Biden’s environmental justice push stalls

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• ExxonMobil said yesterday it was moving its headquarters to Houston from its current base in Irving, Texas, as part of a wider restructuring plan. The supermajor releases its 2021 full-year earnings today. Check out ft.com for details.

Irving has been home to Exxon’s C-suite since 1989 and the headquarters, which are to be sold after the move, are widely known throughout the industry as the “God Pod”.

Welcome back to Energy Source. It’s already one month into 2022 — and just over a year into Joe Biden’s presidency.

With midterm elections looming, there is increasing frustration in Democratic ranks about the slow progress being made on many of the administration’s promises — especially when it comes to climate and energy.

There have been achievements on some fronts. For example, the Environmental Protection Agency today moves into the next phase of the rulemaking process for new regulations on monitoring and plugging methane leaks in oil and gas operations.

But on many of the big issues, rhetoric has failed to translate into meaningful action. That is the theme of today’s newsletter.

Our first item is on a subject that the White House vowed to put at the heart of its climate agenda: environmental justice. But progress has been dogged by staffing and resource problems, and advocates are getting fed up.

Our second item takes a look at the state of play with the sweeping tax credit extensions the administration wants to bring in for clean energy, after they were derailed by the failure of the Build Back Better bill. Developers say the uncertainty around what support will be available to them is making it impossible to plan future projects.

Data Drill charts the surge in Europe’s carbon price.

Thanks for reading.

Frustration mounts with pace of Biden’s environmental justice push

Joe Biden entered the White House with a pledge to put environmental justice at the heart of his climate agenda.

But one year into his presidency, campaigners are growing frustrated with the administration’s sluggish progress, which has been beset by project delays and staffing challenges.

The environmental justice movement seeks to fix an enduring inequity in US society: that minority communities disproportionately bear the brunt of environmental problems. Biden has tried to establish a far-reaching approach to tackling the issue, creating new advisory and inter-agency councils and securing funds for clean water and dealing with legacy pollution.

But activists say these actions haven’t created a tangible impact. With midterms looming and Build Back Better stalled, the pressure is on for the administration to deliver on environmental justice this year.

“If after a year, people don’t see concrete on-the-ground impacts, I think it’s going to be hard for them to continue to have the kind of faith in the commitment,” said Jordan Diamond, president of the Environmental Law Institute.

Much of the campaigners’ frustration is owing to the White House’s delayed launch of the climate and economic justice screening tool, a device to identify disadvantaged communities. It was supposed to be released last June but has yet to materialise.

Without the screening tool, advocates say it will be difficult to track progress on Justice40, a White House initiative that aims to direct 40 per cent of benefits from federal climate investments toward disadvantaged communities.

There is also uncertainty surrounding the timeline for a planned scorecard, which would grade agencies on their environmental justice performance. In his executive order, Biden said the scorecard would be published by February 2022.

These issues have been compounded by the recent departures of top environmental justice officials, prompting fears of further delays. Cecilia Martinez, the first-ever senior director for environmental justice at the Council for Environmental Quality, resigned at the beginning of January, citing burnout. David Kieve, another senior director at CEQ, left shortly thereafter for reasons unknown.

Peggy Shepard, co-chair of the White House Environmental Justice Advisory Council (WHEJAC), said the departures were understandable given the enormity of the task the officials were assigned, with little support.

While Biden hasn’t fulfilled his entire environmental justice agenda, he has done the slow, steady work of carving out the federal capacity he promised for it, according to Hannah Perls, who tracks federal environmental justice actions at Harvard Law School.

But activists say not enough resources have been allocated to achieve the president’s ambitious environmental justice goals.

“Biden can’t expect to reach his goal of 40 per cent of climate investments being given to frontline . . . marginalised communities if he really doesn’t have the capacity to get to this goal,” said Eden Alem, spokesperson for the Sunrise Movement.

At last week’s WHEJAC meeting, federal officials insisted they were taking environmental justice issues seriously, assuring the council they were hiring more staff and pointed to investments in clean drinking water and cleaning up legacy pollution sites.

“We’ve really changed the [ball game] here, and we’ve made sure that different funding solicitations . . . are prioritising funding and benefits to disadvantaged communities,” said Candace Vahlsing, associate director in the Office of Management and Budget.

Still, activists want to see more.

“If this is a Biden administration priority, they need to probably double the staff of CEQ and increase the budget in order to do this work effectively and efficiently,” Shepard said.

(Amanda Chu)

Renewable developments put on hold by Build Back Better collapse

Environmental justice is not the only area where the slow-moving cogs of government are causing frustration.

Renewable energy developers say they are unable to greenlight billions of dollars in capital spending over the coming years because of the lack of clarity around what government support will ultimately be available.

The president’s sweeping Build Back Better bill would have provided the biggest-ever federal injection of funds into the clean energy space, spurring a massive build out of renewable infrastructure and helping to electrify the US grid. But it was effectively scuppered in December when West Virginia senator Joe Manchin made clear he would not support it due to inflation concerns.

Congressional Democrats are now scrambling to find another vessel for the bill’s $555bn in climate spending, which is largely comprised of tax credits for clean energy projects.

The bill would have extended for a decade solar and wind tax incentives and introduced new ones for transmission and batteries. Developers say these credits, which can cut costs by up to 30 per cent, make the difference in whether or not between projects are viable. Until there is clarity on which credits will ultimately come to fruition, many are hitting pause on new projects.

“We’ve had our finger on the trigger to unlock dozens of projects — I’m talking tens of billions of capex here — over the course of the last six to nine months that we’ve just been waiting and waiting and waiting,” a top executive of one major US renewables developer told ES.

According to the American Clean Power Association (ACP), an industry lobby group, every month implementation of the bill is delayed is costing roughly $2bn in economic activity.

In a letter to the Democratic Congressional leadership last week signed by over 260 energy companies — including big names such as Avangrid, BP, Shell, NextEra, Orsted and Vestas — ACP said the bills climate provisions would more than double clean energy investment to $750bn over the next ten years.

Meanwhile, Democratic politicians — keen for a win on climate ahead of the midterms — are increasing pressure on the president.

In a letter yesterday, 20 House Democrats running for re-election urged Biden to “seize this moment for all Americans and enact these vitally important climate investments into law in the coming weeks.”

I am doing some more in-depth reporting on this topic. If you are involved with a clean energy business whose plans have been hit by the demise of Build Back Better, please get in touch: [email protected].

(Myles McCormick)

Data Drill

Carbon prices are soaring in the EU. Allowances have neared €90/tonne, up 260 per cent from the same time last year, with Brussels facing growing pressure from top leaders to intervene.

Many factors are behind the price rally. Analysts point to Europe’s energy crunch, growing interest among traders, and strengthening climate policy. Prices are expected to remain high for the rest of the year, with triple-digit records within reach.

“We expect that the ETS price is going to stay bullish and we’re going to see new peaks,” said Elena Belletti, head of carbon research at Wood Mackenzie. The energy consultancy expects carbon prices to average €84-86 this year.

Brussels launched its emissions trading system in 2005, but prices languished below €40/tonne until 2021. An OECD report estimates prices must reach €120/tonne by 2030 to decarbonise by mid-century.

According to Belletti, higher carbon prices are changing company business plans and the economics of decarbonisation. Businesses are now investing in technologies once thought to be too expensive, like carbon capture and “green” hydrogen.

“A lot more companies are starting to just put in place strategies to avoid paying this price in the future,” Belletti said. “And that of course means they won’t be emitting anymore.” (Amanda Chu)

Power Points