Renewable manufacturing jobs continue to make America great

Energy Matters

This post originally appeared on The Hill

The goal of bringing good manufacturing jobs back to the United States is not just an old school game. It is, and can be, more powerfully advanced by renewables.

Let’s start with America’s largest renewable energy resource by installed generating capacity: wind power. Phenomenal growth in wind turbine manufacturing in the U.S. has been driven by the simple fact that the most efficient turbines are so large that it is cost effective to manufacture major components close to installation sites here at home.

Today, more than 500 factories build wind-related parts and materials in 43 states, making everything from major wind turbine components such as nacelles, blades, towers, and gearboxes, to internal components like bearings, slip rings, fasteners, and power converters. These facilities support more than 25,000 manufacturing employees. Today, more than 100,000 Americans work in wind energy across all 50 states.

These manufacturing facilities are being built not only close to where the wind farms are being built, but also where many manufacturing facilities have fled. For example, in the Rust Belt, Ohio leads the U.S. with more than 60 wind power factories, while Michigan, Wisconsin, and Pennsylvania boast 26 apiece.

While not all areas that have wind farms can boast a new manufacturing facility, they are contributing to jobs and the economy, as more than 70 percent of wind farm capacity is installed in rural areas that fall below the poverty line. Of course, wind power’s reliability and potential continue to advance smartly behind technological advances.

Another renewable sector with tremendous growth potential is biomanufacturing. Largely based on the most efficiently produced carbohydrate in the world, American corn, chemical engineers are manufacturing renewable bioproducts as diverse as personal care, coatings for everything from paper to clothing, adhesives used in most construction materials and, increasingly, biochemical, and plastics.

According to a report from the Biotechnology Innovation Organization, biochemicals and plastics already account for more than 77,000 jobs nationally and pay an average annual wage of more than $80,000. Moreover, these jobs have an impressive employment multiplier of 18. As innovation advances enhanced functionality and drives down costs, advanced bioproducts appear to be just getting started.

Compostable bioplastics are starting to take over packaging and serveware in local restaurant chains, such as Sweetgreen. Waste from these restaurants does not go to landfills, but city composting operations, helping to control waste disposal costs. Some recyclable bioplastics even have performance capabilities that exceed conventional plastics. Durable bioplastics produced with carbon capture in place today afford promising carbon neutral or even negative technology.

Technology advances and growing consumer demand for low carbon energy sources and products ensure that many renewables will grow rapidly in the coming years. The right policies can make the U.S. the location where the renewable manufacturing jobs growth occurs. The key will be reforms in regulations and taxes.

Rolling back regulatory overreach can fuel manufacturing growth by inviting investment in America. Eighty-seven percent of surveyed manufacturers say that if compliance costs were reduced permanently and significantly, they would invest the savings in workers, research and development, or capital.

For example, while President Obama sincerely advocated development of the bioeconomy, his Environmental Protection Agency’s (EPA) greenhouse gas regulatory overreach thwarted further development of biochemicals and bioplastics. The new team at the EPA should abandon permitting requirements over carbon dioxide emissions from rising bread, brewing beer, and advanced bioproduct manufacturers because the carbon being released from processing crops is simply carbon that was captured when the crops grew earlier in the year.

All American manufacturers, including those in the renewable space, can benefit from tax reform focused on investment in the United States. Proposals being advocated by the House of Representatives in the “Better Way” agenda can boost American manufacturing with its simplification, immediate expensing of capital expenditures, and lower tax rates.


ENERGY POLICY NEWS

Trump to Ask for Sharp Increases in Military Spending, Officials Say President Trump will instruct federal agencies on Monday to assemble a budget for the coming fiscal year that includes sharp increases in Defense Department spending and drastic enough cuts to domestic agencies that he can keep his promise to leave Social Security and Medicare alone, according to four senior administration officials. The budget outline will be the first move in a campaign this week to reset the narrative of Mr. Trump’s turmoil-tossed White House. A day before delivering a high-stakes address on Tuesday to a joint session of Congress, Mr. Trump will demand a budget with tens of billions of dollars in reductions to the Environmental Protection Agency and State Department, according to four senior administration officials with direct knowledge of the plan. Social safety net programs, aside from the big entitlement programs for retirees, would also be hit hard. But this plan — a product of a collaboration between the Office of Management and Budget director, Mick Mulvaney; the National Economic Council director, Gary Cohn; and the White House chief strategist, Stephen K. Bannon — is intended to make a big splash for a president eager to show that he is a man of action. Read more on New York Times

