Morning Consult Energy: What's Ahead & Week in Review

Morning Consult Energy: What’s Ahead & Week in Review

Energy

Essential energy industry news & intel to start your day.

April 2, 2023

By Julia Martinez

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Howdy and welcome to April, Morning Consult Energy readers!

I know we were all anxiously awaiting the latest on electric vehicle tax credit guidance from the Treasury Department, so let’s jump right into what happened last week.

The Treasury’s complex domestic sourcing requirements will make it more difficult for many electric vehicles to qualify for the $7,500 tax credit, at least in the short term, as the department attempts to incentivize EV purchases while not angering the nation’s closest trading partners.

Sen. Joe Manchin (D-W.Va.) said the proposal ignores the purpose of the Inflation Reduction Act, “which is to bring manufacturing back to America and ensure we have reliable and secure supply chains.”

Specifically, the proposal allows for sourcing of battery minerals from Japan, with a possibility of adding more countries.

Earlier in the week, the United States and Japan struck a trade deal agreement on EV battery minerals including lithium, nickel, cobalt, graphite and manganese, in an effort to strengthen their respective supply chains and lessen their dependence on Chinese minerals.

That deal was met with some criticism from Rep. Richard Neal (D-Mass.) and Sen. Ron Wyden (D-Ore.), who said Congress and the public should have been able to review the deal.

The list of eligible vehicles, which will be updated monthly, is expected by April 18. The new rules apply after the proposal is published in the Federal Register on April 17, but the rule will not be finalized until June.

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What’s Ahead

Congress is on a break, so we’re a little light on any House and Senate hearings for the next couple of weeks.

The House passed the GOP’s energy package last week with a 225-204 vote, and while the package has been dubbed dead on arrival in the Democratic-controlled Senate, the Lower Energy Costs Act might kick start negotiations for permitting rules.

Two House Democrats are teaming up to assemble their own version of permitting reform in response to the GOP package. Reps. Sean Casten (D-Ill.) and Mike Levin (D-Calif.) are expected to introduce the Clean Electricity Transmission Acceleration Act of 2023, E&E News reported, after they finalize the text and reach out to other lawmakers that inspired their plan.

The permitting measure will only deal with permitting for clean energy projects, which is likely to get pushback from the GOP and Manchin, who would want to include oil and gas projects in the proposal. Keep an eye out for any news on this proposal or any developments on the GOP’s energy package this week.

The Atlantic Council will host World Bank Group President David Malpass on Tuesday, a week ahead of the World Bank-International Monetary Fund Spring Meetings, where global finance ministers and central bankers convene in Washington, D.C.

I would expect some questions on climate change at the discussion, since Malpass recently announced that he will step down as president in June, before his five-year term expires, after he faced backlash for saying he did not know whether “manmade burning of fossil fuels is rapidly and dangerously warming the planet.” He was appointed by former President Donald Trump in 2019.

Since the resignation announcement, the Biden administration nominated former Mastercard Inc. Chief Executive Ajay Banga to lead the World Bank. Banga is the only candidate nominated so far, and he appears to be cleared to take on the job.

Week in Review

California: California will mandate that half of all heavy-duty trucks sold in the state – including garbage trucks, tractor-trailers, cement mixers and other heavy vehicles – must be electric by 2035, a regulation that required approval from the Biden administration as it goes beyond federal requirements.
Conservation: The Interior Department proposed a program to lease public land for conservation purposes similar to the way the agency leases acreage for drilling, mining and grazing, in an effort to respond to requests by states and companies looking to lessen the environmental impact of development projects on public lands.
Carbon offsets: After three years of work, the Integrity Council for the Voluntary Carbon Market released highly anticipated guidelines for carbon offset markets, although some experts said the guidelines lack important safeguards that would help guarantee that the funding is going to environmental projects and the people doing the work.
Storm recovery: Biden announced that the federal government would cover the full cost of Mississippi’s emergency measures for 30 days, after a storm killed 26 people and destroyed homes and other infrastructure.
WOTUS: In a 53-43 vote, the Senate adopted a resolution aimed at overturning the Biden administration’s clean water regulations, known as the Waters of the United States rule, which were finalized in December and define which waters are subject to federal oversight.
Oil: In a major blow to oil companies in California, Gov. Gavin Newsom (D) signed first-of-its-kind legislation aimed at penalizing companies for alleged price gouging at the pump.
Lucid: Electric vehicle company Lucid Group Inc. plans to cut 18% of its workforce, around 1,300 employees, in an effort to reduce costs amid a ramp up of its Air luxury sedan, according to a regulatory filing.
Wildfires: PG&E Corp. has committed to investing $18 billion for wildfire prevention through 2025, with plans to bury more than 2,000 miles of wires, install stronger utility poles, repair equipment and trim trees, following back-to-back seasons of catastrophic wildfires in California that have resulted in criminal and civil liabilities for the company.
Steel: Production of paper-thin steel critical to power electric vehicles is ramping up as companies anticipate demand for the hard-to-make material will outpace production as the sale of EVs rises over the coming years.

Stat of the Week

$264 million

The amount raised as part of an offshore oil and gas lease sale last week in the federal waters of the Gulf of Mexico. Chevron Corp. led bids by offering $108 million for 75 parcels, followed by BP PLC with $47 million in bids and Shell PLC with $20 million in bids. The sale saw a 38% increase in bids from the previous auction, marking the most offered in a sale since 2017.