DOE DENIES REHEARING OF LNG PAUSE: The Department of Energy is defending its pause on liquified natural gas export terminals, denying a request from the American Petroleum Institute for a rehearing of the move.
In a March 27 letter denying the application, the agency defended the pause and called it an “integral part of DOE’s process” for the public interest determination required by the Natural Gas Act.
A snippet of the DOE’s reasoning: “For more than a decade, economic and environmental analyses have been a critical component of DOE’s public interest determinations authorizing the export of domestically produced LNG from the lower-48 states under NGA section 3(a),” DOE Assistant Secretary Brad Crabtree wrote. “Because of the profound changes in both the U.S. and global natural gas markets and in the cumulative volume of long-term LNG exports approved for non-FTA countries since DOE’s most recent economic analysis in 2018 and environmental analyses in 2014 and 2019, it is necessary for DOE to update these analyses.”
The agency argues that pause is not an “order” that would be subject to a rehearing under the NGA – therefore API did not establish a basis to seek such a move, and was not considered a “party” that would be able to anyways. Furthermore, DOE rebuffed characterizations that the pause was a final agency action that would be subject to judicial review, stating the move was temporary.
Some background: The API filed an application for the rehearing in February, arguing in a 22-page letter that the move was illegal under the NGA and the Administrative Procedure Act. Read the application here.
Why it’s important: Reuters had reported Tuesday that U.S. officials were open to ending the DOE’s LNG pause in efforts to get a Ukraine aid legislative package passed – a trade-off suggested by Speaker Mike Johnson. However, a spokesperson for the White House said the report was “not true” and reiterated President Joe Biden’s support for the pause.
Although the letter was dated before the Reuters’ report emerged, the letter draws a contrast between the public support for the pause from the administration, and conversations that may have happened behind closed doors. White House sources told Reuters that reversing the pause could be a possibility for the White House to move forward on Ukraine aid, since the pause would have no effect on near-term LNG exports.
A kink in the plan: A reverse on the LNG pause might not be a strong enough concession to get House conservatives to move on the priority. While House Republicans have moved on a measure that would undo the export pause, there would need to be a stronger concession baked into negotiations to move on Ukraine aid – which is highly opposed by the right flank in the lower chamber.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email bdeppisch@washingtonexaminer dot com or nancy.vu@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
BIDEN’S GREEN BANK ROLLS OUT GRANTS: The Environmental Protection Agency is issuing $20 billion in grants under a program meant to reduce greenhouse gas emissions in disadvantaged communities, allocating the majority of funds that were obligated under the Inflation Reduction Act, Nancy reports.
The announcement will be made on Thursday by Vice President Kamala Harris and EPA Administrator Michael Regan in Charlotte, North Carolina, in an effort to tout the effects of the Biden administration’s spending on climate measures. The applicants receiving funding will operate under two programs within the Greenhouse Gas Reduction Fund, which was created by the Inflation Reduction Act. Eight nonprofit organizations were picked for the two competitions, with $14 billion and $6 billion allocated to each program.
“When President Biden and I made the largest investment in our nation’s history to address the climate crisis and to build a clean energy economy, we made sure that every community would be able to participate and benefit,” Harris said in a written statement.
House Republicans had sought to repeal several provisions within the Inflation Reduction Act, including the Greenhouse Gas Reduction Fund. However, the statutory deadline to obligate these funds is Sept. 30, and with grantees selected for the majority of the program’s money ahead of the deadline, it will likely prevent Republicans from rolling back the larger half of the program if the party takes back Congress or the White House. Read more on that here.
SANCTIONS LIMIT RUSSIA’S ABILITY TO REPAIR REFINERIES: Russian energy firms have been increasingly struggling to make repairs or replace spare parts at oil refining facilities across the country without the help of the U.S. and EU, according to a new Reuters report—underscoring the impact that Western sanctions appear to be having on Russia’s energy sector as its war in Ukraine drags on.
This has been further exacerbated by the recent Ukrainian drone strikes on at least a dozen Russian refineries in recent weeks, which the outlet notes have shut in some 14% of its refined petroleum product capacity in the first quarter of the year.
