rico has revealed in a new report to Congress that more than 1,400 people were killed as a result of Hurricane Maria last year. The government had previously estimated a death toll of 64.

Puerto Rico’s government included the new death toll in a draft outline of a $139 billion reconstruction plan for the region set for publication Thursday and first reported by the New York Times.

Miscalculation: “Although the official death count … was initially 64, the toll appears to be much higher,” the report says. It notes that there were 1,427 more deaths in the four months after the hurricanes than normal for that time of year.
Power woes: The Federal Emergency Management Agency admitted it miscalculated the havoc Hurricane Maria would have on the island and its “insufficiently maintained infrastructure” or power grid.

Just this week — 11 months after the hurricane — Puerto Rico officials said power has finally been restored to all but 25 customers.

Reuters Coal lobby’s push for lower black lung tax clashed with U.S. studies

Bloomberg Exxon seeks long-term deals for U.S. oil exports

Reuters Palestinians turn to the sun to reduce their power shortfall



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