BBB plays waiting game- POLITICO – POLITICO

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By MATTHEW CHOI 
02/02/2022 10:00 AM EST
With help from Josh Siegel, Ben Lefebvre and Jordan Wolman
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— Democrats have more pressing things on their plate than reviving the popular parts of BBB, Sen. Joe Manchin told reporters.
— A bipartisan drive for sanctions on Russia hits old partisan divisions on Nord Stream 2 and whether to impose them now or wait to see if Moscow invades.
— Interior accidentally released a draft proposal to raise onshore oil and gas leasing rates, though the agency said no final decisions on royalties had been decided.
HAPPY WEDNESDAY! I’m your host, Matthew Choi. Congrats to Paul Balserak of the American Iron and Steel Institute for knowing Madagascar is the largest island in the Indian Ocean. For today’s trivia, which Malaysian federal territory is located in East Malaysia (and let me know if you’ve been there!)? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.
Check out the POLITICO Energy podcast","link":{"target":"NEW","attributes":[],"url":"https://politico-energy.simplecast.com/","_id":"0000017f-4dfe-d81a-a57f-6dff56a60004","_type":"33ac701a-72c1-316a-a3a5-13918cf384df"},"_id":"0000017f-4dfe-d81a-a57f-6dff56a60005","_type":"02ec1f82-5e56-3b8c-af6e-6fc7c8772266"}”>Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast","link":{"target":"NEW","attributes":[],"url":"https://www.politico.com/energy-podcast","_id":"0000017f-4dfe-d81a-a57f-6dff56a60006","_type":"33ac701a-72c1-316a-a3a5-13918cf384df"},"_id":"0000017f-4dfe-d81a-a57f-6dff56a60007","_type":"02ec1f82-5e56-3b8c-af6e-6fc7c8772266"}”>politico.com/energy-podcast. On today’s episode: How the Russia-Ukraine crisis is undermining Biden’s clean energy message.

ONCE MORE, WITH FEELING: Senate Energy Chair Sen. Joe Manchin caused a stir when he told reporters that the Build Back Better bill was “dead,” reiterating the stance he’s had on the legislation since December. “There is no Build Back Better bill, I don’t know what you’re all talking about,” he told Insider’s Joseph Zeballos-Roig and Oma Seddiq.
But to be clear, he later specified that he was referring to the package that was under discussion last year, and that he’s not been involved in any recent talks about passing any of the measures he’s considered more palatable. He didn’t rule out a future climate package based on the old BBB, even though that isn’t at the forefront of his attention. And his remarks didn’t appear to shake climate-focused lawmakers.
“Sen. Manchin has said pretty clearly the bill formerly known as Build Back Better is not going anywhere … but that doesn’t mean some of the things we were going to do in that bill can’t be done,” Sen. Tina Smith (D-Minn.) told Pro’s Josh Siegel.
WHAT NEEDS TO GET DONE NOW: Manchin has a whole laundry list of legislative priorities to get done before circling back on BBB issues: the impending fiscal deadline in just over two weeks, the looming conflict in Ukraine, the China competitiveness bill under discussion in the House, and, of course, the economy.
The omnibus package “has to be done first,” Manchin told reporters, calling it the “highest priority we have right now.” Democrats are clawing for an appropriations measure that would allow them to fund their priorities, rather than simply extending levels set under the Trump administration.
Rep. Katie Porter laid out the stakes to a League of Conservation Voters panel this week. “If we do not pass an omnibus budget, a lot of the things that we did with infrastructure, including to combat and prevent wildfires, won’t necessarily go into effect.”
Manchin showed some irritation over the slow pace on the competitiveness and manufacturing bill meant to counter Chinese influence over supply chains, saying “there’s no reason that shouldn’t have been passed a long time ago.” The bill, which passed out of the Senate last year, is currently under discussion in the House, which is leaning toward taking a firmer stance on trade regulations to protect U.S. manufacturing from Chinese competition. The White House lobbied the House this month to get on with the legislation quickly, and the Office of Management and Budget released a statement Tuesday backing the latest iteration from the lower chamber.

