Friends,

Hope your August is going great. I know we haven’t slowed down with all the fall sports starting.   Hannah is back at Wellesley on the field hockey pitch, Olivia is in the middle of practice double sessions, Adam just finished 12th in the Annapolis 10-miler yesterday in under an hour and I have started my NCAA field hockey season.  That is a lot, but not enough for us to top each weekend off with Incubus last Sunday at The Fillmore in Silver Spring and Godsmack/Shinedown last night at Jiffy Lube Live.

And it hasn’t really slowed down in DC either.  Last week, we had 2019 RFS RVO comments due and the Chamber’s Global Energy Institute released a new analysis that quantifies billions of dollars of savings in lower electric bills Americans are starting to realize stemming from enactment of the Tax Cut & Jobs Act.  Then this week, we expect to see the roll out of the Clean Power Plan replacement which is yet to be named.  President Trump is expected to announce the new plan in West Virginia tomorrow.  The New York Times, Washington Post and Wall Street Journal all had stories.

My colleague Scott Segal said “the previous administration’s effort to address greenhouse gases was a complex and unnecessarily burdensome overreach that took much of the responsibility for power systems away from the state regulators who know them best.  He adds “the replacement rule is premised on the fact that states are in a better position to judge the inventory of measures available to reduce carbon emissions within their power sectors.  That’s consistent with decades of integrated resource planning that takes places at the state level, the shared responsibilities under the Clean Air Act, and the traditional federalism that governs utility regulation in most states.”  Both Segal and Holmstead will be available this week.  I also expect our friends at the Chamber’s Global Energy Institute will also have comments, background and analysis as well.

Not much shaking this week other than the meetings with SCOTUS nominee Brett Kavanaugh and we hear rumors that the Senate may shut it down after finishing a few more funding bills.  Action includes Senator Peter’s hosting a field hearing today in Traverse City on pipeline safety while Senate Environment (and Public Works) holds a field hearing in Ellicott City on the Federal role in preventing future flooding.  Tomorrow, Senate Energy looks at energy efficiency and blockchain while Sen. Judiciary hosts witnesses like SoCo CEO Tom Fanning on protecting critical infrastructure at 2:30 p.m.  On Wednesday, Senate Energy discusses several bills related to land, forest and mineral extraction including Helium Extraction.

Also this week, EPRI is hosting its Electrification conference in Long Beach.  They also have recently introduced a new #sharegrid concept (including a great white board video) that outlines the shared, integrated grid concept and how it will improve customers’ energy assets all while enhancing grid reliability, resiliency and value for all.

Finally, there is new interesting research from MIT on pavement’s impact on urban heat island and its impact on climate change. “Albedo” is the measure of how much solar energy is reflected by the Earth’s surface. Low albedo, or darker color, surfaces absorb more heat and reflect less shortwave radiation than high albedo, or lighter color, surfaces. Increasing pavement albedo has been considered as a strategy to mitigate impacts of climate change, but evaluating the effectiveness of such strategies requires context-specific data on climate conditions. MIT’s CSHub has developed an analytical approach to quantify global warming potential savings resulting from increases in pavement albedo.  More detail on this soon.

The comment period closes today for CEQ’s NEPA reform plan.  We are following closely.  Enjoy the last two weeks of August.  Call with questions – especially on CPP-related issues…Best,

 

Frank Maisano

(202) 828-5864

c. (202) 997-5932

 

FRANKLY SPOKEN

“Our new analysis shows that the Tax Cuts and Jobs Act of 2017 is reducing energy costs for both residential customers and industrial users.  Utilities that have seen relief from their tax bills are passing those savings onto their customers, which ultimately saves consumers money. This savings is resulting in increased economic productivity and more jobs around the country.”

Karen Harbert, president and CEO of the U.S. Chamber’s Global Energy Institute, rolling out a New report that looks at the benefits utility customers are reaching due to the Administration tax relief plan.

“The previous administration’s effort to address greenhouse gases was a complex and unnecessarily burdensome overreach that took much of the responsibility for power systems away from the state regulators who know them best.  It is why 29 states pushed back against the rules and the Supreme Court blocked their implementation with which an unprecedented stay. It is clear this Administration and its EPA seem likely to address this issue within the framework of the Clean Air Act and give states a significant role in managing the reliability and environmental performance of their power sectors.

Finally, the replacement rule is premised on the fact that states are in a better position to judge the inventory of measures available to reduce carbon emissions within their power sectors.  That’s consistent with decades of integrated resource planning that takes places at the state level, the shared responsibilities under the Clean Air Act, and the traditional federalism that governs utility regulation in most states.”