Trump Proposes Cutting State Department Budget by 37% The White House wants to cut State Department and U.S. Agency for International Development spending by 37 percent, according to a source familiar with the new administration’s budget planning. President Trump’s proposed federal budget would add more than $50 billion to the defense budget by making significant cuts in other areas of domestic spending. The budget for the State Department and USAID this year is roughly $50 billion. Officials and sources close to the deliberations say that two areas within State that may be slashed are spending on special envoys and development assistance to other countries. Read more on E&E 

Shimkus Hopes for Bipartisan Support of Renewable Fuel Standard Reform This Summer A key House Republican lawmaker hopes to move legislation reforming the Renewable Fuel Standard through the chamber by August, though he acknowledges reaching compromise will be “tremendously difficult.” Rep. John Shimkus (R-Ill.), chairman of the Energy and Commerce subcommittee on environment, said any reform package would not “push a legislative mandate on what fuel type and mix to make” but instead “offer an opportunity to those who want to compete in this market.” And he said bipartisan support was a must. Separately, Energy subcommittee Chairman Fred Upton (R-Mich.) said he would include an energy title in broader infrastructure legislation with “a number of things we reached consensus on” during negotiations over a broad energy bill last year. Read more on Politico 

House Passes Bill to ‘SCRUB’ Old Rules The House passed Republican-sponsored legislation meant to root out ineffective and antiquated federal rules. The chamber passed H.R. 998, the “Searching for and Cutting Regulations That Are Unnecessarily Burdensome (SCRUB) Act,” by a vote of 240-185. The bill would establish a temporary commission of nine people, picked by the president and confirmed by the Senate, to review rules 15 years and older that may be outdated, unnecessary or otherwise ripe for repeal. The measure would authorize $30 million for five years and aims to cut 15 percent of all rules published in the Federal Register. The bill would task the commission with submitting a bundle of rules to Congress for disapproval. Lawmakers would vote to kill the rules en bloc. Read more on E&E 


 

ENERGY REGULATORY NEWS

Regulatory Process Bills to be Voted on This Week House lawmakers will vote this week on three bills overhauling various components of the regulatory process. Up first is the SCRUB Act (H.R. 998), which would create a five-year commission to suss out existing federal regulations for repeal. Members of the commission would prioritize rules that are more than 15 years old and aim to reduce the cumulative costs of federal regulations by 15 percent “with a minimal reduction in the overall effectiveness of such regulation.” The bill is expected to get a vote Tuesday. After that, lawmakers will consider the OIRA Insight, Reform, And Accountability Act (H.R. 1009), which would formally enshrine the nation’s regulatory gatekeeper into statute and require independent agencies to submit their rules for review. And the chamber will also tackle the Regulatory Integrity Act (H.R. 1004 ), a bill that would mandate agencies post copies of all steps and communications involved in their rulemaking activities online. Read more on Politico


 

ENERGY TAXATION NEWS

Border Adjustment Tax Under Fire by Refiners U.S. refining companies are stepping up their opposition to House Republicans’ border adjustment tax proposal. Tesoro, a refiner with substantial operations in both North Dakota and California wants to see the border tax plan completely scuttled. While it’s likely the proposal to tax imports but exempt exports from income tax calculations would most directly affect refiners on the east and west coasts, it would also touch Midwest refineries that buy oil from Canada. The American Fuel and Petroleum Manufacturers, a refining trade group, “supports comprehensive tax reform, but refiners have serious concerns that a border adjusted tax could have considerable impacts on the industry, consumers, and the economy,” the AFPM president and chief executive said. Read more on Politico

Divided Republicans Look to Trump to Lead on Tax Reform Republicans need President Donald Trump to get tax reform back on track. Lawmakers widely agree on the need for a major tax-code cleanup, but they are tied in knots over how. The main proposal, by House Speaker Paul Ryan, has taken a beating from many of the party’s erstwhile allies in the business community, not to mention a growing number of Republicans. But it’s unclear what the critics could support in its place, with lawmakers offering a host of competing proposals. That’s creating a big void that Trump, now working on a new tax-reform plan of his own, can fill — by resuscitating Ryan’s so-called border adjustment plan or perhaps with an entirely new vision for the tax code. “I’m waiting to see what’s coming out of the White House because, at the end of the day, the most powerful voice is going to be the president’s,” said Rep. Mike Kelly, a Republican member of the tax-writing Ways and Means Committee. Read more on Politico

