HOUSTON — The White House is banking on the six-month-old Inflation Reduction Act to shift global investment away from China and into a new wave of U.S. clean energy projects, a top Biden official said Monday at one of the world’s most important energy conferences.
“We, for too long, let our supply chains drift overseas, particularly to China,” John Podesta, senior adviser to President Joe Biden for clean energy innovation and implementation, told reporters.
“They have a stranglehold on particularly processing of critical minerals. They have a huge hold upstream, particularly wafers in the solar world,” he said at the CERAWeek by S&P Global conference in Houston. “What we’re trying to do is reset that policy so that we have the security of supplies.”
Podesta also pushed for faster environmental reviews at federal agencies, touted the Department of Energy’s authority to site new transmission lines in priority corridors and said an Interior Department decision on the Willow project, a crude oil production proposal in the National Petroleum Reserve-Alaska, would come “very soon.”
He added that the Treasury Department would unveil a new electric vehicle tax credit in March, a development that’s likely to come before the U.S. and European countries resolve their differences over the domestic content requirements in the Inflation Reduction Act.
Podesta spoke before John Kerry, the special climate envoy in the Biden White House, who said natural gas is “absolutely” part of the energy transition. “But if you get to 2030 and you’re abating those emissions, you’re then contributing to the problem,” he said.
On Monday, Kerry also huddled with Sen. Dan Sullivan (R-Alaska) on the sidelines of the conference. The informal meeting followed a public spat last week on Capitol Hill over Kerry’s role in the liquefied natural gas market development.
During a confirmation hearing for an EPA official, Sullivan accused Kerry — who was not present in the hearing room — of telling foreign governments not to buy U.S. LNG.
In remarks to E&E News on Monday, Kerry flatly denied Sullivan’s accusation.
“All we’ve said to people is we have to be able to try to capture emissions but never, ever said that they shouldn’t do that,” Kerry said, referring to the accusation. “I told him [Sullivan] that.”
The two Biden officials were among the energy experts from more than 90 countries who flooded downtown Houston for the launch of this year’s CERAWeek gathering.
The 41st edition of the conference, hosted each year by famed energy intellectual Daniel Yergin, brings together executives from across the energy sector — from oil majors and national oil companies to natural gas companies and renewable energy developers.
A recent report by the environmental group Climate Power says that, in the wake of the Inflation Reduction Act signing in August, companies have announced projects in the U.S. that will bring more than 100,000 new clean energy jobs.
Analysts at CERAWeek spoke to the seismic shifts in the global supply chains underway now.
“It’s not de-globalization, but it definitely is a once-in-a-generation fluidity to global supply chains that we just haven’t seen for 30 or 40 years,” said Shannon O’Neil, a Council on Foreign Relations expert.
O’Neil referenced a recent survey, conducted by American Chamber of Commerce in China, that shows a majority of responding companies do not consider China among the top three countries they plan to invest in. Forty-five percent of respondents said the Chinese investment environment is deteriorating, nearly a third more than last year.
“That is just a sea change,” she said.
The themes blanketing CERAWeek this year are focused heavily on energy security and decarbonization. Here are four takeaways from day one of the conference:
LNG supply chain
Last year, CERAWeek was held during the initial Russian invasion of Ukraine, which sent shockwaves through the conference and global energy markets alike. In 2023, attendees aim to shore up still-evolving global supply chains.
U.S. policymakers and industry executives called Monday for more flows of LNG flows, particularly to Europe where countries are trying to shut off Russian fossil fuels.
“The world will not be able to live without U.S. gas, U.S. LNG,” said Torbjörn Törnqvist, chair of the fossil fuel trading firm Gunvor Group.
The United States currently exports about 12 billion cubic feet per day of LNG. A DOE official recently predicted that global U.S. exports of LNG would increase to 15 billion cubic feet per day in 2024 and reach 20 billion cubic feet by 2030.
One LNG company, Venture Global Plaquemines LNG LLC, is now looking to speed up the construction of FERC-approved terminal in Plaquemines Parish, La.
But on the U.S. side of the Atlantic, producers are still trying — with some frustration — to strike long-term LNG supply deals.
“Europe clearly needs alternate sources of gas,” Chevron Corp. CEO Mike Wirth told Bloomberg recently. “Off-take agreements have been slow to come, particularly out of European buyers. So, I think that becomes a big of a limiting factor on which projects will get done and in what sequence.”
U.S. policymaking — and partisan political discord — are never far away from an energy debate.
Cheered on by the American Petroleum Institute (API) and U.S. Chamber of Commerce, LNG producers are looking to ink big new deals at CERAWeek.
On Tuesday, the Chamber of Commerce is hosting an event with industry executives and representatives from members of the Group of 7 (G-7) nations — which includes the U.S., Canada, France, Germany, Italy, Japan and the United Kingdom — as well as the European Union.
