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MARCH 9, 2022

Hello! Thanks to everyone for the warm welcome to Anca Gurzu, Cipher’s new correspondent based in Brussels. As a reminder, you can reach her at anca@ciphernews.com.

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Send your energy photos, ideas and more to news@ciphernews.com or me directly at amy@ciphernews.com.

We have a jam-packed edition today. Let’s get to it!

HARDER LINE COLUMN
National security comes roaring back as argument for climate policy
BY: AMY HARDER

Russia’s invasion of Ukraine is catapulting a dormant argument for climate policy to the top of everyone’s mind: national security.

In 2009 and 2010, the last time Congress considered comprehensive climate legislation, the U.S. was beginning to import liquefied natural gas, oil imports were persistently high and the prospect of peak oil seemed imminent.

One of the most compelling arguments to pass a big climate bill back then wasn’t that it would reduce emissions or even create jobs—it was to reduce America’s dependence on foreign oil.

Then-Sen. John Kerry (D-Mass.), who is now President Biden’s top climate envoy, called a climate bill he co-authored “a national security imperative because it reduces dependence on foreign energy” in a POLITICO 2010 op-ed. “This dependence takes nearly $500 billion a year out of the U.S. economy and ships it to too many countries that don’t share our values.”

But then, around 2010, new extraction technologies began releasing vast reserves of oil and natural gas previously locked in shale rock deep below the ground across the country.

Seemingly overnight, the national security argument for climate policy evaporated and America became the world’s biggest producer of oil and natural gas.

Prices of both commodities collapsed and so did domestic gasoline prices, ushering in a new era of global energy abundance that made it more difficult for various efforts and new clean energy technologies to gain a foothold.

But of course, oil is a global commodity at the whims of geopolitical upheaval and natural gas is increasingly becoming one, too. The argument didn’t evaporate, it just seemed like it—until now.

“It’s been a long time since energy was at risk. I think people forgot energy security was a real risk. This is a reminder that it is.”

- Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy and former White House adviser under President Obama

Politicians became complacent with plentiful oil. Congress passed at least two laws selling off oil from the nation’s strategic oil reserves to fund other priorities in the middle of the last decade.

Such sales could detract from the original purpose of the reserves, which is to provide relief against supply and price disruptions like the kind we’re experiencing now.

Energy security is roaring back as a top argument for clean energy technologies.

"This crisis is a stark reminder that to protect our economy over the long term, we need to become energy independent," Biden said Tuesday when announcing the U.S. was going to ban imports of Russian oil. "It should motivate us to accelerate a transition to clean energy."

Back in 2010 and again today, national security appears to provoke stronger and more widespread concern and thus support for policy change than reducing emissions or even creating jobs.

Sen. Joe Manchin (D-W.Va.) has expressed concern for months about higher energy prices due to climate policy. In the face of Russia’s aggression, Manchin’s tone dramatically changed.

“If there was a poll being taken and they said, ‘Joe, would you pay 10 cents more per gallon to support the people of Ukraine and stop the support of Russia?’ I would gladly pay 10 cents more per gallon,” Manchin said at a news conference last week.

Gasoline prices are rising much faster and higher than that though; 50 cents or more in some places over just the past week to exceed $4 a gallon for the national average (a record high).

Bordoff said this reflects the difficult reality that America’s political system tends to respond to acute crises but not the “proverbial frogs boiling in the pot”—climate change.

“There is not a lot of support to seeing higher energy prices to facilitate the energy transition, say, through a carbon tax,” Bordoff said. “But there is more willingness to accept higher prices to push back on this horrible Russian aggression.”
VOICES
Clean energy can be America’s national security buffer
BY: LYNN ABRAMSON

Lynn Abramson is president of the Clean Energy Business Network, which serves as the small business voice for the clean energy economy. You can reach her and her team at cebn@cebn.org.

My paternal grandparents emigrated from Ukraine a century ago to escape war and persecution. I hope my grandchildren will live in a world where democracy prevails and energy resources can’t be used as a chokehold on freedom.

But that’s what we’re witnessing today. Beyond its military, one of the strongest resources powering Russia’s invasion of Ukraine lies beneath the surface: its oil and gas supplies—and the dependence of the rest of the world on them.

The invasion of Ukraine has drawn a clear line between energy security and national security. Ukraine was front and center in President Biden’s State of the Union Address on March 1. He discussed working with our allies to release 60 million barrels of oil into global markets to stabilize gas prices. Just yesterday, the President announced a major step to ban all imports of Russian oil, gas and coal.

Sen. Joe Manchin of West Virginia—chairman of the Senate Energy and Natural Resources Committee and the critical linchpin of a pending clean energy tax package in Congress—said last week: “Energy has become a weapon of war for Vladimir Putin.”

But we have a whole arsenal of our own weapons here in America in the form of clean energy technologies. Global commodities will always be acutely affected by geopolitics, but a diversified energy portfolio affords us a more reliable and lasting weapon.

National security, family budgets and climate change are all on the line. By doubling down on clean energy, Americans will be paid back threefold.

Clean energy is rapidly becoming the dominant energy now and into the future. The latest edition of the Sustainable Energy in America Factbook, produced by Bloomberg NEF for the Business Council for Sustainable Energy, illustrates that 2021 broke every imaginable record in deployment of clean energy technologies, with private investment topping $105 billion. A trifecta of policy solutions is in the works that can deploy this arsenal faster and further than previously imaginable:

1. Market signals for decarbonization:

In his address last week, Biden called on Congress to enact a package of clean energy tax credit extensions and modifications for clean energy technologies, such as solar, wind, storage, carbon capture, efficiency and more.


