Just a short intro today because 1) I want to get to the Top 14 for ‘14 and 2) I am completely overloaded with sports. From the Winter Classic at the Big House (105K-plus) to the football playoffs, the firing of a bunch of NFL coaches and the end of the College Bowl season with tonight’s Florida State-Auburn game, there is just so much going on. And this doesn’t even contemplate the upcoming 2014 winter Olympics which begin next month. (can’t wait for the Olympic Hockey and the Curling competitions.)
The other story of 2014 so far seems to be the cold weather… While I know some of you thought I was going to make a global warming comment, but really, I just remind you that it is winter… Have you ever been ice fishing on Green Bay in the middle of January? I can tell you that it is pretty cold.
As regular as the ball dropping in Times Square on New Year’s Eve, this week starts the “State of the (Fill in the Blank)” events that go on in Washington every January. Tomorrow at Noon will be the first and often most widely-attended hosted by API’s Jack Gerard at the Newseum.
Also a regular staple of January are AUTO SHOWS…Yes, the world-famous North American International Auto Show launches next week in Detroit followed closely by the Washington Auto show, which has recently become a great, policy-focused follow up to the big Detroit product car show.
Finally, last night the respected news magazine 60 Minutes did a significant and serious piece on Clean Tech issues. Unfortunately, its title “Clean Tech Crash” and its over focus on the few high-profile failures tends to undermine the true state and significant successes of the industry. More on this below.
BTW, Stop hording the incandescent light bulbs… They are not as good as the newer, improved (and much more efficient) light bulbs. On to the Top 14…
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Top 14 Issues for ‘14
As you know, each year for the first update of the year, I highlight a number of important issues for you to put on your agenda for the year. So here we go with the Top 14 issues for 2014:
1) Politics, Politics, Politics – In 2014, the year will be impacted greatly by the politics of the mid-term election in November. More so than usual, there is great uncertainty about who has the advantage heading into this key year. Expect most of the air in the room to be taken up between health care politics and continued budget battles that will play out in 2014, but there will be energy issues that invade the limelight, especially regionally and when key decisions are made like the Keystone pipeline decision and the Supreme Court’s expected Spring ruling on power plant emissions. Conventional wisdom reminds that that Democrats are defending the majority of the vulnerable Senate seats and the mid-term of a President’s second term are usual difficult for his party, but also Congress is at all-time low approvals.
2) New Personnel Might Changes Some Minds, Approach – 1) Louisiana’s Mary Landrieu: Speaking of vulnerable Senate seats, Landrieu is among them, but the appointment on Max Baucus to be ambassador to China and Ron Wyden’s expected move to Finance might give Landrieu an early gift as chair of the Senate’s Energy Committee. 2) John Podesta: Podesta’s move to the White House to head the President’s Energy team will create some credibility that this Administration has not had to date. While Podesta is definitely in line with the enviro community and will be their advocate, he also has significant political and process knowledge that will make him a much more powerful force than either Heather Zichal or Carol Browner. 3) FERC Chair: With Wellinghoff out and Bins sacked, who steps up next will be another interesting question for 2014. Look for NARUC power broker Collette Honorable of Arkansas to be at the front of the line.
3) NatGas 2014 – One of the biggest issues on the energy front this year will be the continued role of natural gas in the energy sector. It’s availability will remain the most important question, but other issues including state/federal regulations, political battles and legal fights will create additional potential problems. EIA says in a new report that Shale energy production will “continue to lift domestic supply and reshape the U.S. energy economy” and will result in near-historic levels of domestic crude oil production, higher levels of natural gas production, and dramatically reduce our reliance on imported energy. All the more reason why we are in a better position that even just a few short years ago.
4) Key LNG Decisions – The chipping away of application approvals continues to be a steady drip despite some strong internal industry competition and opposition. The key won’t be whether more applications are approved though. The key for 2014 will be whether one of those already approved beats litigation and opposition to finally makes it to the finish line and starts exporting.