Scott Segal commenting on the expected new release of the Trump Administration’s redo of the Clean Power Plan, expected to be released on Tuesday in West Virginia. 

 

ON THE POD

Cap Crude Looks at Russian Sanctions – The Platts Capitol Crude podcast focuses on Russia with Congress considering a raft of new sanctions against Russia that could hit energy trade.  Agnia Grigas, a senior fellow at the Atlantic Council and author of The New Geopolitics of Natural Gas, discusses the potential risks to oil and gas investment, including the Nord Stream 2 pipeline.

 

FUN OPINIONS

Former Energy Secretary Says Ethanol Bad Policy – As a former senator from an agricultural state and a former U.S. Energy secretary, Spence Abraham recently wrote in The Hill that both American agriculture and our independent refineries can succeed. Unfortunately, the current structure of the federal biofuel mandate fails to achieve these goals.  Abraham wrote: “As the U.S. Energy secretary during the passage of the first RFS, I can categorically state that the RIN system was not meant to create a multibillion-dollar commodity market that serves to subsidize large-scale blenders and vertically integrated oil companies at the expense of smaller and independent refiners. The administration and Congress must act to reform the RFS in a way that keeps RIN costs under control, while also ensuring robust domestic biofuel use. Recent experience proves such a ‘win-win’ can be achieved to save manufacturing jobs in the Rust Belt, without adversely impacting the Corn Belt.  The president previously considered taking more permanent action to achieve this goal. Now would be a great time for him to finish the job.”

IN THE NEWS

Chamber Report Says Tax Cuts Will Reduce Power Bills – The Chamber’s Global Energy Institute (GEI) will release new analysis that quantifies billions of dollars of savings in lower electric bills Americans are starting to realize stemming from enactment of the Tax Cut & Jobs Act.  Investor owned utilities (IOU) saw significant tax rate reductions from comprehensive tax reform and are now passing on that savings to their customers.  GEI quantified that total savings in 12 representative states and further calculated the average residential customers’ savings.  With businesses and families keeping more of their money, we also modeled the additional economic growth and job creation expected to occur. The 12 representative states GEI analyzed were Alabama, Arizona, California, Florida, Georgia, Maine, Michigan, Minnesota, Missouri, Nevada, Texas and Virginia.  Across those states, customer savings over the next five years (2018-2022) will range from $100 million in Maine to over $3 billion in California. Each state also sees meaningful GDP and job gains as a result of these customer savings.

RVO Comments Pour In – On Friday, the comment period for the 2019 Renewable Volume obligations (RVO) for the Renewable Fuels Standard closed.  There were many comments from both sides, But the opponents are a broad-based group of refiners, labor unions, conservative and environmental groups.  Here are some highlights:

1) United SteelworkersRoxanne Brown, Legislative Director, United Steelworkers:

Our union believes that reducing the U.S.’s reliance on foreign oil and focusing on energy independence is a meaningful policy goal not just for strategic and employment reasons, but for our environment as well.  However, current RFS policy has led to increased foreign imports of biofuels, including biomass-based diesel fuel, undermining Congressional intent of the RFS.

The reduced availability of additional biofuels to blend into the system creates logistical and technological challenges commonly known as the “blend-wall”. This has led to significant cost impacts for refineries as compliance costs related to Renewable Identification Number (RIN’s) pricing, which has wildly fluctuated based off of no logical demand structure, creates uncertainty for refineries and undermines long term investment strategies for domestic refining.  USW encourages the EPA to develop realistic biofuel assumptions that recognize the significant changes in fuels policy and the continued inability of commercially viable cellulosic biofuel to enter the market.

2) The Toledo Chamber of CommerceBrian Dicken, Vice President, Advocacy & Public Policy, Toledo Regional Chamber of Commerce

We are encouraged that EPA is taking comment on RIN market reforms, but believe such reforms should be dealt with in the final RVO and not via a separate rulemaking. Even biofuel interests have questioned the volatility of the RIN market. The history of the program shows wild swings in RIN costs, but the percentage of ethanol blended into gasoline has stayed at around 10 cents regardless of whether RINs are three cents or $1.40.

Public comments EPA received for last year’s RVO detailed several observations of possible market manipulation that are illegal in other contexts, but not controlled or regulated in relation to the RIN market. EPA must act to prevent anti‐consumer manipulative practices and should advance RIN market reforms in the final 2019 RVO, rather than wait to pursue measures addressing RIN market integrity in the future.