Alberta Premier Warns U.S. Import Tax will Hurt American and Canadian Economies Alberta Premier Rachel Notley warned Tuesday that both the U.S. and Canada will suffer economically if U.S. lawmakers institute a border adjustment tax that hurts the flow of crude from the oil-rich province. Notley, who traveled to Washington after huddling earlier in the month with Canadian energy executives — including the CEOs of Cenovus Energy, Enbridge, TransCanada and Imperial Oil — said the Canadian industry was concerned about a potential 20 percent tax on goods imported into the U.S., which would include crude from the oil sands of western Canada. In an interview, Notley called the border tax “a hypothetical,” but said the energy executives “asked for us to make the case to as many people as possible on the economic effects of Albertan oil.” Read more on Politico


 

ENVIRONMENTAL NEWS

EPA

Pruitt Gets Hero’s Welcome at Conservative Confab U.S. EPA Administrator Scott Pruitt on Saturday rallied conservatives and promised to rein in the agency. Speaking at the Conservative Political Action Conference, Pruitt said he would focus on adhering to the formal rulemaking process and stick to the confines of federal law. At the same time, the new administrator said he would promote clean air and water and clean up Superfund sites. “I think there are some regulations that in the near term need to be rolled back in a very aggressive way,” he said. Others may take longer, he noted. In particular, he mentioned the Clean Power Plan, methane standards for the oil and gas industry, and the Waters of the United States rule. Pruitt added that “executive agencies only have the power that Congress has given them.” Pruitt said states care about clean air and water and are “partners, not adversaries.” Read more on E&E

Groups Fighting Repeal of Safety Regs for Industrial Plants A coalition of more than two dozen environmental justice groups is advocating against congressional repeal of recently released U.S. EPA safety regulations for chemical plants, oil refineries and thousands of other major industrial facilities. “Congress should reject self-interested calls from industries that use extremely hazardous chemicals to overturn the modest changes to the RMP [risk management plan] rule” and instead side with first responders, safety experts and at-risk communities, members of the Environmental Justice Health Alliance for Chemical Policy Reform said in a letter to House and Senate leaders released this afternoon. The amended regulations “place very little new responsibility or costs on industry, but can help to prevent future disasters,” they added. EPA had published the “accidental release” regulations last month; they were prompted by a 2013 Obama administration executive order issued in response to an ammonium nitrate explosion at a Texas fertilizer storage and distribution facility that killed 15 people. Read more on E&E

New Hazardous Waste Regulation Deemed “Draconian” by Trade Associations Trade organizations across multiple industries have brought what one called a “draconian” new regulation on hazardous waste generators to court. Eight trade organizations, representing the chemical, paper, iron, steel, petroleum, wood, electronics, motor and oilseed industries, asked the U.S. Court of Appeals for the D.C. Circuit to review an EPA rule. The rule revises regulations for those generating hazardous waste and is scheduled to go into effect in May. The rule makes revisions to the Resource Conservation and Recovery Act’s hazardous waste generator regulation program. It seeks to make the regulations more user-friendly for generators, strengthen environmental protections and allow generators more flexibility in managing their hazardous waste, according to the Environmental Protection Agency. Failing to meet any one of the EPA’s conditions for exemption “could subject a generator to multiple violations and substantial penalties,” the American Chemistry Council said in a statement. Even minor deviations in compliance could mark a generator as an illegal treatment, storage and disposal facility, the statement said. Read more on Bloomberg

Governors Group Urges Reform of Key Law In a rebuke to environmentalists, the nation’s governors have formally endorsed the Endangered Species Act reform effort underway on Capitol Hill. “Governors support the Endangered Species Act (ESA), when applied prudently, as a valuable tool for protecting imperiled species and call on Congress to improve and reauthorize the act,” the bipartisan National Governors Association said. Nearly 300 environmental and consumer protection groups urged the NGA last Thursday to oppose calls from their Western members to endorse ESA reforms at their weekend meeting. Led by the Center for Biological Diversity (CBD), the groups argued that “in the current political environment, any effort to open up the law would likely weaken, if not cripple its ability to conserve and recover our nation’s most imperiled plants and animals.” Many of the 14 principles for reform that the NGA adopted were uncontroversial: to rely on science and work to prevent the need to add species to the endangered or threatened lists, for example. Others, however, could dramatically change the implementation of the 4-decade-old law. The WGA is currently working with a coalition of stakeholders, including some environmentalists, to put forward specific, consensus-based reforms. Read more on E&E