5) RFS: To Cut or Not to Cut – Expect this to remain an interesting talking point this year after the EPA issued a proposal to reduce the amount of ethanol. While both sides have hammered each other for years, there are two key players to watch: environmental groups and Valero. Valero is the largest independent refiner in the US, but also one of the largest ethanol manufacturers so they carry extra credibility. As for enviros have never been enamored with the RFS. For years they really looked the other way and hoped that second gen biofuels and cellulosic industries would emerge, but they haven’t. Adding to the challenge for ethanol, the industry has lost much of its clout, both in politics and in the marketplace. It has been some years in the making, but combined with the lack of development of the 2nd gen/cellulosic, they have lost a lot of credibility. The politics just aren’t as favorable as they used to be for ethanol, especially since this election year doesn’t run through Iowa.
6) Keystone – Is it finally time? That is the question. Why this has become such a flash point for some environmental activists may be an even more important question. Most expect the President to approve the pipeline, but look for a good cop/bad cop approach with Secretary John Kerry and a heavy dose of focus on implementing the new GHG rules, which would have a much more dramatic impact on the environment and the economy.
7) Focus on Crude Transportation – Speaking of transporting crude, given a number of incidents, expect a wider, more detailed focus on the infrastructure issues surrounding transportation of oil. Enviro activists who have at times struggled to rally support against Keystone may be able to mainstream themselves with other enviros who have stayed in the background on the Keystone fight. The first shot in this battle was the recent revelation from PHMSA saying that Bakken oil may be more flammable than traditional crude. (that won’t move to the top of the activists’ key talking points…oh it already has?)
8) Crude Oil Exports? – Speaking of Keystone, there is a growing debate over whether we should be exporting crude oil. The fire was stoked by Energy Secretary Ernest Moniz when he suggested revisiting the ban on almost all oil exports. Expect this to be a key point for the oil industry and I expect it to come up tomorrow at API’s State of the industry event. Don’t kid yourself though: this one doesn’t break down along the typical party lines and politics 2014 (and the usual gas price increases in the summer) may ice this issue to another future time.
9) Vogtle Nuclear Success – Last year, we pegged action on some nuclear projects as a key for the future of expanding nuclear power. While others have fallen off the radar screen, the brightest shining light continues to be Southern’s Vogtle Plant, which is currently fighting through the challenges, crossing significant milestones and will soon be at the point where we know it will happen. Keep a close eye on Georgia, especially now that several older coal plants are also timelined to close in a few years, which makes Vogtle that much more important.
10) Loan Guarantee Successes – As I mentioned in the blurb about 60 Minutes, the DOE Loan Guarantee program will be seen in a different light after 2014. Already, several important projects are just going on-line and will generate some real-world successes for the program. They start with Tesla and several solar projects in California like Ivanpah.
11) PTC Deal in Larger Tax Reform – While the Production Tax Credit (PTC) expired quietly on January 1st, not much noise was made given the change in status that allows the trigger point to be “commence construction” rather than “in-service. “ That change gave developers another year or so to finish projects already started. But this leads to a larger question: Will it be renewed again? I suspect the answer is yes in the long-time tax extenders package that is expected to run along with the mandatory debt ceiling legislation which is required sometime in the first quarter of 2014 (depending on whom you ask). Most experts think it may take the form of a longer-term phase out, maybe 4 or 5 years. A key player to watch is Iowa Sen. Chuck Grassley.
12) Impacts of Mexican Energy Reforms – Energy is the most contentious and challenging reform for the Mexican government. With declining oil revenues and increasing dependence upon imports of refined oil and gas from the United States, the Mexican government will need to significantly reform its national oil company PEMEX, as well as modify the role played by international oil and service companies. While constitutional reforms approved in December 2013 are a necessary precondition, forthcoming enabling legislation and its implementation will determine the shape and success of Mexico’s energy reforms. And it will have an important impact on what we do here, especially in the Gulf of Mexico. The reform will open investment opportunities for American energy and service infrastructure companies seeking new energy markets as well as access to Mexico.
13) Offshore Wind Will Blow in This Year – We have been saying to watch this for a couple years now, but this IS the year for offshore wind. With the litigation, delays and construction challenges finally getting resolved, most experts really expect that we will see our first offshore wind projects finally completed. There is no doubt that 2013 saw significant progress for the fledgling industry. With strong government leadership at the state and federal levels working together with the innovators on the front lines of the economic and technical development, we are closer than ever to really starting an entirely new industry that promises revenue, jobs and clean energy, all in one. This year will finally be time to get a project in Rhode Island, Delaware or New Jersey or Massachusetts in the water and operating.