3) IBEW Local 8 in NW OhioStephen Brown, Business Representative, International Brotherhood of Electrical Workers Local Union No. 8.  Local 8 represents over 1,600 electrical workers in Northwest Ohio and Southeast Michigan; its jurisdiction includes the Toledo Refinery Company (TRC):

EPA’s proposed increase in the RFS requirement over 2018 levels fails to recognize the blendwall and the uneven playing field among RFS obligated parties. It could result in upward pressure on RIN costs, which as we saw earlier this year with Philadelphia Energy Solutions (PES), would once again threaten highly skilled domestic refining industry jobs.

A look back at the last six months proves EPA can help prevent RIN price spikes without adversely impacting biofuel consumption. A combination of RFS reform discussions and small refiner waivers has resulted in RIN prices decreasing from 90 cents last November to approximately 20 cents recently.  Despite these factors, U.S. Energy Information Administration (EIA) monthly data shows there has been NO backtracking on biofuel blending. In fact, the blend rate in the first quarter of this year was slightly higher than it was in the first quarter of last year.  This has all occurred in conjunction with small refiner waivers and falling RIN prices. The facts to date show that domestic biofuel use will remain robust, even when the standard is waived for parts of the industry.

4) NJ Senate Majority Leader Sweeney, Dep. Assembly Speaker Burzichelli – Stephen Sweeney, Senate President, New Jersey Senate & General Assembly:

The proposed increase in the RFS requirement over 2018 levels fails to recognize the blendwall and the uneven playing field among RFS obligated parties. It could result in upward pressure on RIN costs, which as we saw earlier this year with Philadelphia Energy Solutions (PES), would once again threaten highly skilled domestic refining industry jobs.

In the high RIN price environment of the last two years, RINs became the [Paulsboro, NJ] refinery’s most significant operating expense; rising above pay, benefits and energy costs. The refinery spent nearly $150 million from 2015 to 2017 on RINs. Returning to such a financial environment would be unsustainable and certainly threaten jobs in the region.

The EPA must act now to prevent anti-consumer manipulative practices and advance RIN market reforms in the final 2019 RVO, rather than wait to pursues measures addressing RIN market integrity in the future.

5) Paulsboro Independent Oil Workers UnionRudolph Rafferty, President, Independent Oil Workers, representing 300 employees at New Jersey’s Paulsboro Refining Company and an additional 200 from neighboring facilities.

The facts to date show that domestic biofuel use will remain robust, even when the standard is waived for parts of the industry.  These facts prove EPA can set a reasonable volumetric requirement that is below the blendwall without adversely impacting domestic ethanol or other biofuel consumption, much of which is economic without government support.

For every refinery employee, 15-20 indirect jobs are maintained to support our activities.  This support comes in the form of goods and services.  For example, one of our products serves as a base stock for a neighboring facility, which employs 105 additional union jobs.  All told, the Paulsboro Refinery helps to support thousands of people and hundreds of families in Gloucester County, New Jersey.  The Paulsboro Refinery has produced fuels for more than 100 years.  It has provided stable employment for generations of families who have relied on compensation from refinery employment to provide a good quality of life.

6) Holly-Frontier – in its comments, HollyFrontier requests that EPA take three specific actions: (1) further reduce the renewable volume obligation (“RVO”) using the general waiver authority given the inadequate volume of domestically produced renewable fuel available to obligated parties; (2) implement Renewable Identification Number (“RIN”) market reforms to increase RIN liquidity and decrease RIN prices; and (3) continue granting small refinery disproportionate economic hardship exemptions as required by the Clean Air Act (“CAA”) when circumstances demonstrate a disproportionate economic harm.

7) Valero – Valero’s comments stress concerns that EPA has yet again proposed RVOs that are not reasonably attainable & declined to make use of available authorities to reduce harms caused by RFS and volatile RIN market.

8) PBF Energy – PBF Energy says the 2019 proposed conventional biofuel volumes should be lowered to avoid severe economic harm. Recent experience indicates setting unreasonable volume targets does result in such harm, but does NOT appreciably do anything to overcome the challenges of the blendwall and advance the RFS program’s objectives.  It also says EPA should lower advanced biofuels limits that are overly aggressive to better reflect accurate domestic production.  Finally, they say EP should EPA should include RIN trading reforms in the RVO as well as advance other changes to ensure RIN market liquidity and limit compliance costs.