SUBSCRIBE TO NATIONAL SECURITY DAILY: Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today.
THE SANCTIONS GAP: The Senate’s bipartisan gang negotiating a Russia sanctions bill is still hung up on two key provisions: penalties on the Russia-to-Germany Nord Stream 2 natural gas pipeline and whether to impose sanctions before an invasion (both GOP priorities). “It makes no sense from a deterrent standpoint to sanction somebody after they have already done what you are trying to stop, so I don’t agree with the effectiveness of post-invasion sanctions,” Sen. John Cornyn (R-Texas), who is part of the negotiating group, told Josh.
Senators were unclear on what a compromise on Russia’s Nord Stream 2 pipeline to Germany would look like. Republicans who support sanctioning Russia want at least some penalties imposed before any potential invasion, including on Nord Stream 2. But Democrats recently defeated a GOP-led effort to do just that.
“I don’t know what the in-between solution would be,” Sen. Kevin Cramer (R-N.D.) said.
Still, Sen. Jeanne Shaheen of New Hampshire, a lead Democratic negotiator, said she was “optimistic we will have an agreement.”
SENATORS PRESS BOEM FOR WIND STUDY: The Maine, Massachusetts and New Hampshire Senate delegations are urging BOEM to do more research on the local environmental and economic impacts of offshore wind ahead of plans for a lease sale in the Gulf of Maine by 2024.
The bipartisan group of lawmakers noted the area off the New England coast holds considerable potential for clean energy development, but they want more data on how offshore wind could impact delicate ecosystems for animals including lobsters and whales, as well as more engagement with local communities on how the energy development will impact the local economy.
“As we work to advance offshore wind in the Gulf of Maine in a sustainable and fiscally responsible manner, BOEM’s efforts to bolster regional outreach and comprehensive wildlife and habitat data collection through the Environmental Studies Program with the best available science will be critical,” the senators wrote in a letter to BOEM Director Amanda Lefton.
Offshore wind projects have faced resistance from fishing interests, including a new lawsuit by the Responsible Offshore Development Alliance filed Monday against DOI over the Vineyard Wind 1 offshore wind project.
IN COMMITTEE: The Senate Environment and Public Works Committee will take a look today at two draft bills focused on recycling (Chair Tom Carper’s “favorite issue,” according to a Carper aide). The Recycling and Composting Accountability Act, drafted by Carper and Sen. John Boozman (R-Ark.), would mandate EPA to gather and report data on the nation’s recycling system in a bid to improve transparency and curb “wishcycling.” Ranking member Shelley Moore Capito’s Recycling Infrastructure and Accessibility Act would create an EPA pilot program to make recycling more accessible to rural and disadvantaged communities.
EPA released its first ever national recycling strategy in November, targeting issues with recycling markets, equitable infrastructure access and awareness on what can be recycled.
The House Select Committee on the Climate Crisis holds a hearing today on domestic investment under the bipartisan infrastructure package and BBB to clean difficult-to-decarbonize sectors and promote U.S. manufacturing in clean energy.
MOVE IT ON OVER: The Senate Energy and Natural Resources Committee is pushing back its second hearing on President Joe Biden’s nomination of Laura Daniel-Davis to be the Interior Department’s assistant secretary for land and minerals management. The hearing, which was originally scheduled for today, is now set for a week later.
The delay of an already unusual request for a second hearing for a nominee comes as Republican senators have taken an increasingly hard line against Biden’s nominations for Interior and used the hearings to air complaints on the Biden administration’s energy policy. A committee spokesperson did not immediately respond to questions as to why the hearing was delayed.