14) The Biggest and Most Important: GHG regulations – This will be the epic battle of 2014. So much to say… This will not be resolved this year, but nearly every fight starts with this issue. This year will feature the released draft rule, the comment period and more EPA hearings. It is also expected to have the release of rules for existing plants (one year from the President’s Summer 2013 Georgetown Speech). Most experts say the challenges will be much more difficult, more costly and legally questionable. They also say the timelines may have to slip, especially in a tough political year. Finally, as stated earlier, the SCOTUS decision on the Cross State pollution rule will also have an impact.
IN THE NEWS
60 Minutes Focuses On CleanTech Challenges – The news magazine 60 Minutes released its long-expected story on Sunday that said tens of billions of dollars in taxpayer support for green-technology companies were wasted. The unfortunately titled, “Cleantech Crash,” set off a furious battle over the true story surrounding clean tech issues. While the 60 Minutes segment underscores some hard to argue facts about failures at Solyndra, A123 and Fisker, among others, it really only acknowledges successes of the program which we are just starting to see. This one line in the 15 Minute report: “The stimulus investment wasn’t a total bust. It helped create the successful electric car company Tesla. A few of other companies are starting to show promise, and loans are being repaid.” This makes the CBS timing fortunate for their story’s approach, but not reflective of the successes that will really start to be evident this year. Our friends on both sides mention the story. At ACORE, they pushed back during the segment on social media with their Energy Fact Check web site. Others added that the DOE Loan Program has a 97% success rate. In July 2012, the former head of the loan guarantee program testified to Congress that funds that went to bankrupt companies represented less than 3 percent of the total Department of Energy portfolio, a far better success than the venture capitalists. As well, solar and wind continue to play a significant role in energy generation and job creation in the US. All fair and important points…and ones missed by 60 Minutes. Also our friend Katie Fehrenbacher has a fair piece that looks at what 60 Minutes may have gotten right and where they went astray.
NYT: Wall Street on Solar Craze – As I mentioned earlier on the timing of the 60 Minutes story, the timing seems to be everything…In fact, over the weekend, the New York Times focused on Solar City and its exploding interest on Wall Street.
WSJ’s Gold Releases New NatGas Book – Award-winning journalist and Pulitzer Prize finalist Russell Gold offers an insightful, no-holds-barred exploration of natural gas drilling practices in his new book that will be released this month. Fracking, or hydraulic fracturing, is the process of injecting fluid into the ground at extremely high pressure in order to fracture shale rocks and release the oil and natural gas inside. It has been the subject of three major films, countless news articles, and has become a hotly contested topic both for its environmental impact and its positive effect on the economy and job creation. In The Boom, Gold examines both sides of the arguments and illuminates the truth of this frequently misunderstood technology. It is a thrilling journey filled with memorable and colorful characters: a green-minded Texas oilman who created the first modern frack; an Oklahoman natural gas empire–builder who gave the world an enormous new supply of energy but was brought down by his own success; and a cast of many. Gold melds his natural gift for engaging, in-depth storytelling and reportage with his insight into the energy industry to bring to life the fascinating history of how this major new source is changing the way we use energy. The Boom is not simply the story of fracking: It is the compelling and thought-provoking story of the modern global economy and how the United States—and the world—have been forever changed.
ON THE SCHEDULE THIS WEEK
Forum to Look at Future Energy Trade – The Brookings Institution’s Energy Security Initiative will host Senate Energy Committee ranking member Lisa Murkowski tomorrow at 9:00 a.m. to discuss the future of U.S. energy trade and its implications on the domestic economy and national security. The boom in American oil and gas production over recent years has generated widespread discourse on U.S. energy security and policy moving forward. In its 2014 Annual Energy Outlook, the U.S. Energy Information Administration forecasts domestic crude oil production to nearly double from 2008 levels to 9.6 million barrels per day by 2019. The report also projects the U.S. will become a net natural gas exporter by 2018. This boom in domestic energy production has raised calls for a fresh look at existing U.S. strategies surrounding its resources. William Antholis, managing director at Brookings, will provide introductory remarks. He will be joined by Charles Ebinger, senior fellow and director of the Brookings Energy Security Initiative, for a moderated discussion and audience Q&A following the senator’s speech.