NDAA Signed By President – President Trump signed the 2019 National Defense Authorization Act, including bipartisan language led by Rep. Joe Wilson (R-S.C.) to require the secretary of energy to report on the feasibility of siting, constructing and operating “micro reactors” at critical Defense Department or Energy Department national security facilities. ClearPath Action advisor and former Nuclear Regulatory Commission Commissioner Jeff Merrifield praised the proposal at a May 22 House Energy and Commerce subcommittee hearing.  The NDAA also allows approvals of exports of non-sensitive nuclear technologies to be delegated to officials more junior than the secretary of energy. This would allow for much quicker approvals, which at times have taken more than a year. All exports to China and Russia would still have to be approved by the secretary of energy.  There was also language the bill on addressing climate change.
ON THE SCHEDULE THIS WEEK

EPRI Hosts Electrification Conference – The Electric Power Research Institute (EPRI) hosts the inaugural Electrification 2018 International Conference and Exposition on this week in Long Beach CA. Hosted by the and sponsored by more than 20 major utilities and organizations, this annual conference will bring together utility leaders, regulators, researchers, academia, vendors, economic development groups, and energy users from diverse manufacturing, transportation, industrial, and agriculture sectors around the globe.  SoCo CEO Tom Fanning is among the many speakers.

Oil/Gas Conference Set for Denver – EnerCom’s Oil & Gas Conference takes place this week at the Westin Denver Downtown.  The conference offers investment professionals the opportunity to listen to the world’s key senior management teams present their growth plans.  Our friends at Wolfe Research will host a full day of management meetings with execs on Tuesday August 21st at the Palm Restaurant.

Senate Commerce Hosts Pipeline Safety Field Hearing – The Senate Commerce Committee will convene a field hearing today at 10:00 a.m. in Traverse City, MI looking at pipeline safety in the Great Lakes.  Sen Gary Peters is hosting.  The hearing will focus on federal oil spill prevention efforts, preparedness and response capability in the event of an oil pipeline break in the Straits of Mackinac. Line 5, the 65-year-old pipeline crossing the Straits of Mackinac, has been the subject of multiple safety concerns, including damage from anchor strikes.  Witnesses include PHMSA Administrator Skip Elliott, USGC local Commander Joanna Nunan and NOAA’s Scott Lundgren, as well as Enbridge’s David Bryson, NWF’s Michael Shriberg, API’s David Murk, Chris Hennessy of the Michigan Laborers-Employers Cooperation and Education Trust (LECET) and local Brewer Larry Bell.

Senate EPW Looks at Flooding in Ellicott City Field Hearing – The Senate Committee on Environment and Public Works Subcommittee on Transportation and Infrastructure will hold a field hearing hosted by Sen. Cardin to provide oversight repeated flooding events in Ellicott City, MD. The hearing will be reviewing the Federal role in preventing future events.

NEI Hosts Reg Affairs Forum – NEI hosts its 2018 Regulatory Affairs Forum in Bethesda tomorrow through Thursday. Topics will focus on a broader issues including Operations, Engineering, and other leadership in the nuclear industry.  Along with Regulatory Affairs personnel, this diverse population will participate in a fast paced exploration of regulatory fundamentals, current and evolving regulatory issues and trends, and how their role; either on the front line, or in station leadership, impacts regulatory performance.

DOE Better Buildings Summit Set – The Advanced Manufacturing Office’s Better Plants Program will co-host the Department of Energy’s (DOE) 2018 Better Buildings Summit in Cleveland, Ohio from tomorrow through Thursday. The Summit is one of the premier events for energy professionals to engage with one another, explore and share innovative strategies, emerging technologies, financing trends, and much more. This year, the Summit will be held in conjunction with DOE’s annual Energy Exchange and will focus on federal facility energy management. Combining the Summit with the Energy Exchange will provide greater access to technical discussions, trainings, panel sessions, and networking opportunities.

Sen Energy Looks at Blockchain. Energy Efficiency, Holds Leg Hearing Wednesday – The Senate Energy Committee holds a hearing tomorrow at 10:00 a.m. to consider the energy efficiency of blockchain and similar technologies and the cybersecurity possibilities of such technologies for energy industry applications. In particular, should we expect electricity prices to increase from rising electricity demand in blockchain applications? In addition, how can we evaluate whether blockchain and similar approaches will soon improve the cybersecurity of computing systems used to supply our energy? Witnesses include Pacific NW Labs Paul Skare, EPRI’s Tom Golden, Claire Henly of the Energy Web Foundation and Princeton’s Arvind Narayanan. Then on Wednesday, the Public Lands, Forests, and Mining panel will also hold a legislative hearing on Wednesday looking at 14 bills including helium extraction, wild and scenic rivers, geologic mapping and fire protection.  Witnesses will include Sens Bennet and Udall, as well as BLM’s Chris McAlear and Forest Service’s Glenn Casamassa.

