Biden to ramp up regulatory push on climate

  • Market: Crude oil, Emissions, Natural gas
  • 01/10/22

US president Joe Biden is setting out an aggressive regulatory agenda this year to reduce greenhouse gas emissions, as Democratic lawmakers remain deadlocked over how to enact ambitious climate policy through a major spending bill.

The White House initially looked to the Democratic-controlled Congress to handle the heavy lifting on climate policy, given the difficulty of achieving lasting emissions cuts through regulation by executive agencies. Biden's initial plan for climate legislation included a carrot-and-stick programme to support clean electricity, subsidies for electric vehicles, an import fee tied to carbon intensity, a fee on excessive oil and gas methane leaks, and clean energy tax incentives.

But opposition from moderate Democrats has already cut the bill's cost in half, to $1.85 trillion, and its more restrictive climate policies have been taken out. Further cuts are likely after West Virginia senator Joe Manchin, a Democrat, last month said he could not support the bill as written. The White House is still negotiating but says there are "multiple paths", including regulation, to meet Biden's goal of cutting US carbon emissions by 50-52pc from 2005 levels by 2030.

The highest-profile climate regulations will introduce limits on methane emissions from existing oil and gas facilities, an action that environmental agency EPA intends to finish by October. But the administration could have a trickier path as it attempts to propose a rule by this summer to limit greenhouse gas emissions from power plants. The US Supreme Court in 2016 halted EPA's first attempt at power plant CO2 regulation, and the court on 28 February will hear a case brought by states and industry groups that want to permanently curtail EPA's climate authority over power plants.

The White House as early as next month separately plans to reverse former US president Donald Trump's decision to water down enforcement of a 1970 law to eliminate consideration of climate change when the government studies how its actions could affect the environment. US public land regulator BLM also plans to propose and finalise broad changes to how it collects royalties and limits flaring on oil and gas producers located on federal land.

Biden finished one major climate rule last month by raising mileage targets for cars and trucks to the equivalent of 40 miles/USG by model year 2026, which is 35pc higher than standards for vehicles sold today. The administration expects it will take until 2024 to finalise tougher mileage standards to apply beyond then.

Full disclosure

Independent federal agencies that regulate the energy and financial sectors are preparing for action on climate change in 2022, after spending much of last year dealing with confirmation delays that prevented Democratic appointees from holding majorities. US energy regulator Ferc intends to soon propose revisions to a 1999 policy that governs when it is in the public's interest to approve interstate gas pipelines and LNG export terminals. That could offer guidance about when a project makes a "significant" contribution to climate change that should be mitigated, Ferc's Democratic chairman Richard Glick says. Ferc has already taken comment on whether it could require project developers to cut their emissions by installing carbon capture technology, planting trees or buying emission offsets.

US securities regulator the SEC aims to propose early this year "clear rules of the rule" for what publicly traded companies must tell investors about their climate risks and emissions targets, agency chairman Gary Gensler has said. Gensler has pushed SEC staff to hold climate disclosures to the same standard used for financial performance, rather than a more flexible approach backed by oil companies and large business groups.


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