President Joe Biden announced several actions on energy and climate matters his first few days in office, and certain segments of the energy industry are upset about federal land restrictions for oil and natural gas development and revoking the presidential permit for Keystone XL pipeline.
Producers in the U.S. and Canada and fossil fuel groups have issued statement critical of the first moves from the Biden White House. Others are bracing for changes while welcoming the new administration and the vastly different policy preferences than the Trump administration.
Biden named Richard Glick chairman at FERC on January 21, with James Danly moving to a commissioner role following almost three months as chairman. Glick, a Democrat, will preside with three Republicans and two Democrats at the Commission. Allison Clements is the other Democrat, while Mark Christie, Neil Chatterjee and Danly are Republicans.
Fellow commissioners, energy groups and others congratulated Glick and vowed to work cooperatively on matters before the Commission. With his Capitol Hill background and experience in the energy sector sandwiched between two stints in the Senate and one at the Department of Energy, Glick was praised by many for his legal acumen and ability to get along with others.
“He was always easy to work with even when we disagreed on things,” and “he is an experienced and sound lawyer,” said William Scherman, partner at Gibson, Dunn & Crutcher LLP and a former general counsel at FERC under Republican chairmen.
Past and current commissioners often say that most of the orders coming from FERC are bipartisan, though some of the major policy matters have become more partisan and brought dissents from Glick. His views on natural gas pipeline application reviews are well known following numerous dissents on orders under Republican chairmen.
Similarly, FERC actions on capacity markets in organized wholesale power markets have garnered his opposition based on his belief that those orders hindered state clean energy policies and pushed states away from capacity markets. Glick has questioned the wisdom of incentive rate treatment for utility investments in regional transmission organizations.
“I am honored that President Biden has shown the confidence in me to lead the agency at this critical moment in time,” Glick said in a statement. “This is an important moment to make significant progress on the transition to a clean energy future,” he said on Twitter, adding that he is looking forward to working with his colleagues to tackle the many challenges ahead.
At the White House, Biden hit the ground running to carry out campaign promises once he was inaugurated, with executive orders and policy directives on a host of issues. The two items that gained the strongest negative reactions were revoking the presidential permit for Keystone XL and an order from the Interior Department to halt new drilling permits on federal lands and waters.
Acting Secretary of Interior Scott de la Vega ordered a temporary stoppage, for 60 days, of action on any new onshore or offshore federal leases for fossil fuel development.
The Independent Petroleum Association of America (IPAA) and American Petroleum Institute (API) said the move would harm the U.S. economy and result in more use of foreign oil. Democrats are willing to destroy the economies of western states and the Gulf Coast region to placate the environmental community, said Dan Naatz, senior vice president of government relations and political affairs at IPAA. “All a leasing ban will do is shift production to Saudi Arabia and Russia, which have far less stringent environmental controls than American producers,” Naatz said in a statement.
Because energy demand will rise as the U.S. economy recovers from the COVID-19 pandemic, restricting oil and gas development on federal lands and waters “is nothing more than an ‘import more oil’ policy,” said Mike Sommers, president and CEO of API.
The halt on leasing through the acting secretary at Interior gives time for Senate consideration of Rep. Deb Haaland (D-N.M.), who is Biden’s nominee to be secretary.
The American Gas Association, Natural Gas Supply Association (NGSA) and many other energy groups issued statements congratulating Biden and vowing to work with the administration on various issues. Because Biden has made climate change a clear priority, gas industry groups are emphasizing the role gas can play in reducing GHG emissions compared with other fuels. Groups supporting renewable resources welcomed the change from Trump, who would criticize wind power projects and strived to have energy policies favoring fossil fuels and coal-fired power generation.
In what may be a reference to Trump actions that were not upheld by the courts, the Biden administration said the planned actions will follow through on Biden’s promises to the American people “and, importantly, fall within the constitutional role for the president.”
Actions on methane regulation, climate change, rejoining the Paris climate accord, revising work on the social cost of greenhouse gas (GHG) emissions and revoking the presidential permit for the Keystone XL oil pipeline were among the steps announced by the Biden transition team before Biden took the oath of office. The announcement said Biden would sign an executive order encompassing items that include a moratorium on all oil and natural gas leasing activities in the Arctic National Wildlife Refuge, revoking or replacing orders from the Trump administration that do not serve the national interest, directing executive agencies to address regulations and executive actions during the past four years that harm the public, damage the environment or are unsupported by the best available science.