EPA Withdraws Obama-Era Requirement for Companies to Provide Methane Data The Environmental Protection Agency said it is withdrawing an Obama-era request that oil and natural gas companies provide information on methane emissions at their operations. EPA Administrator Scott Pruitt said the withdrawal is effective immediately, adding he wants to assess the need for the information the agency has been collecting under a directive issued in November. Eleven states had questioned the reporting request as overly burdensome. Mr. Pruitt said removing the reporting request signals that the EPA under his leadership takes seriously the concerns of state officials. The EPA sent letters in November to more than 15,000 owners and operators in the oil-and-gas industry requiring them to provide information on the numbers and types of equipment at onshore oil and gas production facilities, and on methane emissions at the sites. Read more on Wall Street Journal


 

ENERGY MARKET NEWS

Crude Oil Prices Rise as Investors Take Long Positions Crude prices gained Monday as speculative investors exhibited confidence that oil would soon break out of its recent trading corridor toward the $60-a-barrel level. Net long positions in oil, a bet that prices will increase, have risen considerably on the expectation that output cuts by the Organization of the Petroleum Exporting Countries and other major producers is going to have a positive impact. Germany’s Commerzbank said in a note that net long positions in Brent now numbered over 500,000 in the week to Feb. 21 while similar contracts in WTI had grown to over 400,000. However, it added that with so many contracts betting that prices will rise, there is a chance that a significant price correction could happen if bearish headlines started to send jitters through the market. Oil prices have been facing strong resistance at the high $50s, frustrated by the steady increase in U.S. oil production. Read more on Wall Street Journal

Chevron Now Alert to Climate Change Lawsuits The growing spotlight on the risks posed by climate change has made government and third-party investigations into Chevron Corp. more likely, according to the company. In its 2016 annual, the company said fuel economy standards, international policies and domestic regulations could hurt business. That sort of discussion — boilerplate, vague descriptions of government efforts to slash emissions — is common among energy companies’ corporate filings. Chevron’s talk of possible climate investigations is not. “Increasing attention to climate change risks has resulted in an increased possibility of governmental investigations and, potentially, private litigation against the company,” the company said in its greenhouse gas portion of the report. While that sentence is a blurb in a 200-page document, it is a departure from Chevron’s past comments. Read more on E&E

Exxon Mobil Turns to U.S. Shale Basins for Growth Exxon Mobil Corp. outlined an ambitious plan to turn to prolific U.S. shale basins for growth, showcasing how the oil giant now sees American production as a key to its future. The company plans to spend about a fourth of its 2017 budget—about $5.5 billion—drilling in Texas, New Mexico and North Dakota, tapping a vast inventory of wells that can turn a profit at a price of $40 a barrel. The U.S. increasingly appears at the center of a burgeoning global revival after prices rebounded modestly and companies such as Exxon have improved in their ability to profit due to lower costs and feats of engineering. Yet unlike some peers that plan to keep investment roughly flat in future years, Exxon plans to increase spending to an average of $26 billion a year from 2018 to 2020. The company plans $22 billion in investments this year. Read more on Wall Street Journal

Occidental’s Massive Petrochemical Plant Comes Online in Texas The first of several new petrochemical plants coming online this year became operational this week when Houston-based Occidental Petroleum opened its new facility near Corpus Christi. The $1.5 billion ethylene plant in Ingleside is a joint venture between Occidental’s OxyChem subsidiary and Mexico-based Mexichem. The facility takes ethane from natural gas production and converts it into ethylene, which is the primary building block for most plastics. The project is the smallest and first of several Texas Gulf Coast ethylene crackers being completed this year. Others are under construction in the Houston area by Exxon Mobil, Chevron Phillips Chemical and Dow Chemical. The plant will churn out 1.2 billion pounds of ethylene a year that Occidental will turn into vinyl chloride mononers, which Mexichem will then convert into polyvinyl chloride to make PVC piping. Read more on Fuel Fix