RAISE THE RATES: The Interior Department inadvertently previewed what would be a historic increase to onshore royalty rates on federal oil and gas leases, only to say it was published on accident and nothing was final. The draft that was online for a brief period Monday said the Bureau of Land Management would hike the royalty payments from 12.5 percent to 18.75 percent, as well as limit what land would be available for leases. It would be the first rate onshore changes in over 100 years.
The changes are in line with the department’s recommendations submitted to the White House last fall, when it found federal royalty rates far below those on private and state-controlled lands.
The House version of BBB included increases to the leasing rates, as did the bill text advanced by the Senate Energy Committee last year. Manchin voiced support for hikes, but while the House text increased rates to 18.75 percent, the Senate version bumped them to a more modest 16.75 percent.
The oil and gas industry has been less keen on the hikes, with American Petroleum Institute spokeswoman Bethany Williams calling this week’s draft “yet another example of the administration sending mixed signals.”
“Washington should do everything possible to encourage domestic energy production and meet rising demand,” she said in a statement. Ben Lefebvre has more for Pros.
PUTIN US DOWN: Russian President Vladimir Putin on Tuesday accused the U.S. of “ignoring” his security demands in a written document the Biden administration delivered to Moscow last week, but he appeared open to continuing talks at resolving the worsening security crisis on the Russia-Ukraine border.
The Biden administration is still working with allies to divert liquefied natural gas cargoes to Europe to help counter one of Russia’s biggest sources of leverage. That approach has angered some liberal environmentalists, who say the Biden administration’s reluctance to try to shrink U.S. oil and gas production and the new effort to bolster supplies to Europe show a business-as-usual attitude.
Leading climate hawk Sen. Martin Heinrich (D-N.M.), however, told Josh on Tuesday that Biden’s move to lessen dependence on Russian natural gas is a geopolitical and national security imperative and not in conflict with his decarbonization agenda.
“The most successful way to manage these problematic high emission energy sources is on the demand side, not on the supply side. So in the short-term to avoid a war, they have to use every lever at their disposal,” Heinrich said. “In the long-term, the answer for a country like Germany is to get off natural gas. It’s to use heat pumps …like duh. In the short-term, we have to manage crises.”
ME’s colleagues on the NatSec team have more on Putin’s latest positioning.
CHINA CHECK IN: U.S. and Chinese officials will be meeting this month to go over some of the practicalities of the climate agreement they reached around COP26, said Sue Biniaz, a member of special climate envoy John Kerry’s team. But the two super emitters are still at odds on a number of major sticking points.
Speaking at a University of Chicago event Tuesday, Biniaz said China’s progress toward reining in its emissions has been “incremental” and far from the rapid cut down the U.S. had been hoping for. Biniaz also reiterated that the Biden administration does not agree with a framework to pay developing countries to help them fight off climate change, fearing doing so would reward high polluting countries like China. Read more from Pro’s Zack Colman.

STEP INSIDE THE WEST WING: What’s really happening in West Wing offices? Find out who’s up, who’s down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider’s guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won’t find anywhere else, subscribe today.
THE BRAKES ON WHEELER: Democrats in a Virginia Senate committee voted against former EPA Administrator Andrew Wheeler’s nomination to be the commonwealth’s natural resources chief. Wheeler faces stiff opposition from environmentalists and liberals, and Democrats maintain a slim majority in the chamber, which could mean Wheeler being out of a job. E&E News’ Timothy Cama has more.
Another Virginia Senate committee punted to next week a bill that would take the commonwealth out of the Regional Greenhouse Gas Initiative. Senate Bill 532 has the support of Gov. Glenn Youngkin but faces a difficult road ahead again given Democrats’ narrow Senate majority.
EXXON’S CARBON, HIGH PRICES: Exxon Mobil says it’s new “Low Carbon Solutions” business is showing signs of success even without a global, widespread government push for carbon capture technology. The company in its latest earnings statement said it has 10 carbon capture projects underway around the world and is fielding interest from potential customers looking to cut their emissions.
Low Carbon Solutions, which Exxon created in 2021, “is rapidly expanding, utilizing existing [global] policy,” Exxon Chief Executive Darren Woods said during the company’s earnings call on Tuesday. On the flip side, Exxon also rapidly boosted its oil production as prices took off during the past year, and the company saw average production in the Permian Basin jump more than 25 percent from the prior year, to about 460,000 oil-equivalent barrels per day, Woods said.
In all, the oil companies had a banner year as high oil prices offset slow fuel sales that still had not reached pre-pandemic levels. Exxon pulled in $8.3 billion in profits for the fourth quarter, while rival Chevron said profits for all of 2021 reached a record high of $15.6 billion – not bad for companies that were swimming in red ink the previous year. Whether this will lead to more oil production – and more methane emissions – this year remains to be seen.

— “Carbon dioxide agreement staves off food crisis in Britain,” via The Financial Times.
— “Congressional Republicans demand investigation of Energy Secretary Jennifer Granholm’s financial conflicts of interest,” via Insider.
— “Luján stroke sends Senate Democrats reeling,” via POLITICO.
— “‘We relied on the lake. Now it’s killing us’: climate crisis threatens future of Kenya’s El Molo people,” via The Guardian.
THAT’S ALL FOR ME!

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