Oil Trade Group to Discuss State of Energy – API will host its 2014 State of American Energy luncheon tomorrow at the Newseum.
US Chamber Sets Business Speech – On Wednesday at 9:00 a.m., U.S. Chamber of Commerce President and CEO Thomas J. Donohue will give his annual State of American Business Address to outline the business community’s top policy priorities for the year.
WRI to Look at Stories to Watch – The World Resources Institute CEO Andrew Steer will offer his perspectives on the major global developments in economics, business, natural resources and sustainability in the coming year on Wednesday at 9:00 a.m. at the National Press Club’s Holeman Lounge. Steer will look at what stories will impact people and the planet in 2014, who are the influential people and what policy decisions will take place. Now in its 11th year, WRI’s “Stories to Watch” at the National Press Club is a go-to event for D.C.’s media, policymakers, business leaders, and consultants.
Author To Discuss Storm, Grid Resilience – The CSIS Homeland Security and Counterterrorism Program will hold a discussion on Wednesday at 4:00 p.m. focused on strengthening homeland security and disaster management to achieve resilience featuring Dr. Dane S. Egli, Author and Senior Advisor, National Security Strategies. In the face of natural disasters such as Superstorm Sandy and man-made disasters like the Boston Marathon attacks, some have argued that there is a growing need to shift towards a posture that emphasizes resilience across all elements of the homeland security enterprise. A career Coast Guard officer and former White House National Security Council staffer, Dr. Dane Egli makes the case in “Beyond the Storms” that the nation needs to expand its focus beyond prevention and protection to a more systemic analysis of mitigation, response, and recovery.
House Resources to Look at Coal Policies – The House Resources The House Committee on Natural Resources will hold an oversight hearing on Thursday at 10:00 a.m. to look at the recent report by the Interior’s office of the Inspector General that focuses on the Administration’s coal policies.
Forum to Look at US-Japan Economic Issues – The East-West Center in Washington will host a forum on Thursday afternoon to look at innovation and growth in US-Japan economic relations in an Asia-Pacific Political Economy Seminar featuring Sean Connell. Innovation is a key characteristic and comparative advantage of the US and Japanese economies, and it is widely recognized by policy makers, business leaders, and the broader public in both countries as essential for future growth and competitiveness. The two governments increasingly recognize innovation as an area with good potential for expanding bilateral cooperation, and in recent years this topic has risen to the fore within several joint initiatives and policy dialogues. With Japanese Prime Minister Shinzo Abe’s economic revitalization initiatives and Japan’s participation in the Trans-Pacific Partnership negotiations bringing new momentum to US-Japan economic ties, increased focus on innovation offers a potentially valuable framework for identifying new opportunities to collaborate in advancing shared goals, while addressing challenges both countries face in a competitive global environment. In his presentation, Connell will offer views on these themes, examine ongoing bilateral initiatives including related to energy technology, and explore potential areas for new engagement.
Detroit Auto Show Rolls Again after New Year – Just like the sun rising, a New Year means important college football games and the roll out of the North American International Auto Show in Detroit launches January 13th through the 26th. Now in its 26th year as an international event, the NAIAS is among the most prestigious auto shows in the world, providing unparalleled access to the automotive products, people and ideas that matter most – up close and in one place.
House Committee to Focus on Transpo Bill – The House Transportation Committee will hold a hearing on Tuesday, January 14th to look at building the foundation for surface transportation reauthorization.
MIT Grid Series Continues – The MIT Club of Washington will continue its US electric grid series on Tuesday January 14th at 7:00 p.m. featuring Western Electricity Coordinating Council Synchrophasor Program Manager Vickie VanZandt. A modernized grid enables the use of renewables, which are part of the strategy to reduce the reliance on fossil fuels and reduce our carbon footprint. The discussion will focus on how will the grid incorporate the diversity of sources that may arise from our research into distributed production techniques and renewable energy possibilities.