Trump’s Justice Department Files First Motion in Ongoing Case The Trump administration filed its first motion in the massive ongoing Clean Power Plan litigation. The motion asks for a weeklong delay in responding to a request to consolidate other lawsuits dealing with the agency’s reconsideration of the Clean Power Plan. The U.S. Court of Appeals for the District of Columbia Circuit in September heard nearly seven hours of arguments in the lawsuit over the Obama administration rule, which required states to develop and put in place plans to lower carbon dioxide emissions from power plants. The D.C. Circuit has yet to issue a ruling in the closely watched case. State and industry opponents of EPA recently filed a new round of lawsuits challenging the agency’s decision to deny dozens of petitions to administratively reconsider the rule. Three of those opponents last week asked the court to consolidate their petitions with the litigation over the underlying Clean Power Plan. The Trump DOJ’s current deadline to respond to that request is Monday. Read more on E&E


 

TRANSITION NEWS

AmericanFlag

EEI Strategist Poised for Top Job Under Perry — Sources A well-connected political consultant for the nation’s for-profit power companies is poised to be tapped as chief of staff at the Department of Energy if former Texas Gov. Rick Perry (R) is confirmed this week, according to multiple sources. Brian McCormack, the Edison Electric Institute’s vice president of political and external affairs, is set to become Perry’s chief of staff, sources familiar with the decision said, while noting that any decision is subject to change. Perry’s nomination could receive a vote on the Senate floor as early as this week. McCormack, a former White House aide, is a familiar face in the utility sector and on Capitol Hill with deep Republican ties. If chosen, he would direct the Office of the Secretary and help oversee DOE’s multibillion-dollar budget and workforce. McCormack would bring a level of utility expertise and politics, and possibly collaboration, to the sprawling DOE, currently rumored to be facing deep budget cuts under the Trump administration. Read more on E&E

He Will Soon Run a Fifth of the Nation. Meet Ryan Zinke The Senate voted to confirm former Rep. Ryan Zinke as Interior secretary in the Trump White House. Zinke, a former Navy Seal, will enter a Cabinet role that will require him to try to balance President Donald Trump’s goal of boosting fossil fuel production, while protecting vast amounts of federal land in the West. Unlike many others in the Cabinet, Zinke had a smooth confirmation, which was capped off with today’s bipartisan 68-31 vote. He drew the backing of 17 Democrats, including Michael Bennet, Heidi Heitkamp, Tim Kaine and Jon Tester. Vice President Mike Pence will swear-in Zinke. He will take over a department tasked with implementing the Endangered Species Act, which some Republican lawmakers are hoping to overhaul in this Congress. Read more on New York Times

Two Candidates Being Considered for Seats on Federal Energy Regulatory Commission The Trump administration is starting interviews w/ at least two candidates for seats on Federal Energy Regulatory Commission, says person w/direct knowledge of interviews. Neil Chatterjee, senior energy adviser to Senate Majority Leader Mitch McConnell and former lobbyist for National Rural Electric Cooperative Assoc. and Patrick McCormick, senior counsel for Senate Energy & Natural Resources Committee, are among candidates: according to person who asked not to be identified because information isn’t public. FERC declined comment; White House didn’t immediately respond to requests for comment. FERC has lacked quorum since former chairman Norman Bay left last month. Agency oversees utility M&A, pipeline tariffs, LNG terminal and interstate gas pipeline siting. Five-member commission has three open Republican seats, two Democrats currently serving. Read more on Bloomberg

Investigators Probed Jeff Sessions’ Contacts With Russian Officials U.S. investigators have examined contacts Attorney General Jeff Sessions had with Russian officials during the time he was advising Donald Trump’s presidential campaign. But disclosures about Mr. Sessions’ contacts led quickly late Wednesday to demands that he step aside from any investigation involving the Trump administration, or that he resign for failing to tell the truth during his confirmation hearing. “If there is something there and it goes up the chain of investigation, it is clear to me that Jeff Sessions, who is my dear friend, can not make this decision about Trump,” said Sen. Lindsey Graham (R., S.C.), adding that a special prosecutor might be needed. Mr. Sessions, in a statement placed on Twitter late Wednesday by his spokeswoman, said: “I never met with any Russian officials to discuss issues of the campaign. I have no idea what this allegation is about. It is false.” During his confirmation hearing for attorney general in January, Mr. Sessions, a Republican senator from Alabama, testified under oath that he had no contact with Russian officials as a campaign surrogate and never discussed the 2016 election with Russian officials. Read more on Wall Street Journal


 