There “remains a significant gap between the commitments to replace Russian natural gas and the policies necessary to achieve that goal. Obstacles vary by country but include excessive restrictions on public financing of natural gas projects and unnecessary delays in approving privately financed projects,” said API, the Chamber and other natural gas groups in a letter highlighting the event to Energy Secretary Jennifer Granholm.
“The upcoming G7 is an opportunity to address these impediments and close the gap between goals and outcomes,” the groups said.
‘Ceasefire’ with industry?
Last Thursday, Biden hosted Sullivan and the Alaskan congressional delegation at the White House, according to remarks from Sullivan last week.
Sullivan said he pressed the president on the Ambler Road project, a 211-mile proposal that would provide access to critical mineral reserves for exploration in interior Alaska, and the Willow fossil fuel project.
Sullivan also said Willow presents a real test for the Biden administration.
“We need a break. We are getting creamed by your administration,” Sullivan, who sat for an interview Monday with Yergin, said he told the president. “The Willow project can be a good example of a ceasefire.”
“We’re going to find out this week,” he said. ConocoPhillips is hoping to pour $6 billion into the project, which could produce 180,000 barrels of oil a day.
Kerry said the oil and gas sector will be a critical player in the climate change decisions of the future.
“We can’t do it without the oil and gas industry,” he said Monday. “Fifteen percent of the earth’s emissions that come from the burning of methane, etc., are attributable in the processes of the oil and gas industry. If they were a nation, they’d be the third-biggest emitter in the world.”
Permitting changes
At the conference, a long list of policymakers and industry players called for changes to the permitting process for U.S. infrastructure.
Among those were Podesta, who said “I’ve worked in three White Houses. Permitting has never been a top priority of senior administration officials in the past. Now, thanks to President Biden, it is.”
“We’re doing what we can with the tools we have,” he added. “We can move faster by setting tighter deadlines for agencies to complete environmental reviews. We can move smarter by making it easier to approve projects with low environmental impact.”
“But Congress needs to do its job too,” Podesta said. “President Biden supported Sen. [Joe] Manchin’s permitting reform bill last Congress. Unfortunately, Congress couldn’t get the job done. So it’s time to get back to work and pass permitting reform legislation.” Manchin, a West Virginia Democrat, is scheduled to speak Friday at CERAWeek.
Republicans, meanwhile, are starting to move permitting proposals through the House (E&E Daily, March 6). Key changes include provisions setting shot clocks and page limits for environmental reviews and restricting the opportunities for legal challenges.
Mike Sommers, the president of API, said Republicans may condition their support for federal government funding later in the year on permitting changes.
“At some point, Republicans are going to have to vote for a debt-limit increase. At some point, they’re gonna have to vote to keep the government open,” Sommers said at CERAWeek. “And the question that I think the Republican majority in the House of Representatives is gonna be asking is: What am I go going to get for that? And energy is at the top of the agenda of almost every Republican that I talk to on Capitol Hill now.”
Despite the complaints of slow permitting, industry laid 21,000 miles of new pipeline in 2022, according to American Gas Association President Karen Harbert.
Climate change
Climate change advocacy also was a key theme from the first day of the conference.
“We are not shying away from the energy transition. In fact, we are running towards it,” Sultan Ahmed Al Jaber, the CEO of the state-run Abu Dhabi National Oil Co. (ADNOC) and president-designate of the upcoming U.N.-brokered COP 28 climate negotiations, told the conference.
The COP will be held in the United Arab Emirates starting in November. There, countries will participate in the first global “stock take,” an assessment on progress made on decarbonization plans.
“The science is just clear. It’s crystal clear. We need to get fully behind net zero,” Al Jaber said. “Let’s aim to achieve net zero even earlier. Why wait until 2050? I’m sure this can be done much earlier.”
The U.N. says the globe must reduce greenhouse gas emissions to net zero by 2050 to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) between the pre-Industrial Revolution era and today. Scientists warn that surpassing that threshold will fuel far more frequent natural disasters, including floods, more intense hurricanes and wildfires.
Temperature rise has already exceeded 1 C above pre-industrial levels.
Earlier this week, ADNOC signed a deal with Eni SpA, an Italian energy firm, to partner on a range of projects like new renewable and hydrogen projects, methane reduction and carbon capture. Still, ADNOC produces roughly 3 million barrels of oil daily, making it one of the world’s largest producers and biggest emitters.
Kerry also warned of the consequences of climate change.
“The reality is that we face a set of human choices. What is happening is happening for one reason principally that we can interpret. It is the blanket of greenhouse gases, principally methane and CO2 but a few others, that contains the heat and is creating this transformation,” Kerry said.
The Energy Department predicts big fossil fuel consumption globally over the coming decades, arguing that petroleum and natural gas will remain the most consumed sources of energy through 2050.
Correction: A previous version of this story incorrectly described U.S. export volumes of liquefied natural gas.
