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BIDEN LOOKS TO MOVE ON: The Biden administration is signaling a stand-down in a years-long effort to stop Russia from finishing the controversial Nord Stream 2 natural gas pipeline to Germany as it seeks to repair relations with Europe.

The latest evidence that President Biden is looking to move on and negotiate a solution with Germany comes after his State Department issued a report to Congress Friday that identified only a single Russian ship and its owner as being in violation of U.S. sanctions. The ship, Fortuna, and its owner, KVT-RUS, were already sanctioned in January by the Trump administration, although the new penalties are triggered under a different sanctioning authority.

Republicans accused the Biden administration of ignoring the broadening of Nord Stream 2 sanctions approved by Congress in this year’s National Defense Authorization Act, which was seen as a last-gasp effort to stop the $11 billion pipeline. A previous round of congressional sanctions helped halt construction roughly 100 miles short of completion, but Russia continued construction in December and it could be completed by August, according to ClearView Energy Partners.

“The history of Russian pipelines is they get built,” Kevin Book, managing director of ClearView, told Josh.

Biden is using his discretion: Nonetheless, Republicans suggested there could be “possible sanctionable activity” on 15 different vessels operating in proximity to Fortuna that have assisted with the Russian pipeline construction. The administration has wide discretion on how to enforce sanctions. The administration said another 18 entities were exempt from sanctions because they had halted activity under pressure.

Book said the Biden administration could still yet sanction other entities in another report due in May.

Biden’s rationale: But he said the light touch applied by the administration so far indicates Biden could be looking to “stand down” in order to remove Nord Stream 2 as an irritant in relations between the U.S. and Germany, enabling the two allies to present a united front against Russia.

Just last week, Biden, speaking at the Munich Security Conference, called on the U.S. and Europe to take on China and Russia.

Germany Chancellor Angela Merkel and other Western European leaders have bristled at U.S. sanctions as interference with its sovereignty, viewing the pipeline as a commercial project.

“The pitch Biden gave is: The U.S. and Europe need to ally closely together against Russia and China,” Book said. “To do that they need to get rid of things that divide them. Nothing connects or divides like a pipeline.”

Anna Mikulska, a nonresident fellow in energy studies at Rice University’s Baker Institute, told Josh that stiffer sanctions could “unleash a diplomatic crisis at the time when the U.S. administration wants to encourage more Transatlantic collaboration.”

Reading between the lines: Biden, like the Trump administration, has emphasized he opposes Nord Stream 2 for its potential to increase Europe’s reliance on Moscow for energy.

But last week, White House press secretary Jen Psaki noted “sanctions are only one among many important tools to ensure energy security.”

In another sign of a possible stand down, hawkish Democrats who backed sanctions before, led by Sen. Jeanne Shaheen, were quiet on the new State Department report, signaling potential deference to Biden easing pressure on the pipeline.

Book and Mikulska said Biden and Germany could seek a diplomatic bargain.

In exchange for Biden waiving sanctions, Europe, for example, could bend to import more U.S. LNG in the name of diversification after recently taking a tough line to importing American natural gas because of methane emissions.

“I don’t know what the deal will look like, but the nature of the negotiation is to get the U.S. and Europe aligned on Russia issues,” Book said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

BROUILLETTE SOUNDS OFF ON BIDEN CHINA AGENDA, GRID RESILIENCE: Former Trump Energy secretary Dan Brouillette says Biden’s climate envoy John Kerry is “misguided” to think he can set aside the biggest confrontations with China to cooperate on combating climate change.

“China is going to play them,” Brouillette told Josh in a wide-ranging interview last week.

Brouillette doesn’t trust China’s pledge to reach carbon neutrality by 2060. To get on that path, critics say, China should be aiming to reduce emissions this decade, not just stop growing them, by reducing its consumption of coal.

“They will agree to some 2060 target and have no intention of meeting any of it,” Brouillette said. “If they can get relief on the trade side and make some cockamamie commitment for 2060, they will do it. The Chinese are pretty sophisticated players and see through these comments [from Kerry].”

Texas grid crisis reflections: Brouillette, a Texas native, was closely following the power shortage crisis happening in his home state last week. He did not follow other Republicans in blaming renewables for failing to keep the lights on (coal and natural gas represented more than half of the power that dropped offline during Texas’s energy crisis).