ENERGY TRANSPORTATION NEWS

Companies Being Allowed to Comply with New Rules for Transporting Hazardous Materials The Pipeline and Hazardous Materials Safety Administration won’t penalize companies complying with new, but inconsistent, hazardous material regulations, the agency announced. PHMSA said it will allow handlers to comply with either new international rules or current domestic rules for transporting hazardous materials via air or water. The agency will also allow those packages to be labeled by either the new or old regulations, without taking enforcement action. “The gist of it is that they (PHMSA) recognize that international compliance and harmonization is crucial for industry, so that’s a very good thing,” said Paul Rankin, president of the Reusable Industrial Packaging Association. PHMSA is working to harmonize domestic with international standards for transporting and labeling hazardous materials. The international rules, from the International Civil Aviation Organization and the International Maritime Dangerous Goods Code, have already been enacted. Read more on Bloomberg

Governors Interested in Public-private Partnerships The head of the National Governors Association said the upcoming legislative push to encourage infrastructure projects will rely heavily on public-private partnerships. Asked about financing the infrastructure bill that could top $1 trillion, NGA Chairman Terry McAuliffe, Democratic governor of Virginia, told reporters on Capitol Hill this afternoon that “it seems clear that everybody is interested in public-private partnerships.” The president earlier today said he promised the group that “we’re going to make it easier for states to invest in infrastructure.” Trump also promised a “big statement tomorrow night” on infrastructure when he addresses a joint session of Congress. “We spend $6 trillion in the Middle East and we have potholes all over our highways and our roads,” Trump said, offering few details but pointing to the crumbling roads and bridges across the country. “Give us the tools at the state level. As we say, we all have different jurisdictions and areas that we represent and different funding formulas, but I clearly think that public-private partnerships are the way to go to get the most out of taxpayer money,” said McAuliffe. Read more on E&E

$28B Enbridge-Spectra Merger Recasts Pipeline Industry Oil and gas pipeline giant Enbridge Inc. is now the dominant energy transportation and storage company in North America after finalizing its buyout of Spectra Energy Partners LP. The Calgary, Alberta-based company swallowed up Spectra in a combination worth an estimated $28 billion, after sailing through antitrust scrutiny in the United States and Canada. Enbridge had to meet terms tied to offshore pipeline holdings to satisfy the U.S. Federal Trade Commission. FTC regulators feared reduced competition for energy transport from three major natural-gas-producing areas in the Gulf of Mexico. But the rise of onshore shale gas has greatly diminished the Gulf’s importance to the North American gas market and its impact on natural gas prices. The transaction closed this week as Spectra’s former corporate leadership confirmed it’s now a wholly owned subsidiary of the Canadian giant. The merger also marks the largest deal of the year in the oil and gas midstream space. With the acquisition of Spectra, Enbridge has planted its flag firmly in the Marcellus Shale, the dominant gas play in North America and one that’s poised to become even larger. Read more on E&E

Keystone Builder Suspends $15B Challenge Against US The company behind the proposed Keystone XL pipeline has suspended an international arbitration challenge that sought $15 billion from the United States government for blocking the project. TransCanada Corp. filed a notice of the suspension with the World Bank’s International Centre for Settlement of Investment Disputes, just over a month after President Trump wrote a memo to restart the federal consideration of the project, a decision that could make the arbitration moot. Trump asked TransCanada in January to apply again for a presidential permit for the controversial pipeline to cross the Canadian border, and told the State Department to decide within 60 days whether to issue the permit. The pipeline developer sent in its new application days later. The challenge under the North American Free Trade Agreement (NAFTA) made various claims against the federal government, including that it did not treat TransCanada the same as it would treat a United States-based company. Read more on The Hill

Marcellus, Utica Projects Get Mixed Environmental Review A pair of natural gas pipelines that TransCanada Corp. subsidiaries propose to build through four southeastern states would have long-term effects on vegetation, air and noise, according to a federal review, but those impacts can be reduced to “acceptable levels.” The Federal Energy Regulatory Commission this week released a draft environmental impact statement (EIS) that covers the Mountaineer XPress and Gulf XPress projects. In its draft review, FERC found that the projects would have “some adverse and significant environmental impacts.” Certain forest habitats would be especially affected because of the significant new rights of way that the project would require, the agency found. Read more on E&E

