Four Takeaways From Manchin Energy Hearing

 

February 5, 2023 - A hearing of the Senate Energy and Natural Resources Committee on Thursday offered a preview of coming battles between the Department of Energy and Congress.

The sole witness was Deputy Energy Secretary David Turk, who defended the administration’s tentative decision to subsidize a U.S. lithium-ion battery producer with controversial ties to China (E&E Daily, Feb. 3).

Turk also addressed lawmaker concerns about DOE’s publication of a rule this week on efficiency of gas stoves and said the department is implementing $62 billion in clean energy grants from the bipartisan infrastructure law with a “sense of urgency.”

“We are together rebuilding American manufacturing and increasing American competitiveness,” said Turk, a longtime federal government veteran and energy expert. “We are also working with a sense of deliberateness and professionalism, understanding that we are entrusted with investments being made by our fellow taxpayers.”

In several cases, Energy and Natural Resources Chair Sen. Joe Manchin (D-W.Va.) and committee ranking member Sen. John Barrasso (R-Wyo.) were in agreement in their criticism, signaling there could be bipartisan pushback against the administration this year on key energy issues, including policies on carbon capture and storage technology.

The hearing also provided new details on the billions of dollars now awaiting disbursement at DOE from the infrastructure law and Inflation Reduction Act, which could be pivotal for Biden’s plans to overhaul the U.S. energy sector and decarbonize the grid by 2035.

“We are making a record level of investment in the United States to unleash an unprecedented level of private sector investment, so we can win the innovation and opportunity war, I guess, of the future,” Sen. Maria Cantwell (D-Wash.) said at the hearing.

But energy experts, along with the DOE inspector general, have spelled out serious concerns in recent weeks about DOE’s capacity to implement the money without glaring missteps like Solyndra, a solar company that went bankrupt during the Obama administration after federal support (Energywire, Jan. 27).

Here are four takeaways from the hearing:

Calls for more oversight

 

Manchin and other committee lawmakers challenged Turk for DOE’s selection of Microvast Holdings Inc., a battery producer with ties to China, for a $200 million grant in October.

The Securities and Exchange Commission recently added Microvast to a list of companies subject to potential intellectual property violations in China after the company admitted to intellectual property risks in SEC filings.

“Now we know that the department has funneled hundreds of millions of dollars to a company that publicly admits it is at the beckon call of the Chinese government,” Barrasso said.

But it turns out that money hasn’t yet gone out the door yet, according to Turk.

“It was selected to negotiate an award. There are no taxpayer funds going to Microvast,” he said.

Turk’s comments come after Kathleen Hogan, principal deputy undersecretary for infrastructure, told Barrasso in a letter dated Feb. 1 that DOE “reserves the right to cancel the award negotiations and rescind the selection.”

“With DOE funding and the company’s matching financial investment, Microvast plans to build a polyaramid separator material production plant in Clarkesville, Tennessee, bolstering domestic supply chains for lithium-ion batteries and creating well- paying jobs in the United States,” Hogan said. “The technology was developed in China and would be manufactured in the U.S. for the first time, obviating the typical risk of intellectual property loss.”

Barrasso, who said he only received the letter the morning of Turk’s testimony, called for more funds for the DOE inspector general.

CCS and EPA

 

Manchin and Republicans teamed up again to attack the Biden administration for allegedly undercutting infrastructure law funding for carbon capture, utilization and sequestration (CCUS) technology.

The lawmakers lambasted EPA for what they said was slow-walking permits for CCUS wells, known as Class VI wells, and failing to approve pending applications from Louisiana and Texas to takeover permitting primacy from EPA.

“We’re never going to meet what we need to do with carbon capture because of the permitting process,” said Manchin, who represents a fossil fuel-heavy state that could benefit from such projects.

EPA has approved only two Class VI wells and dozens more are pending. To date, the agency has awarded permitting primacy to Wyoming and North Dakota (Energywire, Oct. 3, 2022). An EPA spokesperson said the agency is continuing to review the Louisiana application. “We do not have a specific time for when the review will be complete,” the spokesperson said.

