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CERAWEEK: US lawmakers dismiss oil leasing pause, tout energy independence

Highlights

Reverse Keystone XL cancellation: Manchin

Shutting production doesn't end demand: Murkowski

Energy industry under assault: Cornyn

Wrapping up the final day of the annual CERAWeek by IHS Markit conference, several US lawmakers outlined legislative priorities pertaining to the energy sector, ranging from critical minerals development to mitigating cybersecurity threats.

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Speaking March 5 at CERAWeek, US Sen. Joe Manchin, D-W.Va., the new chairman of the Senate Energy and Natural Resources Committee, said the US must "challenge" itself to produce cleaner energy but noted that the transition must not leave workers behind or threaten the country's energy security. With Democrats holding a narrow majority in the US Senate, the moderate fossil fuel-state lawmaker's support will be critical to any climate proposal Democrats want to advance.

"My main goal is to make sure that we remain energy independent in America," Manchin said. "I think it's very important for us. And that means an all-of-the-above energy portfolio."

To balance those interests, Manchin and Sen. Debbie Stabenow, D-Mich., recently introduced legislation that would amend an advanced energy manufacturing tax credit to direct investment to communities that have been hurt by the transition away from coal-based electric generation. If passed, the bill would provide $8 billion for new facilities that make or recycle energy-related products, with half that money going to formerly coal-reliant communities that have not previously benefited from the tax credit.

Oil, gas concerns

Although broad bipartisan backing exists for helping displaced workers, Manchin's support for fossil fuels has occasionally put him at odds with US President Joe Biden and other Democrats. Manchin asked Biden to reverse his decision to cancel a presidential permit that would have allowed the Keystone XL crude pipeline to travel into the US from Canada.

"A pipeline is the best way to move this product," Manchin said. "We need that heavy crude, and I'd rather have it from Canada than I sure as heck would want to get it from Venezuela or countries that are basically oppressing their people."

The West Virginia senator has also raised concerns with the Biden administration's decision to pause federal oil and gas leasing, a move that two Republican senators said has affected several western states.

"Do we rely on ourselves or do we rely on foreign imports?" Manchin said. "I'm determined to be energy independent ... and it's up to us to use it in the cleanest fashion."

US Sen. Lisa Murkowski, R-Alaska, noted that her home state produces resources that can be used by manufacturing states, adding that Biden's initial slew of executive orders "really threaten our ability to engage in any level of resource development." The administration's leasing pause delayed exploration efforts in Alaska's North Slope, which contains significant oil reserves, Murkowski said. The industry conducts exploration activities during the coldest part of the year to limit its environmental impact, so even a brief delay could push such efforts back an entire year, the lawmaker said.

"These are real implications at a time when a state like Alaska has just been smacked hard," Murkowski said. "It's not as if we shut down all of our production on federal lands that that's somehow or other going to bring about a commensurate reduction in our consumption, in our demand. No, it's not. We're just going to get it from somewhere else."

The pause also dealt yet another blow to Texas' oil and gas industry, which was recovering after economic fallout from the pandemic coupled with a significant drop in oil prices in spring 2020, according to US Sen. John Cornyn, R-Texas. More recently, millions of Texans lost power for days after harsh winter weather rocked the state's energy system.

Biden's leasing pause primarily threatens Texas' offshore oil and gas sector, since the state has few onshore federal lands, the lawmaker added.

"The industry I think is under assault from people who claim to be for all-the-above or for energy diversity, which I think is the answer, when really they want to eliminate or restrict the very baseload that we need in order to keep our economies moving," Cornyn said.

Utilities have warned that Biden's goal to have a carbon-free power sector by 2035 will be tough to reach, even though the president is open to all technologies, including coal- and gas-fired plants with carbon capture. But with scientists urging additional emissions cuts to avoid the worst impacts of climate change, many lawmakers within Congress' Democratic majority want swift action.

"The science tells us we have to be at net-zero emissions no later than 2050, so a lot of those goals, we're going to have to move them up," US Rep. Kathy Castor, D-Fla., chair of the House Select Committee on the Climate Crisis, said March 5 at the CERAWeek conference.

In June 2020, Castor's committee released a sweeping blueprint to tackle climate change. Among other things, the blueprint recommended that Congress enact a federal clean energy standard to achieve net-zero emissions from the electricity sector by 2040.

With Biden in the White House, "we are working to enact our policy recommendations into law," Castor said.

Energy sector vulnerabilities

The US also has room for improvement in protecting its energy assets from cyber attacks, given the threat foreign adversaries pose to such infrastructure, Cornyn said. Entities are not obligated to report cyber breaches to the government, something Cornyn said he plans to address with legislation. Such a bill could require companies to notify the government of any cyber breaches while also including "some sort of liability protection," given the potential for reputational risks, he said.

"It's going to be controversial, I'm sure, but I think we need to do something to up our game, and I think that is really a minimum," Cornyn said. "We have to do much better. We're a big open society."

Lawmakers also noted the vulnerability of US mineral supply chains necessary for renewable energy and battery equipment, among other technology. The nation largely relies on foreign sources for the bulk of such materials, with China dominating many of these markets.

Murkowski, who previously led the Senate Energy and Natural Resources Committee, has called on the government to help alleviate the nation's foreign reliance on such critical materials. At CERAWeek, she said the US needs to have its "eyes wide open when it comes to minerals and minerals security."

"We are blessed with extraordinary mineral resources," Murkowski said. "Where we have a challenge is in our ability to be able to access them, and yet we don't seem to have too much hesitation in going to other countries that might have lousy environmental practices, that might have horrible practices when it comes to child labor laws or just labor laws in particular, and we will turn our eyes from that in an effort to get what we want."