House GOP to Prioritize Ethanol, Pipeline Legislation Republicans on the House Energy and Commerce Committee are planning to push legislation this year to change the federal ethanol mandate and make pipeline approvals easier. Committee leaders said that the ethanol and pipeline policies are among the legislative priorities in their push to “put the consumer first and build policy from there,” as Rep. Greg Walden (R-Ore.), the newly minted chairman of the full committee, put it. Rep. Fred Upton (R-Mich.), the chairman of the energy subcommittee and previous chairman of the full panel, said he hopes that policies to build out energy infrastructure including pipelines can become part of the infrastructure package that the House plans to debate later this year. Read more on The Hill

730-mile Epic Permian-to-Corpus Pipeline in the Works A trio of companies hope to build a 730-mile-long crude oil and condensate pipeline from West Texas to Corpus Christi, taking crude from points in Orla, Pecos, Crane and Midland in West Texas’ Permian Basin and transport it to an affiliate’s terminal in the Port of Corpus Christi and other drop-off points in the area. The so-called Epic pipeline would have a maximum capacity of 440,000 barrels per day of crude oil and condensates, a form of ultralight crude oil. The companies are currently bidding out the first 200,000 barrels of pipeline capacity and have not said how much it will cost to build the pipeline or when they plan to start construction. The companies say the pipeline will be operational by the first quarter of 2019. Read more on Fuel Fix


POTUS ENERGY NEWS

Trump Avoids Energy and Environmental Policy in Congressional Address Anyone expecting to get additional details on how President Donald Trump will approach energy and environmental policy during his joint address to Congress on Tuesday night left disappointed. Among the words that did not appear in the hour-long speech were “energy,” “climate” and “oil.” Trump touted what he described as “a historic effort to massively reduce job crushing regulations” and pledged his administration was “going to stop the regulations that threaten the future and livelihood of our great coal miners.” He also vowed to work with members of both parties “to promote clean air and clear water,” and cited his moves to get the Keystone XL and Dakota Access pipelines built (the video feed cut to an applauding Sen. Heidi Heitkamp for the pipeline talk). But there were no specific additional details beyond those references. Republicans weren’t concerned by the lack of detailed discussion of energy policy. Read more on E&E


 

ENVIRONMENTAL REGULATION NEWS

Trump Moves to Kill Obama Water Rule President Trump signed an executive order on Tuesday kicking off the process of repealing former President Obama’s Clean Water Rule. The order itself doesn’t repeal the regulation, but it instructs the Environmental Protection Agency (EPA) to reconsider the rule, also known as Waters of the United States. It’s the first action Trump has taken against the EPA, following years of complaints from Republicans and industry about the agency, and multiple campaign promises to rein it in. It’s a horrible, horrible rule. Has sort of a nice name, but everything else is bad,” Trump said at a White House signing ceremony, surrounded by Vice President Pence, first lady Melania Trump and top opponents of the regulation, including newly installed EPA Administrator Scott Pruitt, Sen. Jim Inhofe (R-Okla.), Sen. Heidi Heitkamp (D-N.D.) and Rep. Bob Gibbs (R-Ohio.). Farmers, homebuilders and county commissioners were also present. Read more on The Hill

EPA Chief: ‘Help is on the Way’ for Farmers The new head of the Environmental Protection Agency (EPA) sought to assure the agriculture industry that the agency will start operating in a way more favorable to them and the business community as a whole. Scott Pruitt, who has led the EPA for a week, spoke to a meeting organized by the American Farm Bureau Federation minutes after President Trump signed an executive order to begin eliminating former President Barack Obama’s Clean Water Rule, a top legislative priority for the agriculture industry. Pruitt told attendees that under Obama, federal regulators took a “we know best” approach on issues like the environment. Pruitt contrasted that with his own intention to put more regulatory powers under state control. Read more on The Hill

Trump to Sign Executive Order on Domestic Energy Development President Donald Trump is slated to sign an executive order on domestic energy development next week that sets in motion a rollback of the Obama administration’s climate change regulations. White House spokeswoman said in an email that the order is “expected sometime next week.” She declined to provide further details. A person familiar with the order said it is expected to emphasize increasing U.S. energy independence and maximizing domestic energy production on federal lands, while eliminating and streamlining regulations. As Trump has long promised, the order will instruct EPA to begin re-working former President Barack Obama’s Clean Power Plan, a process that could take years and will almost certainly face court challenges. The order will also overturn the Obama administration’s 2015 moratorium on new coal leases on federal lands. Read more on Politico Pro


 

