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Republican House OKs pro-drilling energy bill that's unlikely to pass Senate. It's still a rebuke of Biden's climate agenda and a 2024 weapon.
11:53am ET 3/30/2023 MarketWatch
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By Rachel Koning Beals
Oil and gas initiatives are a nonstarter in a Democrat-controlled Senate, Leader Schumer says. But Republicans' energy priorities are a key pillar of the party's election platform.
Republicans see value in using their political energy to advance a counter proposal to President Joe Biden's climate-change and renewable-energy agenda. That's because their pro-oil energy bill -- which the GOP-run House of Representatives approved in a 225-204 vote on Thursday -- faces certain death in a Democrat-controlled Senate.
Instead, California Rep. Kevin McCarthy, the House's speaker, and House Majority Leader Steve Scalise, from drilling state Louisiana, are bolstering their energy platform now with an eye to the 2024 election that will include a fight for the White House.
Named the "Lower Energy Costs Act," the legislation draws from a number of bills advanced by House committees that focused primarily on long-held Republican priorities, such as boosting fossil-fuel production. House leaders even assigned the bill the honorable designation H.R. 1, perhaps to signify its importance to the GOP majority that won back the House in the midterms.
Essentially, Republicans want to downplay the arguably longer-term risks of dangerously rising global temperatures that result from greenhouse gas emissions put off by coal, oil and gas, and focus on providing the lower costs they assign to a wide offering of energy sources. That leaves traditional energy at the heart of their platform, but can include wind, solar, nuclear, hydrogen and other alternatives (ICLN), with GOP priority given to market-based solutions in these areas, they say.
Related:Earth-warming carbon-dioxide emissions hit a record high in 2022 as air travel roared back to life
Plus, Republicans view their proposals as key to the reinvigoration of U.S. energy (XLE) independence, cutting reliance on the volatile Middle East and Russia.
"This [GOP] bill counters President Biden's attack on our domestic energy and includes permitting reforms that will speed construction for major infrastructure projects across the country," McCarthy said in a March 14 news release.
Read:Biden approves Willow oil-drilling permit in Alaska. It's a 'carbon bomb,' one group says
Added Scalise: "Gas and utility costs have skyrocketed to record highs, with the average American paying over 40% more for their gas since President Biden took office."
Permitting: An area of cooperation?
Republicans have used the package to attack Biden's cancelation of the Keystone XL gas pipeline expansion and are proposing to ease cross-border pipeline permitting.
The bill also directs regulatory agencies to speed up the approval of energy project permitting, an idea that has the backing of West Virginia Democrat Sen. Joe Manchin, known to sometimes side with Republican energy-state pols given his own state's energy revenues.
Permitting may be a key area of cooperation since streamlining the current multiple-year process is seen getting more alternative energy online sooner along with traditional energy. Faster permitting could also boost upgrades to a dated power-transmission system that will need to be more robust to handle rising demand. The nation's grid will be in greater use to power lower-polluting electric cars and the heat pumps meant to replace furnaces and AC cooling, plus other appliances in the push for electrification over natural gas.
The Biden administration has pledged to zero out carbon emissions from the power sector by 2035.
Still, as written, the GOP bill is "dead on arrival" in his chamber, said Senate Majority Leader Chuck Schumer, the Democrat of New York, after its language was released earlier this month.
"HR 1 is useful for Republicans as a messaging bill that indicates how they are working to bring down energy costs for consumers, opening a line of attack against President Biden in the runup to the 2024 presidential election," said the political analysts at Washington-based Beacon Policy Advisors, in a note.
"Finding a compromise that's acceptable to both Senate Democrats and House Republicans and can pass under divided government will be challenging though," they added. "Moreover, political dynamics in the Senate create an uphill climb for permitting reform."
Biden, Schumer and their fellow Democrats last year passed a climate-heavy broad spending bill known as the Inflation Reduction Act. That law, especially when piggybacked with a bipartisan infrastructure (PAVE) bill passed a year earlier, has been billed by supporters as the largest U.S. action to combat climate change to date.
Inside the $600 billion IRA is $370 billion dedicated to supporting a renewable-energy buildout and global-warming resiliency measures. The IRA mandates a nationwide reduction of carbon emissions by roughly 40% as soon as 2030, a pledge that allows the U.S. to keep up with much of the industrialized world in this fight.
Read: Here's how the Inflation Reduction Act's rebates and tax credits for heat pumps and solar can lower your energy bill
The Biden agenda handed consumers, businesses and local government agencies a list of tax incentives and other sweeteners meant to put more solar power on rooftops and more electric vehicles(TSLA)(RIVN)on U.S. roads, but also gave money to technologies such as Republican-favored carbon capture and storage, which aims to let more traditional oil and gas remain on the market, just with fewer emissions.
Read:Carbon capture, nuclear and hydrogen feature in most net-zero emissions plans and need greater investment: report
But Republicans aren't convinced the IRA offered enough to energy states, and they want some incentives tossed altogether.
IRA rollbacks and more LNG
Also in the Republican proposal is a repeal of a new Biden-favored methane emissions fee. Methane, released when natural gas is captured and from landfills and some agricultural practices, is a more-potent but shorter-lasting greenhouse gas than carbon dioxide. These emissions' short life positions them as a favorite and "attainable" target by the Biden administration and emissions-fighting groups.
The GOP bill calls for the elimination of plans for a "green bank" to spur low-carbon projects enacted under Democratic control last year.
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According to a summary, the bill would also lift restrictions on the import and export of liquefied natural gas(LNG). It would eliminate royalties that companies(CVX)(XOM) pay to extract fossil fuels from federal land or waters.
The legislation would mandate that the Interior Department publish a five-year plan and that it include oil and gas leasing. The bill would also end a federal moratorium on the leasing of coal from federal land.
And as for the details on faster permitting, the bill would require regulatory agencies to complete environmental assessments within one year and environmental impact statements, which are more rigorous, within two years.
Manchin had moved to attach his permitting proposal to spending legislation and the annual defense policy bill last year, but those efforts fell through.
The House had been expected to vote on the bill, a broader set of energy, infrastructure, permitting and environmental elements, during the last week of March. In addition to Manchin's interest, centrist Sen. Angus King, an independent of Maine, could favor more of the Republican language within the proposal, based on his past allegiance with diverse U.S. energy offerings.
"I think there is a pathway for [permitting]. I want it to start in the House; it should come over [to the Senate]," Manchin said during theCERAWeek Energy Conference earlier this month.
Beyond Thursday's vote, Republicans may be in for the long haul.
"H.R. 1, the Lower Energy Costs Act, takes a great first step to realizing these goals by cutting Washington red tape that stifles American growth," said Heather Reams, president of center-right lobbying and trade group Citizens for Responsible Energy Solutions. CRES backs alternatives such as solar, and promotes carbon capture, but wants these sources alongside natural gas and other U.S.-generated options.
"By accelerating the deployment of clean energy technologies and emission-efficient production of our energy resources and by catalyzing the development of America's mineral resources, the [act] will strengthen the United States' leadership role in reducing global emissions, make energy more affordable for American families, and decrease our reliance on Russia and China, making our nation more secure," Reams said.
MarketWatch's Victor Reklaitis contributed to this report.
-Rachel Koning Beals
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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March 30, 2023 11:53 ET (15:53 GMT)
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