President Joe Biden is poised to scale up his regulatory efforts to cut down on greenhouse gas emissions next year, as Democratic lawmakers struggle to enact ambitious climate policy through a $1.85 trillion spending bill that has stalled.
The regulatory actions queued up for next year include greenhouse gas emission limits for power plants, methane limits on existing oil and gas facilities, increasing royalty collection from federal oil and gas production and tightening the natural gas pipeline approval process. That sets up a more ambitious regulatory agenda than Biden's first year, when the administration focused on reversing rollbacks made under former president Donald Trump.
The White House initially hoped the Democratic-controlled US Congress would handle some of the heavy lifting on climate policy, given the difficulty of trying to achieve emissions cuts through time-consuming regulations that will be vulnerable to litigation and changes by subsequent administrations. Biden's initial $3.5 trillion framework for his spending bill included $150bn in incentives and penalties for utilities to increase clean electricity usage, subsidies for electric vehicle, an import fee tied to carbon intensity, a fee on methane emissions from oil and gas companies, and clean energy tax incentives.
But opposition from a handful of moderate Democrats has already cut the cost of the bill roughly in half, while replacing its most restrictive climate policies with subsidies in the tax code. Senator Joe Manchin (D-West Virginia) on 19 December announced he could not support the bill, meaning further cuts are likely for the bill to have a shot at passing in the evenly divided US Senate.
The White House is still negotiating on the bill but says there are "multiple paths" to meet Biden's goal to cut domestic carbon emissions to 50-52pc below 2005 levels by 2030. Those paths include methane rules, phasing out climate-warming hydrofluorocarbons and using funding in a recently enacted $1 trillion infrastructure law, the White House says.
Pen and phone approach
Democrats faced a similar dynamic in 2010 when a key cap-and-trade bill died in the Senate, leading then-president Barack Obama to shift to regulations such as mileage standards and a plan to cut greenhouse gases from power plants. Obama touted his use of a pen and a phone to act on issues when Congress deadlocked, but Trump used those same tools to soften climate rules from 2017-21.
Biden has the strongest legal footing for setting limits on methane emissions from existing oil and gas facilities, a rule the US Environmental Protection Agency (EPA) intends to finish by October. Large producers say they support regulating methane, despite opposition from smaller producers and many Republicans who see regulation as unnecessary.
The Biden administration could have a trickier path as it works to propose a rule by summer to limit greenhouse gas emissions from power plants. The US Supreme Court halted EPA's first attempt at those regulations in 2015 via the Obama-era Clean Power Plan, and the Supreme Court this year agreed to hear an appeal by states and industry groups that want to curtail EPA's climate authority over power plants.
Other high-profile climate actions set for action in 2022 include a White House plan to partly undo Trump-era changes to implementation of the National Environmental Policy Act, which removed the federal government's need under the law to scrutinize how its actions would affect climate change. The US Interior Department also plans to propose and finalize sweeping changes to how it collects royalties and limits flaring on federal oil and gas production.
Biden already finished one major climate initiative through a rule issued this month that will raise the stringency of mileage targets for cars and trucks from model years 2023-26. EPA expects to wait until 2024 to finalize tougher mileage standards that will apply beyond then.
FERC, SEC focusing on climate
Independent federal agencies that regulate the energy and financial sectors are set for more action on climate change in 2022, after key agencies spent much of this year dealing with confirmation delays that prevented Democratic appointees from holding majorities.
The US Federal Energy Regulatory Commission (FERC) aims 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. The revision could offer guidance about when a gas project would make a "significant" contribution to climate change that needs to be mitigated, its 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 LNG developer NextDecade already said it aims to capture 90pc of direct emissions from its planned 27mn metric tonne/yr Rio Grande LNG export terminal in south Texas, as it asks the agency for project approval.
The US Securities and Exchange Commission (SEC) is aiming to propose in early 2022 a regulation that sets "clear rules of the rule" for what publicly traded companies must tell their investors about their climate risks and emissions targets, chairman Gary Gensler said this summer. Gensler has pushed SEC staff to hold climate disclosures to use the same standard used for financial performance, rather than a more flexible approach backed by oil companies and large business groups.
