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NextImg:Daily on Energy: Industry doubts about drilling more, Trump tariffs would hit crude oil, and Newsom vs. Musk - Washington Examiner

WHAT’S HAPPENING TODAY: Good afternoon and Happy Tuesday, readers. It’s been a busy day for both the Biden administration and incoming Trump administration, from securing funds to boost EVs to the expected effects of the recently announced tariffs on goods from Canada and Mexico. 

In today’s edition of Daily on Energy, Callie and Maydeen have their eyes on potential trouble for Trump within the oil industry as he looks to implement his “Drill, Baby, Drill” agenda, as well as drama unfolding between Tesla’s Elon Musk and California Gov. Gavin Newsom

Also, as we approach Thanksgiving, we are expecting the Department of Energy’s report on the environmental and economic impacts of LNG exports to drop any day. Be sure to keep an eye out for our full coverage on the report when it is released. 

Welcome to Daily on Energy, written by Washington Examiner energy and environment writers Callie Patteson (@CalliePatteson) and Maydeen Merino (@MaydeenMerino). Email cpatteson@washingtonexaminer dot com or mmerino@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.

‘DRILL, BABY, DRILL’ FACES HURDLES FROM WITHIN OIL INDUSTRY: Boosting domestic oil and gas production may prove more difficult than anticipated for President-elect Donald Trump, as oil executives have cast doubt on the Republican’s “Drill, Baby, Drill” agenda. 

The details: Today, Liam Mallon, president of ExxonMobil’s Upstream Company, said the global oil and gas giant is not expecting many producers to immediately fall in line with the incoming president’s goals for boosting output. 

“We’re not going to see anybody in ‘drill, baby, drill’ mode,” Mallon said during the Energy Intelligence Forum conference in London, according to Reuters.

Mallon said that output growth would be limited by investors’ desire to maintain capital discipline. “A radical change [in production] is unlikely because the vast majority, if not everybody, is focused on the economics of what they’re doing,” he said.

A reminder: For months, Trump has vowed to expand oil and gas drilling within the U.S. in his new administration – a sharp turn away from renewable alternatives that had been prioritized under President Joe Biden. The promise to increase output comes as the U.S. is already the leading producer of oil worldwide, producing more than 13.4 million barrels a day. 

With crude benchmark prices already in the high $60s and low $70s, boosting production is expected to depress prices further. While this ensures lower prices at the pump, it causes lower profits for producers – potentially leading to additional production cuts. 

Read more from Callie here

CRUDE OIL NOT EXEMPT FROM CANADA & MEXICO TRUMP TARIFFS: Imported crude oil from Canada and Mexico is reportedly not expected to be exempt from Trump’s proposed tariff plan. 

The details: Two sources familiar with the plan confirmed to Reuters on Tuesday that crude imports from both of the U.S.’s neighbors would be subject to 25% import duties. 

For decades, the U.S. has imported millions of barrels of crude oil from Canada every day, reaching a record of 4.3 million barrels per day in July, per the Energy Information Administration (EIA). Meanwhile, since peaking in 2006, imports of crude oil from Mexico have steadily dropped. In 2023, the U.S. only imported an average of 733,000 barrels of crude per day. While domestic production of crude dwarfs those numbers at an average of 13.4 million barrels a day, tariffs on the imported oil would likely affect fuel prices. 

The tariff: Last night, Trump announced his plans to impose the tariff, if Canada and Mexico fail to stop drugs and illegal immigrants from crossing the northern and southern borders. The president-elect claimed the tariff would apply to all products from the two countries. 

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump said in a post to Truth Social. “We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”

While details on how the duties would be implemented remain to be seen, Mexican President Claudia Sheinbaum has already indicated she would respond by implementing a tariff of her own on U.S. goods. 

U.S. RACES TO BOOST NUCLEAR POWER: A number of nuclear energy companies in the U.S. are looking to secure billions in federal funding to boost production of nuclear fuel, as the nation prepares to reduce its reliance on Russian imports. 

The details: Companies like Centrus Energy are looking to secure $3.4 billion in federal funding to boost domestic production of nuclear fuel, according to a new Financial Times report. Other companies looking to expand uranium enrichment production include Urenco and Orano. 

“We feel a great sense of urgency about getting started and we want to make an initial investment to begin centrifuge manufacturing and expand our manufacturing capacity to give ourselves a head start in anticipation of further federal funding becoming available,” Dan Leistikow, vice-president of communications for Centrus, told the outlet.

As nuclear power is going through a revival in the U.S., particularly through restarting decommissioned plants and building small modular reactors, demand for uranium is only expected to grow while foreign supply dwindles. 

Some background: On Nov. 15, Russian President Vladimir Putin imposed restrictions on exporting enriched uranium to the U.S. The ban was hitting back against White House restrictions on imports of Russian uranium, which still allowed for shipments through 2027. The recent export ban is expected to create supply chain disruptions for nuclear power plants in the U.S., as at least 12% of the nation’s imported uranium in 2022 was from Russia, per the EIA. 