The Biden team named several items to be included in that latter element, with a host of regulations from agencies that include the White House Council on Environmental Quality, Department of Energy (DOE), Environmental Protection Agency, Interior Department, Department of Transportation and others. The list includes 10 items from DOE, mainly around energy conservation and equipment standards, 48 items from EPA, 31 items from Interior and three from DOT, including regulations finalized in July of 2020 on transporting LNG by rail.
The administration intends to re-establish the interagency working group on the social cost of GHGs and the issuance of an interim social cost of GHG schedule to ensure that agencies account for the full cost of GHG emissions, “including climate risk, environmental justice and intergenerational equity.”
FERC’s examination of GHG emissions associated with natural gas pipeline applications has been a point of contention among commissioners, with Glick issuing numerous dissents for what he views as incomplete examinations in FERC orders on pipelines and LNG facilities, including environmental justice issues. He has been joined in those views by Commissioner Allison Clements, with both of them issuing statements recently on projects approved at the January 19 open meeting.
Biden took the oath of office shortly before noon January 20, and the administration said he will sign a combination of executive orders, memoranda and directives within hours of taking office “not just to reverse the gravest damages of the Trump administration – but also to start moving our country forward.”
NGSA President and CEO Dena Wiggins said the group supports the U.S. remaining in the Paris climate agreement and principles around methane regulation, both of which were announced in September 2020. NGSA members are committed to reducing methane emissions and are making investments to do that, along with improving transparency and quality of methane emission data. They support increased voluntary efforts and reasonable government policies that are “scientifically sound, cost-effective and flexible” enough to enable efficient implementation, new technology deployments and continuous improvements, Wiggins said in a statement.
As one of the first fossil fuel groups to support carbon pricing, NGSA is a strong proponent of such market-based mechanisms that most effectively reduce GHG emissions at the lowest possible cost to consumers and are most efficient when implemented as broadly as possible, Wiggins said.
The revocation of Keystone XL’s presidential permit, which was announced in the days leading up to the inauguration, garnered plenty of reactions, with the Association of Oil Pipe Lines (AOPL) and others critical of the move. Contrasted with Trump’s effort to speed the permitting process, which hit snags in courts and regulatory actions, Biden’s transition team announced that the permit revocation would be made on Biden’s first day in office.
Keystone XL is owned by TC Energy and the Alberta government, with the province holding an equity stake of about $1 billion. Because it would carry heavy crude oil from Canada to U.S. markets, supporters of Keystone XL, including Alberta Premier Jason Kenney, have urged Biden to not revoke the permit in order to protect construction jobs and economic development.
Kenney addressed the media January 20, and Reuters had reported that the province retained legal counsel to seek damages under international free trade agreements if the project is ended by presidential fiat.
TC Energy said it is disappointed with the expected action from Biden on Keystone XL, which would overturn years of effort and lead to unemployment for thousands of union workers. TC Energy will review any decision, assess its implications and consider its options, the company said in a statement.
TC Energy will halt work on the project and cease capitalizing costs beginning January 20. “Absent intervening actions, these steps could result in a substantive, predominantly non-cash, after-tax charge to earnings” in the first quarter of 2021, the company said.
AOPL President and CEO Andy Black said revoking the Keystone XL permit would harm construction workers, Native Americans and the U.S. steel industry that was to supply pipeline segments. TC Energy had recently made a commitment to power Keystone XL operations at net zero GHG emissions through renewable resources, and with oil transportation shifting to rail or truck deliveries, canceling Keystone XL would lead to an increase in GHG emissions, AOPL said.
Keystone XL had committed more than $500 million for Native American suppliers and employment opportunities for tribal communities, and rural communities would lose out on more than $100 million in property tax revenue if the project is canceled, Black said in the statement. “Killing 10,000 jobs and taking $2.2 billion in payroll out of workers’ pockets is not what Americans need or want right now,” he said.
By Tom Tiernan email@example.com