Biden's climate carrots, not sticks

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With help from Kelsey Tamborrino and Catherine Morehouse.

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Quick Fix

— President Joe Biden appears ready to focus on the climate carrot over the stick, telling a town hall he would be happy taking money from a punitive measure and moving it to promote clean energy.

— The pair of wind turbines off the Virginia coast could herald the beginning of new industry that sprouts clean energy along country's shores — if it can navigate a sea of challenges.

— Tensions at FERC are coming to the fore, as commissioners dig their heels in for battles over pipelines and the plans for Southeast energy market.

HAPPY FRIDAY! I’m your host, Matthew Choi. NRDC’s Joan Matthews gets the trivia for knowing Amy Brookheimer went to UPenn in “Veep.” For today: Ryan Bingham tried to collect 10 million miles with what airline in “Up in the Air”? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.

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Driving the Day

SPARE THE ROD: President Joe Biden told a CNN town hall Thursday night the U.S. doesn't have to impose penalties on fossil fuels to bring down the nation’s emissions. That's an implicit acknowledgment that the Clean Electricity Performance Program's punitive measures for utilities that don't cut carbon aren't going to be part of any climate legislation in the budget reconciliation bill, a stance Sen. Joe Manchin has been adamant about.

Still, Biden insisted the CEPP wasn't dead — despite lots of evidence to the contrary — and that the $150 billion planned to go toward that program would be redirected to other strategies. "I'm going to add it to be able to do things ... that don't directly affect the electric grid in the way that there's a penalty, but allow me to spend the money to set new technologies in place," he said.

Biden also did some pretty big rounding, saying that "well over a trillion dollars" was devoted to climate change in the package. That's a few hundred billion over the spending likely under consideration, even if the package is still in flux.

And as our Kelsey Tamborrino reports, clean energy tax credits are increasingly shaping up to be a point of agreement across the party. House Ways and Means Chair Richard Neal told reporters that Sen. Kyrsten Sinema, a moderate who has pushed her caucus to lower the topline figure of their reconciliation package and who spoke with Neal Thursday, supported the clean energy tax proposals that went out of his committee earlier this summer.

The proposals would offer long-term extensions of the Production and Investment tax credits, with direct-pay options for several key tax breaks — which has been lauded by environmentalists as a game changer to make the benefits more accessible. Still, the future of clean energy tax credits under reconciliation remains in flux, with Neal’s tax package clashing with Senate Finance Chair Ron Wyden’s vision of combining a smorgasbord of clean energy tax breaks into three emissions-based incentives for clean electricity, clean transportation and energy efficiency.

Neal told Kelsey that he and Wyden were close to reaching an agreement, saying it was “likely” they would reach a compromise, such as one where tax credits follow the House model for four or five years before the Senate model takes over. Read more for Kelsey.

Around the Agencies

CLIMATE’S RISKY BUSINESS: The Financial Stability Oversight Council released its long-awaited report on climate change Thursday, declaring it an emerging threat to the country’s financial system and charting a path to assess and prepare for the risks. The council plans to create a committee dedicated to climate risks across member agencies, as well as an advisory committee with outside experts. The report also outlines further research goals to better gauge climate risks.

FSOC was formed in the wake of the 2008 financial crisis to assess major risks to the U.S. financial system. Environmentalists had hoped for the report to push regulators like the Federal Reserve to try to curb investments into fossil fuel projects, but it stopped short of doing so.

“This report makes it clear that financial regulators understand the need for action to ensure that the climate crisis doesn’t cause the next financial crisis,” said Ben Cushing, campaign manager of the Sierra Club’s Fossil-Free Finance campaign. “However, by leaving out key risk-reduction tools, it is not treating the problem with the urgency it deserves,” he added, calling it “a missed opportunity.” Pro’s Victoria Guida has more.

NAT SEC TOO: The financial sector isn’t the only worry for the administration. Climate change also poses a major security risk, the Biden administration declared in a suite of reports from key national security agencies Thursday. The Office of the Director of National Intelligence issued its first National Intelligence Estimate on Climate Change; the Pentagon released its own review on how climate change will alter defense; the Department of Homeland Security created a strategic framework on defending the country and its individual communities from climate threats; and the White House crafted a report on the links between climate change and migration. The National Security Council is also putting together a standing interagency working group tackling climate change and migration.

“We are already experiencing the devastating impacts that climate has wreaked on almost every aspect of our lives, from food and water insecurity to infrastructure and public health, this crisis is exacerbating inequalities that intersect with gender, race, ethnicity, and economic security,” the White House said in a statement. “We have reached a point where we cannot reverse some of the changes to the climate system.”

XIE YOU SOON: U.S. climate envoy John Kerry will get some face time with his Chinese counterpart, Xie Zhenhua, late next week in London, Pro’s Zack Colman and Phelim Kine report. The meeting will come just before the Glasgow climate conference and could be a final attempt to get the world’s largest carbon emitter on board for more stringent climate goals.

China has been a major focal point for Kerry, who has been pushing the country to set more ambitious goals than its current target to peak emissions around 2030. He has also criticized the country for constructing new domestic coal plants. Read more from Zack and Phelim.

