Photographer: Vincent Mundy/Bloomberg

Energy knots that remain no matter today’s outcome

November 8, 2016 Mark Drajem  & Ari Natter

The First Word Energy team draws on Bloomberg’s worldwide resources to cover all aspects of energy policy. Learn how Bloomberg Government can help your energy lobbying or policy analysis—contact Peter Hsu at yhsu24@bloomberg.net or 202-416-3035.

There are wide and well-explored differences between Hillary Clinton and Donald Trump on energy and the environment, even if those haven’t been front and center in the campaign. Trump promises to undo much of President Obama’s programs: the Clean Power Plan, the Paris climate accord, the ban on new coal leases and rules imposed on natural gas and oil drilling on public lands. Clinton would do the opposite, defending and building on each, while also promising to rapidly expand the deployment of solar power.

No matter who wins, there are energy issues that will persist into 2017 without straightforward answers for either candidate. Here are a few:

1. The Renewable Fuel Standard: Will Congress take up a rewrite of the 2007 ethanol mandate? If so, that will require the kind of deft deal-making we’ve all grown skeptical that Washington can deliver. If not, the administration is going to have to wade through the thorny legal and technical issues around the biofuels mandate. No matter what John Podesta may hope, the RFS, RINs and ethanol is not going away.

2. Nuclear waste: Our colleague Catherine Traywick wrote a wonderful exploration of the thousands of tons of nuclear waste left stranded at nuclear plants. The Yucca Mountain depository has been blocked because of opposition from Sen. Harry Reid. With his departure, can it be revived, or will a private-sector alternative emerge? (Our money is on the latter.)

3. Earthquakes: No, the Oklahoma earthquakes are not caused by fracking. But, after a magnitude 5 earthquake hit two miles west of Cushing on Sunday, the problem of wastewater from oil and gas production is again in the spotlight. It’s the second sizable quake in the past two months in the area, and after the first one the state ordered the shut-down of a number of wastewater wells in the Arbuckle formation. The Oklahoma Corporation Commission is now “working on an action plan,” it said in a statement. Federal oversight is tricky, but if the ground keeps shaking there may be calls for intervention from Washington.

4. Pipelines: The fatal blast at the Colonial pipeline, the angry confrontation over the Dakota Access pipeline and the federal lawsuit over the Colonial pipeline all point to one thing: even with the debate over the Keystone XL pipeline behind us, pipeline issues will be a big point of contention next year. If Trump wins today, clearing the way for pipeline construction could be a major part of his infrastructure agenda; if Clinton wins, figuring out how to balance the competing interests is going to tie her administration in knots.

One Opportunity

To borrow a phrase we’ve heard before, *many people are saying* that infrastructure is an area of opportunity in either a Clinton or Trump administration. We tend to agree, but our friend Pete Cohn of Height says lobbyists shouldn’t expect a package to pass within the first 100 days:

“However, on Capitol Hill there remains a strong pent-up desire to reform international taxes as well as to tackle the longstanding opportunity costs of deferred maintenance in roads, bridges, transit systems, pipelines and water supplies, to name a few.”

“Public pressure will be on to put aside partisan wrangling and get something significant accomplished….It remains a question of when, not if, enhanced infrastructure spending passes into law.”

The Other Election to Watch Today

If voters in Washington approve Ballot Initiative 732, refiners in the state could see their combined tax bill rise by more than $80 million a year, Rob Barnett of Bloomberg Intelligence says. The measure calls for a $15-a-metric-ton carbon tax in July 2017 that jumps to $25 in July 2018, but it has divided the state’s environmental community. Altogether, the tax would raise about $1 billion in revenue, he wrote.

For background on the carbon tax, as well as Florida’s solar fight, see this story.

Slowdown for DAPL

The Army Corps said yesterday it’s “slowing down” the Dakota Access process in order to find another path for the pipeline and address the concerns of the Standing Rock Sioux. That’s in line with what the Tim Kaine told Fusion’s Alicia Menendez:

“Well, look, they’ve already re-routed it once,” Kaine said in the interview, referring to the change made to move the pipeline south of Bismark, North Dakota. “If it’s an important enough project, you ought to be able to find a route that works. What the Obama administration has done by saying, let’s look at route alternatives, I think is the right thing to do.”

The Predictor

Sure today is important, but the real excitement is likely to come later this week as the Interior Department is poised to release its wind and solar leasing rule.