Brouillette was careful how he spoke about his proposal to FERC with his predecessor Rick Perry to provide subsidies for coal and nuclear plants for storing fuel on-site.

“We never pretended to have the absolute right idea,” Brouillette said. “We just wanted to have the discussion.”

He advised Biden to emphasize grid resilience as part of his infrastructure investment agenda, which is expected to include efforts to modernize the grid against worsening extreme weather events from climate change.

“Resiliency needs to be part of the conversation,” Brouillette said.

Read more from the Brouillette interview, including his endorsement of the Biden DOE’s climate innovation funding push.

TEXAS CRISIS IS A WAKE-UP CALL FOR THE GRID: The rare deep freeze that left millions in Texas without power last week should be a massive signal to policymakers to reform the power grid, energy experts told Abby for a story posted over the weekend.

While the United States has learned from extreme events in the past, such as determining to build power substations on higher ground after Hurricane Sandy so they aren’t as vulnerable to storm surge, it’s always “reactive,” said Arshad Mansoor, CEO of the Electric Power Research Institute.

“The design basis of the grid was based on the weather normal we had 50 years ago,” Mansoor told Abby. “That design basis will have to evolve.”

That evolution includes not just the physical infrastructure but also the way power markets are designed, to reward efforts power providers take to bolster resilience to extreme weather. Many power plants in Texas faltered last week because they weren’t mechanically prepared to handle freezing temperatures and had little financial incentive to winterize their equipment in the past.

But as the grid grapples with building up resilience to extreme events, it is also undergoing rapid change, as it incorporates more renewable energy and prepares to take on more load as sectors such as transportation increasingly electrify. All of that puts new stressors on the grid.

Much more in Abby’s weekend story.

DEMOCRATS SHARPEN PROBES: Democrats in Congress are sharpening their attacks and questions about the failure of Texas, a Republican-led state, to prevent its grid from succumbing to a winter storm last week.

Senate Majority Leader Chuck Schumer tweeted at FERC and NERC, both independent agencies, urging them to focus their previously announced investigation into the failures of the power system on how Texas Gov. Greg Abbott’s “policies in Texas have failed & exacerbated the winter storm crisis.”

“Ignoring warnings, lying about the climate crisis, refusing to act on it are exactly what’s exacerbating extreme weather,” Schumer said Friday.

In the House, Democratic Rep. Ro Khanna of California, the chairman of the Oversight Committee’s environment subcommittee, announced a probe that he says will focus on the “failure of fossil fuels” in Texas.

“We need to know why so many fossil fuel sources failed, why ERCOT wasn’t better prepared, & who participated in the conspiracy to falsely blame renewables,” Khanna tweeted Friday.

Energy and Commerce Committee Democrats, led by Chairman Frank Pallone, also sent Abbott a letter Friday demanding to know why Texas facilities failed to weatherize as federal regulators called on them to after a similar cold weather event in 2011.

Consumers suffering, not just in Texas: Democratic Sen. Tina Smith of Minnesota is calling for federal investigations into possible price gouging of natural gas in the Midwest, which also suffered extreme cold and outages last week.

Smith said natural gas spot prices spiked as high as 100 times normal levels, forcing high costs upon utilities and other natural gas users, many of which were passed on to customers.

In a letter sent Saturday to federal regulators, obtained by the Associated Press, Smith said the price spikes harm consumers and also “threaten the financial stability of some utilities that do not have sufficient cash reserves to cover their short-term costs in this extraordinary event.”

BIDEN PICKS TRUDEAU FOR FIRST BILATERAL MEETING: Biden will hold a virtual meeting with Canadian Prime Minister Justin Trudeau tomorrow, and energy and climate issues are on the agenda, the Washington Examiner’s Mica Soellner reports.

Biden is expected to discuss climate change, strengthening the partnership between the United States and Canada, the two nations’ economic ties, and combating the COVID-19 pandemic, the White House said.

In a previous phone call, Biden acknowledged Trudeau’s “disappointment” regarding the new president’s decision to reject the Keystone XL oil pipeline from Alberta, Canada to the U.S.

But the two leaders seem eager to bury the hatchet and move toward reducing emissions globally.

BIDEN’S PLEDGE TO COAL WORKERS WILL TAKE ‘ENORMOUS’ WORK: The major U.S. utility workers union sees hopeful signs in some of Biden’s early moves to help fossil fuel regions, but its officials are cautioning it will be challenging for Biden to keep his pledges.