THE PRICE TO PAY TO BURP: In a landmark decision, Denmark has agreed to implement a tax on agricultural emissions – in other words, a tax on the farts and burps of livestock. 

The details: Last week, the Scandinavian country’s government came to an agreement on the tax, which is a part of a larger package known as the Green Tripartite and was first introduced in June. Starting in 2030, Danish farmers will have to pay 300 Danish kroner (approximately $43) for every ton of methane (as per carbon dioxide equivalent) emitted from their livestock, including cows and pigs. By 2035, that jumps to 750 kroner (around $106). 

Farmers won’t be left completely shortchanged, as the government will give them a 60% rebate, according to the New York Times. Jeppe Bruus, the green transition minister of Denmark, told the outlet that this rebate will be put in place as the technology needed to eliminate methane emissions from animal flatulence is still being developed. “A tax on pollution has the aim to change behavior,” Bruus said. 

In the meantime, some farmers are opting to use additives to the feed given to their livestock to reduce methane, reportedly sending manure to machines that then reuse the emissions within the nation’s gas grid. Others are looking to curb emissions through their land, planting trees that absorb carbon dioxide.

Some background: Combined, cows and pigs in Denmark outnumber the human population, as almost two-thirds of land in the country is used for farming. Both animals are known for producing several tons of methane, with cows producing around 6.6 tons of CO2 equivalent annually. 

Researchers estimate that more than 30% of human-caused methane emissions come from livestock. Given that methane is considered to be 80 times more potent at warming the atmosphere than carbon dioxide, the United Nations Environment Programme has called on farmers to rethink how they approach livestock production. This primarily includes opting for alternative types of feed or ways to manage manure to reduce methane emissions. 

AVIATION OFFICIALS SAY TRUMP COULD HARM GREEN JET FUELS EXPANSION: Aviation officials fear that President-elect Donald Trump could hinder the expansion of green jet fuel by canceling the tax credits from the Inflation Reduction Act, Reuters reports

During an airline conference in London, the International Air Transport Association (IATA), an airline trade group, and American Airlines spoke about what the incoming Trump administration could mean for nascent clean jet fuels. 

“There are these big potential risks on what the Trump policy is actually going to be and how this really affects everybody’s motivation to pursue climate change,” Marie Owens Thomsen, chief economist for airlines trade body IATA, told Reuters.

Sustainable aviation fuel makes up 1% of the world’s jet fuel, Reuters reports, and its production needs to ramp up quickly in order to meet zero carbon emissions by 2050. There has been talk about the incoming Trump administration slashing parts of the IRA.

“The market needs certainty in terms of building up their reservoir,” said Ronce Almond, American Airlines’ head of intergovernmental affairs. 

RIVIAN RECEIVES NEARLY $6.6 BILLION FOR EV MANUFACTURING FACILITY: Electric vehicle manufacturer Rivian will receive nearly $6.6 billion in funding from the Biden administration to construct a factory in Georgia. 

The Energy Department’s Loan Program Office announced Tuesday that Rivian will be awarded a direct loan of up to $6.57 billion to finance the development and construction of Project Horizon, an EV manufacturing facility in Stanton Springs North, Georgia.

“This loan will help create thousands of new American jobs and further strengthen U.S. leadership in EV manufacturing and technology,” Rivian founder and CEO RJ Scaringe said in a press release.

The facility will help build Rivian’s R2 midsize SUV and the R3/R3X, a midsize crossover. The two vehicles are Rivian’s smaller and less expensive vehicles.

The Biden administration has pushed to expand the EV industry through tax incentives from the Inflation Reduction Act. Yet, there have been reports that the incoming Trump administration could slash the federal $7,500 tax credits for EV purchases. 

CALIFORNIA REACTS TO TRUMP’S POSSIBLE EV TAX CREDIT CUTS: On Monday, Gov. Gavin Newsom announced a plan for the state to provide rebates for residents who purchase EVs, if the Trump administration repeals those tax credits. 

Rivian’s competitor, Tesla, could be one of the EV manufacturers not qualified for California’s new rebates. Tesla CEO Elon Musk has been a close adviser to the incoming Trump administration and supports slashing incentives for EVs.

Musk on X called Newsom’s plan to exclude Tesla from the incentives “insane.” He said, “Even though Tesla is the only company who manufactures their EVs in California!”

Read more by Maydeen on today’s EV news here

ICYMI – DOE AWARDS $4.9 BILLION TO A MIDWEST POWER LINE PROJECT: The Department of Energy yesterday also announced it would provide a loan guarantee of up to $4.9 billion to Grain Belt Express LLC to help finance its high-voltage transmission project. 

The transmission project would generate up to 2,500-megawatt (MW), running approximately 578 miles from Ford County, Kansas, to Callaway County, Missouri.

DOE said the project would connect three regional grids: the Southwest Power Pool, the Midcontinent Independent System Operator, and Associated Electric Cooperative Incorporated.

RUNDOWN 

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