Senate Gaming

Larry Sabato’s last crystal ball says the Senate will end up 50-50, and Clinton will take the White House, and so Democrats will be in control. If that happens, Maria Cantwell is in line to take the reigns of the Senate energy committee. Her agenda is hiding in plain sight, check it out here.

But who will take over the powerful Environment and Public Works Committee? Well, it’s complicated:

  • Sen. Tom Carper is the top-ranking Democrat on the panel, but would also be in line to be chairman of the Homeland Security panel. If he takes that….
  • Sen. Ben Cardin is next in line, but he may prefer to take over Foreign Affairs, in which case…
  • Sen. Bernie Sanders is next up, but he would likely prefer to take over the HELP committee if Sen. Patty Murray goes to Appropriations…
  • And so, that would leave Sen. Sheldon Whitehouse, the climate warrior who has delivered 148 speeches on climate change on the Senate floor, to chair the committee.

All of that is to say the EPW committee will look very different if Democrats win the majority. The Republican side is much simpler: Sen. John Barrasso, who would represent a continuation priorities, is next in line to replace Sen James Inhofe, who must relinquish the gavel because of term limits.

EPA Gaming

Dan Esty and Mary Nichols are the likely frontrunners to lead the EPA should Clinton prevail, according to Brian Dabbs.

EPA: Nuh uh!

The National Mining Association argued to the D.C. Circuit that EPA’s calculations in a separate rule showed that more coal capacity exists now than it had put into its Clean Power Plan. EPA would like to raise an objection: The association’s reference to a 2016 base case “has little relevance for determining the impacts of the CPP, which does not begin to require compliance until 2022,” EPA said in a letter to the court. “Petitioner’s comparison of projected coal capacity in 2030 under the CPP to a 2016 base case is defective because it fails to separate the CPP’s effects from other factors, such as changing market conditions.”

Also Today

  • Gas traders are giving up on the U.S. winter even before it begins; Brian K. Sullivan says they may be in for a frosty surprise.
  • In England, wind farms are killing more bats than their developers’ pledged to regulators.
  • NextGen Climate says it sent out “9,001,812 million pieces of mail” in battleground states this year. That’s surely a typo, but, still, that’s a lot of junk mail.
  • The oral arguments over EPA’s ozone standard will be held Feb. 16 in the D.C. Circuit.
  • The DCIst has a helpful list of the best places offering specials to those with an “I Voted” sticker, or other election specials. (The website says rewarding voters with food or drink is likely illegal; we are pretty certain the FBI is otherwise occupied at the moment.)

Editor’s Note

Here is what your First Word Energy team has planned for election day and tomorrow: Ari Natter will be monitoring the returns as they come in tonight, and putting out breaking news updates as we get information about the presidential race, key Senate contests and our House races to watch. Tomorrow’s newsletter will include all of those updates in one concise form. We will also do a special mid-morning update of the newsletter that will include Bloomberg analyses about what the outcome means for legislating and for companies and markets. We will keep the news alerts coming if contests remain undecided, so be sure you’re signed up for the First Word Energy alert.

Contact Us

Send us your comments and tips: Ari Natter is the First Word congressional reporter (anatter5@bloomberg.net or @arinatter) and Mark Drajem is the editor (mdrajem@bloomberg.net or @drajem).

Chart of the Day

(For a link to the chart, click here.)

Vestas Wind Systems A/S and SunPower Corp. are among the renewable-energy companies that climbed Monday as polls show Donald Trump trailing in the U.S. presidential race, removing a perceived threat, analysts said. According to an Ernst & Young LLP survey published last month, the U.S.may lose its position as the top-ranked renewable-energy market for investors if Trump wins the presidency.

This chart shows how closely correlated Vestas’ stock price is with the outlook for the election. After FBI Director James Comey released his letter last Friday saying that the probe into Hillary Clinton’s e-mail would resume, the wind-turbine maker’s stock tanked. After Comey issued his “all-clear” letter on Sunday, Vestas jumped nearly 4%.

What would a Trump win mean for wind and solar? He could make them collateral damage in a plan to cut corporate tax rates, Joe Ryan writes:

Wind and solar companies depend heavily on financing from large banks, insurers and other backers that take advantage of federal credits through tax-equity financing — they’re expected to provide developers with about $14.8 billion this year, according to Bloomberg New Energy Finance.