Fanning Headlines Senate Judiciary Look at Cybersecurity Threat – Southern Co. CEO Tom Fanning will testify at the Senate Judiciary Committee tomorrow at 2:30 p.m. to examine cyberthreats to the nation’s electrical grid.  Fanning is a member of the Electricity Subsector Coordinating Council, the chief coordinating liaison between the power sector and the federal government in preparing for attacks and “national-level incidents” against infrastructure like transmission lines. Other witnesses include Michael Moss, deputy director, Cyber Threat Intelligence Integration Center, Office of the Director of National Intelligence; Bob Kolasky, director, National Risk Management Center, National Protection and Programs Directorate, Department of Homeland Security; and James Lewis, senior vice president, Center for Strategic and International Studies.

Canadian Energy Expert to Look at Quebec Circular Economy – The Circular Economy Working Group holds its August monthly meeting on Wednesday at 6:00 p.m. at the Canadian Embassy Quebec Office.  The Group materialized from past Leaders in Energy workshops and activities on the circular economy.   At the August meeting, Charles Girard, Lead Energy, Cleantech, and Economic Attache at Quebec Government Office in Washington, will present on circular economy business activities in Quebec.

Forum to Look at Advanced Nuclear – The Global America Business Institute holds an event on advanced nuclear innovation at 12:00 p.m. on Thursday.  Speaker Ron Faibish – Senior Director of Business Development, Nuclear Technologies and Materials at General Atomics (GA) – will look at the topic.

ABA Teleconference to Discuss Fuel Economy – The American Bar Assn will host a teleconference on fuel economy and greenhouse gas standard reform on Thursday at 12:30 p.m.

EPA to Host IRIS Public Meeting – The EPA is hosting a public meeting on Thursday at 1:00 p.m. to receive feedback on the IRIS Assessment Plan (IAP) for Naphthalene. EPA has extended the public comment period until September 5, 2018.

IN THE FUTURE

Forum to Look at Regional Transportation – The Georgetown Climate Center will host an event next Monday at 1:00 p.m. in Largo to facilitated discussions designed to hear input on the topics of an innovative, low-carbon transportation future, residential and business transportation choices, improving environmental quality and public health benefits while also increasing mobility and modernizing the transportation system and policies/programs that could help achieve this vision.

USEA to Discuss Energy Employment – On Wednesday, August 29th at 10:00 a.m., the US Energy Assn hosts a presentation to summarize the high level results of the 2018 US Energy and Employment Report (USEER) in four key sectors of the American economy–Electric Power Generation and Fuels Production; Transmission, Distribution, and Storage; Energy Efficiency; and the Motor Vehicles Industry.  In addition to providing job numbers in emerging technologies, such as renewables, energy storage, and smart grid, the USEER analysis reveals the large number of direct employment that has gone uncounted in traditional energy sectors such as nuclear generation and fossil fuel production.  Two special features of the presentation include an analysis of jobs focused on energy efficiency and a breakdown of motor vehicles employment associated with alternative fuels and fuel efficiency.  Finally, the presentation will take a forward look at predicted employment growth in 2018 in each energy sector, the hiring difficulty experienced by energy employers, and a demographic overview of energy employment in America. David A. Foster of the Energy Futures Initiative, Speaks.

CSIS Hosts Trade Reps – On Monday September 17th, the CSIS Scholl Chair in International Business is hosting a conversation with six former United States Trade Representatives, who will share wisdom from their own experience and discuss the current global trading system, its institutions, and the prospects for trade in these challenging times. Speakers include Bill Brock, Carla Hills, Micky Kantor, Charlene Barshefsky​, Susan Schwab and Ron Kirk.

Border Energy Forum Set for San Antonio – The North American Development Bank (NADB) will host the XXIII Border Energy Forum in San Antonio on September 26th and 27th at the Hilton San Antonio. This forum brings together local and state officials, private sector developers, academics, large commercial users, and energy experts from the U.S. and Mexico. NADB’s unique position as the only U.S.-Mexico binational development bank, has provided the Bank the opportunity to be involved in some of the most relevant clean energy projects developed in the last five years in the region. NADB has financed close to $1.5 billion for 35 projects with total costs of $5.2 billion. Roughly, 2,548 MW of new generation capacity is being installed along the border. The forum will center the dialogue on energy prosperity, innovation, financing, the future of energy markets, and crossborder opportunities along the U.S.-Mexico border, and how to continue building partnerships to advance both countries energy goals that ultimately improve economic development and protect the environment.

SEJ in Flint – The Society of Environmental Journalism holds its annual conference on October 3-6th in Flint.  Of course, Bracewell hosts its annual event on Thursday October 4th.