Christopher Guith, senior vice president at the U.S. Chamber of Commerce’s Global Energy Institute, said the primacy approvals will speed up progress with CCUS.

“The Clean Water Act explicitly allows for delegating this authority to the states,” Guith said. “Generally speaking, that’s where it should be because state regulators are much better equipped than the feds to understand the geology and the hydrology and to process these permits.”

Carbon capture technology creates tricky politics for the administration. Many groups say it is critical to decarbonize the power sector as Biden wants, but some environmentalists and members of the Democratic party’s left flank slam the technology as an expensive boost for fossil fuels.

Turk insisted the U.S. is positioned well to be a global leader in carbon management. “We have a phenomenal opportunity on CCUS,” Turk said. “We’re trying to work with EPA.”

Gas stove furor

 

Earlier this week, DOE advanced rules to increase efficiency metrics for gas stoves and ovens (Energywire, Feb. 1). That prompted a sharp rebuke from Manchin, who said “I don’t like where I think they’re going with this,” referring to DOE.

“They’re not taking my gas stove out,” Manchin said. On Tuesday, he and Sen. Ted Cruz (R-Texas) introduced legislation to ban a potential ban. Manchin also teamed up with Sen. James Lankford (R-Okla.) to request information from the Consumer Product Safety Commission on its ongoing plans to regulate gas stoves.

But DOE did not float a ban on gas stoves in its proposal, and Turk downplayed the threat of aggressive regulatory action against the appliances, a prospect that has rocked Washington recently.

“The White House has been clear on this. The president does not support banning gas stoves,” Turk said. “The Department of Energy does not support banning gas stoves. We do do efficiency regulations for all sorts of appliances.”

In recent months, Consumer Product Safety Commissioner Richard Trumka Jr. signaled the agency is exploring a ban on gas stoves, although the White House and federal officials later said a prohibition was not being planned.

The American Gas Association, meanwhile, is expressing some concerns with the DOE proposal. But Andrew deLaski, executive director of the Appliance Standards Awareness Project, said DOE is not legally capable of banning — or regulating out of existence — gas stoves or any other product.

“It’s not unfair for anyone to say they disagree with state governments potentially prohibiting gas stoves (which contribute significant indoor air pollution), or that they don’t want a federal agency to do so (none has yet proposed to, though some may have the authority),” deLaski said in a column. “But the Department of Energy’s appliance standards simply aren’t authorized to do so, a fact that the industries involved surely know.”

Nuclear fuel supply

 

Barrasso urged DOE to repurpose a portion of a $6 billion nuclear bailout in the infrastructure law, known as the Civil Nuclear Credit program, to instead shore up uranium supply for U.S. nuclear producers. Currently, DOE is eyeing some of the funds to support struggling nuclear reactors, including the Diablo Canyon power plant in California (Energywire, Jan. 30).

On top of the $6 billion bailout, nuclear producers in the United States are also eligible for a production tax credit under the Inflation Reduction Act.

“The tax credit is more than sufficient to address the economic needs of the existing reactors,” said Barrasso. “These same reactors are now facing a new challenge, a different challenge, and that’s eliminating their dependence on Russian uranium.”

In 2021, U.S. uranium mines produced 21,000 pounds of uranium concentrate, an 88 percent decrease from 2019 production levels, according to the U.S. Energy Information Administration. That year Russia supplied roughly one-seventh of all uranium purchased by U.S. producers.

Last Congress, Barrasso introduced bills to ban Russian uranium imports and to create a U.S. uranium reserve.

“We support both taking care of our existing reactors and we support a very robust, aggressive uranium strategy for low-enriched uranium and HALEU,” Turk said at the hearing, referring to the high-assay low-enriched uranium used in more advanced reactors.

It’s not clear whether DOE has the authority to repurpose funds from the Civil Nuclear Credit program. Matt Crozat, the executive director of policy development at the Nuclear Energy Institute, said the option was worth looking into.

“While we still think there’s going to be opportunities for the Civil Nuclear Credit program, we don’t know that all that funding will be necessary, and the importance of this fuel supply is such that we’ll be looking for options anywhere we can,” Crozat said.