That’s in part because other energy job opportunities, such as working in wind or solar energy, either aren’t a direct match for workers’ skill sets or lack the economic benefits offered by their prior jobs.

When a coal-fired power plant shuts down, those individual workers “probably just lost the best job they ever had and probably the best job they might ever have,” said Lee Anderson, director of government affairs for the Utility Workers Union of America, told Abby in a recent interview.

Utility jobs tend to have relatively high union density, with some of the best working-class wages in the economy and benefits such as pension access and “solid” healthcare plans, he added.

“Those things were all the result of decades of collective bargaining,” Anderson said. “You don’t just get that back with the wave of your hand.”

Anderson said his union and others in labor will be watching closely the interagency working group Biden established in his sweeping climate executive order focused on “coal and power plant communities and economic revitalization.” Biden directed that group to issue a report with policy recommendations within 60 days of the Jan. 27 order.

More in Abby’s story in this week’s Washington Examiner magazine.

EPA BACKS BIOFUELS IN RFS DISPUTE: The EPA announced this morning that it agrees with a federal appeals court ruling early last year sharply restricting the agency’s ability to issue exemptions from biofuels blending requirements to small oil refiners.

The move represents a shift in the EPA’s position from the Trump administration, which had objected to the 10th Circuit’s ruling but ultimately declined to appeal it. And the EPA’s new position comes after the Supreme Court agreed to take up an appeal of the 10th Circuit decision from several oil refiners.

Biofuels producers had accused the Trump administration of too liberally granting exemptions to small oil refineries, undermining the Renewable Fuel Standard program. Oil refiners, however, have argued they need the exemptions because complying the RFS places too much of an economic burden on small facilities.

ENERGY DEPARTMENT TO REVIEW TRUMP EFFICIENCY ROLLBACKS: The Energy Department is considering pausing, revising, or revoking several Trump administration actions that weakened energy conservation standards for appliances, the agency said in a memo Friday.

The rules under review include actions relaxing energy and water conservation standards for dishwashers, clothes washers, and showerheads that appeared to be a response to complaints from former President Donald Trump about water pressure and cycle time in those appliances. Much of the appliance industry was opposed to those particular changes.

The Energy Department is also reviewing actions that made overall changes to how the agency sets energy efficiency standards, changes largely supported by industry but that environmental groups said would lead to weaker rules.

“By reviewing these rules and regulations, the Department of Energy will determine whether policy changes are necessary to lower Americans’ energy bills, create manufacturing jobs in the U.S., and cut down on polluting carbon emissions,” said Kathleen Hogan, acting under secretary for science and energy, in a statement.

ENVIRONMENTALISTS RAMP UP PRESSURE ON CONGRESS: A coalition of 51 environmental and public health groups are calling on congressional leaders to include 10-year extensions of wind and solar tax credits, consumer incentives for zero-emission vehicles, and new tax credits for electric transmission and clean energy manufacturing, along with many other clean energy investments, in any economic recovery package.

Achieving Biden’s target of carbon-free power by 2035 “will require a combination of tax incentives, direct spending programs, and other energy and pollution standards to deliver swift and lasting change,” the groups wrote in a letter today to Schumer and House Speaker Nancy Pelosi.

The groups, which include the Environmental Defense Fund, Center for American Progress, Natural Resources Defense Council, and Sierra Club, said Congress must act to put the U.S. on track to cut greenhouse gas emissions by at least 90% by 2050.

The Rundown

Politico Biden squeezed between promises to go green and bolster unions

Bloomberg Exxon pushed for net-zero goal by activist shareholder

New York Times Texas blackouts point to coast-to-coast crises waiting to happen

Bloomberg Days before blackouts, one Texas power giant sounded the alarm

Texas Tribune Texas officials block electricity providers from sending bills, disconnecting utilities for nonpayment

Reuters OPEC, US oil firms expect subdued shale rebound even as crude prices rise

Calendar

TUESDAY | FEB. 23

9:30 a.m. SD-366 Dirksen. The Senate Energy and Natural Resources Committee will hold a confirmation hearing for Deb Haaland to be Interior secretary.

WEDNESDAY | FEB. 24

10 a.m. G-50 Dirksen. The Senate Environment and Public Works Committee will hold a hearing titled, “Building Back Better: Investing in Transportation while Addressing Climate Change, Improving Equity, and Fostering Economic Growth and Innovation.”

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