This package has already passed the House of Representatives and similar legislation is now pending in the Senate. A recent analysis by the Rhodium group found that these tax credits and other investments would combat inflation by reducing the average customer’s utility bills $500 per year, and benefits to society would outweigh costs by 3 to 1.

2. Infrastructure modernization:

Biden also highlighted the Infrastructure Investment and Jobs Act, which passed Congress with bipartisan support and was signed into law in November. This legislation is making historic investments in modernizing our nation’s energy, transportation, water and other infrastructure. Provisions include deploying 500,000 electric vehicle charging stations across the country—particularly in rural areas—which has spurred auto companies like Ford to build multibillion-dollar EV manufacturing plants in places such as Tennessee and Kentucky.

The tax package pending in Congress would complement these investments by making EVs a reality for more families and alleviating their pain at the pump, made worse by Russia’s invasion of Ukraine.

3. New energy technology innovations:

And finally, Biden pressed Congress to advance bipartisan legislation to strengthen U.S. competitiveness in scientific research and development. The House and Senate have each passed their respective innovation bills and are now in conference to resolve differences. This package will invest in cleantech research and development and bolster important supply chains for critical minerals and semiconductors.

Again, tax policy is complementary to this effort, supporting pathways for new technologies as they advance from the lab to the market. Pushing the next wave of cleantech down the cost curve means every dollar invested in research would stretch further.
Lunchtime Reads & Hot Takes
Almost all climate-related corporate disclosures are inadequate, CDP says Reuters
Amy’s take: This casts a cloud over the record amount of disclosure going on that we highlighted in a Data Dive a few weeks ago. It underscores the importance of forthcoming U.S. disclosure regulations, which could be released as soon as next week, Reuters also reports.

Germany sticks with Putin for its oil and gasPOLITICO Europe
Anca’s take: Banning imports of Russian oil and gas can cut both ways—especially in Europe, which is highly dependent on both. Germany’s unwillingness to cut ties with Russian fossil fuels shows Berlin’s decades-long Realpolitik when it comes to Moscow. But other EU countries are also not keen fearing it would leave their citizens even more vulnerable.

In Virginia, abandoned coal mines are transformed into solar farms The Washington Post
Amy’s take: This type of direct energy transition will be critical to help communities historically dependent upon fossil fuels. But, as the story notes, renewable energy doesn’t provide as many full-time jobs, which is a key sticking point with the transition.

LanzaTech to go public in SPAC deal, valued at $2.2 billionReuters
Amy’s take: We were the first to tell you to expect this move early this year, which marks the first time a carbon management firm of any kind goes public. Although this is a lot less than some in the frothy electric-car SPAC market, hopefully this is more enduring.

Will the Ukraine war derail the green energy transition? Financial Times (paywall)
Anca’s take: The concerning part is this: “Far from declining, coal use globally surged to record levels over the winter, causing emissions to rise, while clean energy installations fell below the levels needed to reach climate targets.” It will be important to make sure this renewed reliance on coal is short-lived.

More reading:
  • What does banning Russian oil mean for global energy markets? — Financial Times
  • IEA says it will draw up plan to cut oil usage as price surge — Reuters
  • Environmental Groups Are United In California Rooftop Solar Fight, with One Notable Exception — Inside Climate News
  • U.N. climate chief: Ukraine crisis must not delay global action — Reuters
  • How the war in Ukraine and climate change are shaping the nuclear industry CNBC
  • Putting a charge in the gas-guzzling power boat industry — Axios
DATA DIVE
Climate goals would slash long-term EU natural gas demand
Source: E3G, European Commission Impact Assessment • Figures are based on achieving climate change goals of reducing greenhouse emissions by 55% compared to 1990s levels. Baseline year is 2015.

BY: ANCA GURZU

The European Commission said Tuesday that fully implementing existing energy and climate proposals would lower European Union gas consumption 30% by 2030.

The official guidance was released to help EU countries find ways to reduce dependency on Russian gas considering Russia’s invasion of Ukraine, a key conduit of gas between Russia and the EU bloc.

The EU is highly dependent on the fossil fuel, not just from Russia but from around the world. The bloc imports 90% of its gas consumption, particularly for household heating.

Even before the current energy security crisis, the EU had begun to work on the European Green Deal to shed fossil fuels and become the world’s first climate neutral continent. That plan would reduce greenhouse emissions by 55% compared to 1990s levels.

Under the plan, the EU could see its natural gas demand drop by an average of 35% by 2030 and 96% by 2050, according to numbers crunched by environmental think tank E3G. Low-emission gases like hydrogen or biogas are expected to replace part of that demand.

The data stem from a detailed 2020 impact assessment released by the European Commission that explored these potential changes considering the bloc’s ambitious climate target.

The impact assessment included several scenarios for meeting the policy goals, ranging from relying on carbon price measures to reduce demand or regulatory actions such as boosting renewables and energy efficiency uptake. The different scenarios led to different projections for gas demand to drop by 2030 (from a minimum of 32% to a maximum of 37%), but they all saw demand dwindle almost fully by mid-century.

AND FINALLY...
Barn-top solar
Stacey and Craig McLaughlin installed an 8.64 kilowatt PV array in early 2020 on their tree farm in Southwest Oregon. The solar panels cover about 54% of the farm’s annual energy needs, which includes the barn, house and a couple more buildings. They initially estimated it could take about seven years to recoup the costs of installation.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

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