Citing 10 Russian industry sources, Reuters reports that these repair and replacement struggles have caused significant harm to the country’s fuel output. All 40 of Russia’s biggest refineries have been supplied by a combination of Russian- and Western-made equipment for the last 20 years—meaning that the abrupt cut-off in Western services and equipment has had a significant effect
Fewer loopholes: While sanctioned countries have long been able to find loopholes to illegally obtain Western-made equipment and supplies, industry sources told the outlet that it is different for oil refineries, as they utilize rare and highly-specialized equipment that is harder to come by illegally. Western countries have also ramped up their third-country checks to prevent illegal shipments.
Combined, these sources said the new hits on Russian energy infrastructure, and lack of repair capacity, could cut into Russia’s refinery output and force it to slash its fuel exports in Africa and South America to focus solely on crude exports instead.
“If the stream of drones continues at this rate and Russian air defenses don’t improve, Ukraine will be able to cut Russian refining runs quicker than Russian firms will be able to repair them,” Sergey Vakulenko, a non-resident fellow at the Carnegie Endowment for International Peace specializing in Russian energy issues, told the outlet. Read more here.
DOE PUBLISHES PARED-DOWN FINAL DISTRIBUTION TRANSFORMER EFFICIENCY STANDARDS: The Department of Energy on Thursday published its final energy efficiency rule for distribution transformers, paring down its original ambitious manufacturing requirements for amorphous alloy and allowing more time for manufacturers to comply.
According to the final rule, transformer cores will now be required to be made with 75% amorphous alloy steel— down from the originally proposed 95% target, and will have five years, rather than three, to comply.
Why it matters: The ultra-thin metal is much more efficient than traditional steel, wasting less electricity and holding more capacity at a time when grid demand has soared to record-highs.
But its availability is highly limited: The U.S. is expanding investment in new amorphous alloy and electrical steel manufacturing facilities—but currently just three U.S. suppliers are in business, and the overwhelming majority of U.S. distribution transformer cores are still made using GOES, or grain-oriented electrical steel.
Utility and manufacturing groups had argued DOE’s earlier 95% amorphous steel target would be all but impossible to meet in the three-year time frame, given the lack of current domestic production and the need for anticipated workforce reskilling.
Speaking to reporters yesterday on a call previewing the rule, Energy Department officials said the updates were made in close consultation with industry groups—noting that the 75% threshold ensures that transformer cores can still primarily be met with GOES, while also increasing efficiency.
DOE said the rule will save U.S. residents more than $14 billion in energy costs and slash nearly 85 million metric tons of carbon dioxide pollution— the equivalent of the combined annual emissions of 11 million homes.
Reaction: Industry groups gave cautious praise for the final standards, which they said allow for a more gradual shift toward energy efficiency while also keeping markets stable.
“As the nation depends on electricity to power more of the economy, a stable distribution transformer supply chain is essential to maintaining reliability and meeting growing demand,” Louis Finkel, the vice president of government relations at the National Rural Electric Cooperative Association, told the Washington Examiner. “DOE’s final rule is much improved over its proposal, which would have upended the entire market for distribution transformers at a time when manufacturers could not keep up with demand for this critical equipment.”
BIDEN ISSUES CIVIL SERVICE PROTECTIONS RULE: The Office of Personnel Management announced Thursday it had finalized a rule strengthening civil service protections, in an effort to battle mass firings by another potential Trump administration, E&E News reports.
The rule would prevent the former president from creating a new category of federal employees, dubbed Schedule F, that would be easier to terminate. While in office in 2020, Donald Trump had issued an executive order establishing a new class of policy-making employees with fewer civil service rights. However, few agencies followed the order, and Biden revoked the policy soon within his first term.
The new rule would codify into law “longstanding civil service protections and merit system principles,” OPM said, that ensure the federal workforce is not subject to a patronage system.
Why it’s important: Trump has vowed to revive Schedule F to “dismantle the deep state.” In response, public interest groups urged the Biden administration to issue a rule safeguarding against career staff being replaced by “unqualified party loyalists.”
Former Trump officials argued that the rule would make it more difficult to fire underperforming or misbehaving employees.
But: A future Trump administration could overturn the policy with its own rulemaking process. Read more here.
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