ENERGY TRANSITION NEWS

Senate Confirms Perry to Lead Energy Department The Senate this afternoon confirmed Rick Perry to be the next Energy secretary, putting him in charge of an agency popular with members of both parties, but also one the former Texas governor famously pledged to abolish as a presidential candidate. Senators backed Perry’s nomination 62-37, with 10 Democrats and Maine independent Angus King supporting President Trump’s pick. Although Perry was among the less controversial Cabinet nominees, he is the last one to get a vote under a schedule laid out by Majority Leader Mitch McConnell (R-Ky.) before the Presidents Day recess. Read more on E&E


 

RENEWABLE ENERGY NEWS

energyAs Wind Grows, So Does Its Opposition Oklahoma wind developers are fresh off a record-setting year. Only Texas installed more wind capacity in 2016. Wind barely registered in Oklahoma a decade ago, but it now accounts for 20 percent of the state’s electricity generation. Instead of celebrating, industry leaders find themselves facing a torrent of anti-wind legislation in Oklahoma City, the state capital. By one tally, 88 bills concerning wind development have been filed in the opening days of the legislative session. They range from a proposal to provide advanced notification for new developments to a plan backed by Gov. Mary Fallin (R) that would impose a 0.5-cent-per-kilowatt-hour tax on wind-generated electricity. Wind’s importance to the local power grid means there is little appetite among lawmakers to back a bill that could raise consumers’ rates. But a proposal to end a tax credit is gaining steam. As oil- and gas-reliant states like Oklahoma attempt to dig themselves out of a budget hole born from weak crude prices, they are increasingly looking toward wind to help balance the books. Read more on E&E


 

 

 

 

FROM THE CHART ROOM

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Canada is the largest energy-trading partner of the United States. Based on the latest annual data from the U.S. Census Bureau, energy accounted for about 5% of the value of all U.S. exports to Canada and more than 19% of the value of all U.S. imports from Canada in 2016.

While the value of bilateral energy trade with Canada has varied over past decade (driven primarily by changes in prices of oil and natural gas) the overall structure of bilateral energy trade flows has changed relatively little, and U.S. energy imports from Canada have exceeded U.S. energy exports to Canada by a large margin. In 2015 and 2016, the value of U.S. energy imports from Canada and the value of U.S. energy exports to Canada both fell, reflecting declining prices of key commodities such as crude oil, petroleum products, and natural gas. For 2016, the value of U.S. energy imports from Canada was $53 billion, while the value of U.S. energy exports to Canada was $14 billion.

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Crude oil makes up most U.S. energy imports from Canada, averaging 3.3 million barrels per day (b/d) in 2016. Canada is by far the largest source of U.S. crude oil imports, providing 41% of total U.S. crude oil imports in 2016. Canada’s crude oil exports to the U.S., which are produced in Alberta and are shipped primarily to the Midwest and Gulf Coast regions of the U.S., consist mainly of heavy grades.  Until 2013, virtually all U.S. crude oil exports went to Canada. However, as the U.S. has exported more crude oil to other countries, Canada has made up a smaller share of U.S. crude oil exports. U.S. crude oil exports to Canada are typically light, sweet grades that are shipped to the eastern part of the country.  Bilateral petroleum products trade with Canada is relatively balanced in both volumetric and value terms. Canada was the destination for 564,000 b/d of petroleum products in 2016, or 12% of all petroleum products exported from the U.S. These exports were valued at more than $8.2 billion. However, the mix of petroleum product flows between the U.S. and Canada varies by product and region. For example, the U.S. is a net importer of gasoline from Canada, with significant volumes flowing from refineries in Eastern Canada to serve markets in the Northeast U.S.

Bilateral natural gas trade between Canada and the U.S. is dominated by pipeline shipments. Natural gas imports from Canada averaged 8.0 billion cubic feet per day (Bcf/d) in 2016, or 97% of all U.S. natural gas imports. Total natural gas imports from Canada were valued at more than $5.9 billion in 2016. Most of Canada’s natural gas exports to the U.S. originate in Western Canada and are shipped to U.S. markets in the West, Midwest, and Northeast. Increases in natural gas production in the Marcellus and Utica shales have made the U.S. less dependent on Western Canadian natural gas imports in northeastern markets. U.S. natural gas exports to Canada mainly go from Michigan and New York into eastern provinces. Increases in pipeline capacity to carry natural gas out of the Marcellus and Utica shale formations may enable increased flows of U.S. gas into Canada over the next several years.


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Michael Best Strategies’ Energy Team

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