Industry Intel

ANY WAY THE WIND BLOWS: The Biden administration is hoping to build out 30 gigawatts of offshore wind power by 2030 — enough to power 10 million homes. It’s an ambitious goal that will shrink emissions while spurring growth in high-paying jobs. But that kind of scale-up will be a challenge, with only two small offshore wind projects currently running in the U.S. and the scars from the shuttered Cape Wind project off the Massachusetts Coast fresh in people’s memories.

Kelsey took to the open ocean recently to have a look at the pair of Dominion turbines that are literally testing the waters off the Virginia coast to see how the company's planned 2,600-megawatt offshore project might one day look. But before that happens, the company will have to clear environmental permitting hurdles, opposition from fisherman and a constrained domestic supply chain to bring its Coastal Virginia Offshore Wind project to fruition. Kelsey lays out the rough sailing ahead here.

On the Hill

TALIBAN METAL: House Republicans are having a forum on Afghanistan’s critical minerals, casting the U.S. withdrawal from the country as handing the Taliban access to one of the world’s largest deposits of vital minerals and metals necessary for clean energy technology.

Hosted by Natural Resources ranking member Bruce Westerman and Energy and Commerce ranking member Cathy McMorris Rodgers, the forum follows recent Republican criticism against Democrats. They point out that the transition to renewable energy will increasingly rely on minerals sourced in countries with shabby human rights records and that the U.S. withdrawal from Afghanistan added a Taliban-controlled Kabul to that list. China has also signaled interest in potentially tapping into the Afghan market. You can watch the forum here at 10 a.m.

FERC World

HOT FERC FALL?: Partisan tensions flared during FERC’s open meeting on Thursday over recent commission deadlocks, as well as its gas pipeline policy. Republican commissioners Mark Christie and James Danly accused Democratic commissioners of voting against a Southeast energy exchange proposal for the wrong reasons — namely, their preference for the utilities there to form a regional transmission organization.

“The opposition was about one thing and one thing only, and that was a well-organized campaign by numerous special interest groups to force all states into federally regulated RTOs,” said Christie.

But Commissioner Allison Clements said she opposed the proposal for a lot of reasons, none of which had anything to do with whether the region should form an RTO. “We cannot reject the (utilities' filing) on the basis that an RTO would deliver greater benefits,” she said. “On that point, we all agree.” Chair Richard Glick told reporters that he had nearly voted in favor of the proposal, but ultimately withdrew his support because of a provision in the plan he fears will give FERC less oversight.

Danly and Glick also clashed — again — over their differing opinions on how FERC should approach pipeline policy. Following a staff presentation highlighting gas scarcity issues across the U.S., Danly attacked recent FERC decisions to weigh climate and environmental justice in its pipeline deliberations as cause for further market uncertainty. Glick responded that Danly was conflating unrelated issues.

Meanwhile, FERC voted 3-1 to reject a complaint against the Tennessee Valley Authority brought by utility members who want to be free to shop elsewhere for their power. Despite voting to strike down the complaint, Glick said he took “very seriously” allegations from member companies that TVA retaliated as a result of the complaint, and had looked into involving the Office of Enforcement.

FERC also ordered hydropower facility Ampersand Cranberry Lake Hydro, LLC, to defend itself against a $600,000 civil penalty incurred by alleged safety violations at its site. The commission issued repeated warnings to the company, according to Glick, who pledged to move forward on a notice of inquiry related to ensuring funds are available for dam safety. Ampersand said it was still reviewing the order, and declined to comment. Catherine Morehouse has more for Pros from the Thursday meeting.

Beyond the Beltway

MODI TO COP26: Indian Prime Minister Narendra Modi will attend the U.N.’s climate conference in Glasgow, Scotland, next month, Reuters reports. India is the world’s third largest carbon emitter after China and the United States, and so far, only the U.S. has confirmed its head of government’s attendance among the other top four emitters. Russian President Vladimir Putin will not attend in person, though he is expected to tune in virtually as he deals with the pandemic in his country.

WATERING DOWN IPCC: The BBC got its hands on more than 32,000 submissions from governments, industry groups and other parties weighing in on the sixth Intergovermental Panel on Climate Change report, showing efforts by several countries reliant on high-emitting industries to tone down the report's language on their role in climate change. Saudi Arabia, Australia and Japan sough to water down the report’s call to shift away from fossil fuels, while Brazil and Argentina strongly disputed the draft report’s language on meat consumption’s role in climate change.

Saudi Arabia, Norway, Argentina and OPEC all took issue with the scientists’ line saying "the focus of decarbonisation efforts in the energy systems sector needs to be on rapidly shifting to zero-carbon sources and actively phasing out fossil fuels." And Switzerland submitted several comments reshaping the report’s call for rich countries to offer financial support to developing countries to meet emissions targets. Read more from the BBC.

The Grid

— “Newsom proposes 3,200-foot buffer between new oil wells and homes,” via POLITICO.

— “Israel considering new pipeline to boost gas exports to Egypt,” via Reuters.

— “Plastics poised to overtake coal as climate driver,” via E&E News.

— “G-20 Leaders Lower Ambitions to ‘Consign Coal to History,” via Bloomberg.

— “Global finance industry sinks $119bn into companies linked to deforestation,” via The Financial Times.

— “France to give citizens €100 payment to cope with rising energy prices,” via POLITICO Europe.

— “Putin: Nord Stream 2 to start gas sales to Europe right after its approval,” via Reuters.

THAT’S ALL FOR ME!