World Bank to Hold Transportation Conference – The World Bank and EMBARQ, the sustainable transport program of the World Resources Institute, will co-host the 11th annual Transforming Transportation conference at the World Bank in Washington, DC on Thursday and Friday, January 16th and 17th. The event provides a unique opportunity for the global transport community to discuss how to achieve large-scale and widespread adoption of sustainable solutions. This year’s conference will look at opportunities for business to help advance the sustainable transport agenda for cities.
USEA to Host State of Energy – On Thursday, January 16th, the US Energy Association will host its 10th Annual State of the Energy Industry Forum at the National Press Club. Distinguished leaders from the most influential and active energy trade associations will present the priorities, issues, trends, and challenges affecting the industry in 2014. See more here.
Brookings to Look at Mexico Energy Reform – The Brookings Institution will host a forum on Thursday, January 16th at 3:30 p.m. in the Falk Auditorium to look at the future of energy reform in Mexico. Energy is the most contentious and challenging reform for the Mexican government. Accordingly, the Latin America Initiative and the Energy Security Initiative at Brookings will host Dr. Fluvio Ruiz Alarcón, professional counselor (independent director) on the executive board of PEMEX, for a discussion on the opportunities and challenges facing the Mexican government as it moves towards introducing future reforms. Dr. Ruiz Alarcón will be joined by Arturo Sarukhan, former Mexican ambassador to the U.S. and distinguished affiliate at Brookings. LAI Director and Senior Fellow Harold Trinkunas will provide introductory remarks and moderate the discussion.
WCEE Forum to Look at Stakeholder Involvement – The Women’s Council on Energy and the Environment and the National Capital Area Chapter of the Society for Risk Analysis will hold a forum on Monday, January 20th at 5:30 p.m. on stakeholder’s involvement through scientific reasoning. José Palma-Oliveira, Ph.D., University of Lisbon will be the speaker. Palma-Oliveira will focus on ways to help stakeholders without using risk communications. The way risk communication is usually conceptualized and implemented has stakeholder persuasion as its main focus. This has failed in many cases resulting in significant stakeholder unease and stress. This talk will focus on alternative approaches of bringing stakeholders on board in projects where risk is a significant driver for decision.
Policy Auto Show Locked In, Ford COO to Keynote – Following Detroit, the Washington Auto Show, the automotive industry’s annual public policy show and the largest public show held in Washington, D.C., will be held on January 22, 2014 through February 2nd. This year, Mark Fields, chief operating officer of Ford Motor Company, will deliver the keynote address at the Newsmaker Breakfast on Wednesday to launch the event. The Newsmaker Breakfast – co-sponsored by Washington Automotive Press Association (WAPA) and the International Motor Press Association (IMPA) – is part of the show’s Public Policy Days. The breakfast follows the Policy Days’ kickoff event on Capitol Hill. For more information about The Washington Auto Show, please visit www.washingtonautoshow.com
Energy Summit Set – The 2014 American Energy Summit will be held on January 27 – 28, 2014 in Arlington, Virginia and will focus on the hundreds of billions of dollars being spent on new energy projects by the federal government, state and local governments, and by private industry.
SNL Conference On Energy M&A Set for NYC – SNL Energy’s 27th Annual Exnet Power and Gas M&A Symposium – an national energy conference will be held on January 28th and 29th at the Ritz-Carlton in New York. The Symposium is the annual go-to event for industry executives, as well as financial and legal advisors who are concerned with strategic planning, business development and the economics of the sector. The speakers and audience are comprised of industry decision-makers, plus heads of power and utility practices at leading investment banks, law firms and consultancies.
Bracewell to Host Environmental Symposium in Houston – On February 11th, Bracewell & Giuliani will host a forum on environment issues in Houston. More on this in the upcoming weeks. While it will not be open to the media, it will feature B&G experts in a series of briefings and discussions about the most challenging environmental legal issues facing the energy and heavy industries today.
Chamber Sets Transpo Summit – On February 20, the U.S. Chamber will gather leaders and experts from all sectors of transportation for the second annual Let’s Rebuild America Transportation Summit-Infrastructure Intersection-to examine the important role transportation infrastructure plays across major sectors of America’s economy. At the summit, presenters will explore five key infrastructure intersections-Energy, Manufacturing, Agriculture, Technology, and Healthcare-and how each sector requires well-functioning transportation infrastructure systems to realize its full potential.