If corporate rates fall, as Trump has pledged if he is elected Tuesday, investors will have less need for writeoffs through tax-equity investments. With wind and solar projects expected to need $56.2 billion in capital during the next president’s first term, a slump in the tax-equity market may leave developers in search of financing.

Tweet of the Day

.@BenjySarlin NEW with @KatyTurNBC: Trump transition eyeing Rudy as AG, Newt as Sec of State, Reince as possible chief of staff

Quotable

“It’s easy to promise the moon,” John Podesta in WikiLeaks leaked e-mail to climate activist Brad Johnson. “It’s a lot harder to deliver.”

Races to Watch

Over the past three weeks, Ari Natter has highlighted key energy House races to watch in each newsletter. The outcome of these races may determine much about energy policy in the next Congress. To recap, here are the key House races to watch:

  • Colorado – Sixth: Rep. Mike Coffman (R) v. Morgan Carroll (D)
  • California 44: Isadore Hall III vs. Nanette Barragán
  • New York 19: Zephyr Teachout (D) v. John Faso (R)
  • New York 22: Claudia Tenney (R), Kim Myers (D)
  • Minnesota 2: Angie Craig (D) v. Jason Lewis (R)
  • California 49: Darrell Issa (R) v. Doug Applegate (D)
  • Florida 7: John Mica (R) v. Stephanie Murphy (D)
  • California 10: Jeff Denham (R) v. Michael Eggman (D)
  • Florida 26: Carlos Curbelo (R) v. Joe Garcia (D)
  • Nevada 4 Cresent Hardy (R) v. Ruben Kihuen (D)
  • Fla. 13: Rep. David Jolly (R) v. former Gov. Charlie Crist (D)
  • California 21: David Valadao (R) v. Emilio Huerta (D)

For other ideas of what to monitor:

– The League of Conservation Voters provided a cheat sheet of state level races to watch.
– republicEN, the pro-climate Republican advocacy group, highlighted these races.

Inside the Beltway

Even supporters of the Environmental Protection Agency’s Clean Energy Efficiency Program, which rewards states for energy efficiency efforts and renewable energy investments in disadvantaged communities in 2020 and 2021, questioned how effective the program would be in comments on the proposed rule, Andrew Childers and Rebecca Kern reported.

The additional emission rate credits would be generated for 2020 and 2021, before the Clean Power Plan, which has been stayed by the U.S. Supreme Court, is intended to take effect. State regulators argued that is not sufficient time for significant investments in renewable energy or energy efficiency programs for low-income communities, which could hamper the incentive program’s effectiveness. Several states called on the EPA to extend the period during which programs could qualify for the additional credits, including giving states credit for programs that are already in place to accomplish those goals.

Outside the Beltway

$25 Billion Seen at Stake in TransCanada Talks Over Gas Tolls
Western Canada’s embattled natural gas explorers may end up forfeiting $25 billion in revenue should they fail to reach an agreement over pipeline tolls with TransCanada Corp., according to the consulting group Solomon Associates. That’s how much total revenue the region’s drillers may miss out on between 2018 and 2027 should they refuse to lock in new contracts to use a TransCanada pipeline system that they depend on to reach markets in Eastern Canada, according to Jihad Traya, a natural gas consultant with Dallas-based Solomon Associates.

Plug Power Slumps After Shift to Leases Reduces Revenue 44%
Plug Power Inc., a provider of hydrogen-fueled electric forklifts, sank the most in more than nine months after a shift to leasing helped drag down revenue 44 percent in the third quarter. The company is switching to a leasing model, which means it will get steady, long-term revenue from customers. The transition also means fewer large payments from selling fuel-cell forklift systems for warehouses and other sites, as well as hydrogen refueling systems.

Generator Asks FERC to Enforce Contract With New Mexico Utility
Western Water and Power Production Limited asks FERC to enforce mandate for the sale of power under PURPA to Public Service Company of New Mexico, according to notice Monday from agency. Protest comes after New Mexico Public Regulation Commission denied Western Water’s complaint over Public Service Company of New Mexico’s refusal to enter contract to buy power.

Trina Solar Sets Voting Date for $1.1 Billion Privatization Plan
Trina Solar Ltd., the world’s largest solar panel manufacturer, scheduled a Dec. 16 shareholder meeting to vote on a $1.1 billion deal to take the company private.
The meeting will be at Trina’s corporate headquarters, the Changzhou, China-based company said in a filing with the U.S. Securities and Exchange Commission Monday. Under the proposal, shareholders will receive $11.60 for each American depository receipt they own.