Biden to leverage Defense Department supply chains to fight climate change


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CLIMATE AND DEFENSE SUPPLY CHAINS: The Defense Department is seeking input on climate-related disclosures in an effort to boost the transparency of its supply chain, signaling the Biden administration is keen to reduce the emissions embedded in the agency’s massive purchasing power.

Such a step could also allow the Biden administration to direct the Defense Department’s procurement power to cleaner forms of energy, a move that could help drive down costs for those technologies more widely.

In a notice published yesterday, the Defense Department posed a number of questions to companies and other stakeholders about how and whether they report their greenhouse gas emissions, whether they participate in environmental, social, and governance (ESG) reporting, and whether they collect emissions data from their suppliers.

“Greenhouse gas transparency is key to improving the climate performance of the [Defense Department’s] supply chain,” deputy Defense secretary Kathleen Hicks said of the move on Twitter.

What’s next: The Defense Department’s notice doesn’t offer many details about how it intends to act on the information it collects, beyond citing compliance with President Joe Biden’s May executive order directing federal agencies to identify and address financial risks posed by climate change.

Nonetheless, Biden is expected to take much greater advantage of the Defense Department’s purchasing power to promote clean energy than any prior administration, including the Obama administration. In another executive order early in his term, Biden directed federal agencies to purchase an increasing amount of clean electricity and electric vehicles.

Biden also recently tapped Rachel Jacobson, an environmental lawyer who is a veteran of the Defense, Interior, and Justice departments, as assistant secretary of the Army for installations and environment. In the Obama administration, Jacobson served as the Pentagon’s top environmental lawyer and a top appointee in the Interior Department.

The Securities and Exchange Commission is already moving toward establishing requirements for public companies to report their greenhouse gas emissions and climate-related physical risks. The Defense Department, however, is the first agency to move independently on climate-related disclosures.

The significance of the agency’s purchasing power: Clean energy experts have said the Defense Department and other agencies investing in nascent clean energy innovations can help those technologies gain a foothold in the market.

The Defense Department “is getting ready to enlist its huge supply chain in the fight against #climatechange. Very big deal,” tweeted David Hayes, a top White House climate adviser.

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MOVEMENT NEXT WEEK ON ENERGY PIECES OF THE INFRASTRUCTURE DEAL? The Senate Energy Committee could mark up Chairman Joe Manchin’s draft energy legislation, his pitch to get his energy priorities in the bipartisan infrastructure deal, as soon as next week, said Kellie Donnelly, executive vice president and general counsel of Lot Sixteen.

Donnelly, a former chief counsel for the Senate Energy Committee, told an event yesterday hosted by CRES Forum that she believes Manchin’s bill has the support of Sens. Lisa Murkowski and Bill Cassidy, two key Republicans in the bipartisan group that struck the infrastructure deal. Sen. John Barrasso, the top Republican on the Senate Energy Committee, is engaging at the staff level in negotiations over Manchin’s energy provisions,
too, Donnelly added.

Should the Senate Energy Committee meet next week on Manchin’s bill, it could tee it up to move with the bipartisan infrastructure deal, which Senate Majority Leader Chuck Schumer is aiming to move on the Senate floor as soon as the week of July 19.

BUTTIGIEG HINTS FUEL ECONOMY STANDARDS WILL BE AMBITIOUS: Transportation Secretary Pete Buttigieg stressed the importance of strict fuel economy standards to clean up the transportation sector because, even as the U.S. shifts to more electric vehicles, gas-powered cars will still be on the roads for some time.

“No matter how good we get at” making electric cars affordable, there will still be gas-powered cars on the roads for a long time “even when no gas cars are being sold,” Buttigieg said.

Buttigieg, speaking at an event yesterday hosted by the Bipartisan Policy Center, didn’t offer many specifics about the administration’s fuel economy proposal, due out sometime this month, but he said that the statute directs the Transportation Department “to be ambitious.” The agency works with the EPA to set fuel economy and tailpipe emissions standards for passenger cars, an important administrative lever to drive emissions reductions in the transportation sector.

“We’re seeking to be as straightforward as we possibly can about the policy goals,” Buttigieg said, adding that the statute directs the Transportation Department to set standards at a “maximum feasible” level. The Biden administration undoubtedly has a very different view about what automakers can achieve than the Trump administration, which drastically weakened the standards.

HEAT WAVES AND OTHER EXTREMES STRAIN THE POWER GRID: The U.S. power grid isn’t prepared for severe weather, a vulnerability that will become more acute as climate change worsens extremes and if the grid doesn’t adjust to managing more renewable energy.

This summer is already reflective of the tensions extreme weather is bringing to bear on the electricity system. Last month, grid operators in both Texas and California asked people to conserve power, fearful of having to impose outages on high-demand hot summer days.

The pleas from California and Texas regulators came less than a year after those states experienced blackouts — California last summer during wildfire season and Texas in February during a rare cold snap. Recent unprecedented heat in the Pacific Northwest is putting a strain on the electricity grid, too.

Climate and weather “is the most influential and impactful force that grid planners and operators have to deal with,” said John Moura, director of reliability assessment and performance analysis for the North American Electric Reliability Corporation, or NERC, a regulatory agency focused on grid stability and security.

Recently, though, “the grid has more than ever been exposed to these extreme conditions,” such as heat waves, drought, flooding, and prolonged freezing temperatures, he added.

More on why these extremes place such stress on the grid, and how to alleviate the strain, in Abby’s story for next week’s Washington Examiner magazine.

NORTH DAKOTA SUES OVER CANCELED OIL AND GAS LEASE SALES: North Dakota is suing the Biden administration for blocking oil and gas production by canceling lease sales, taking another shot at one of Biden’s central day-one climate policies to pause oil and gas leasing on federal lands.

The state’s lawsuit takes aim at the Biden administration for its cancellation of individual lease sales in March and June that the state says were required by law. It follows a ruling from a federal judge last month blocking Biden’s leasing pause.

North Dakota says in its lawsuit that the canceled lease sales will cost the state, the nation’s second-largest oil and gas producer, more than $80 million. That could balloon to billions in lost revenue if the Bureau of Land Management doesn’t begin holding lease sales again, the state claims.

The Biden administration hasn’t said yet how it will approach future oil and gas leasing or whether it will deliver on Biden’s campaign promise to ban new leases altogether on federal lands.

HOW TO MAXIMIZE CLEAN ENERGY TAX CREDITS: Policymakers should offer long-term, full-value, flexible tax credits that allow developers to claim the incentives as direct payments and extend to cover all clean energy resources, the Rhodium Group said in a new report yesterday evaluating how to maximize the potential of clean energy incentives.

Enacting those incentives could slash power sector carbon emissions to between 64% and 73% below 2005 levels in 2031, up to eight times more reductions than would be achieved by a simple extension of existing tax credits, Rhodium finds.

Extending and restoring the credits to their full value alone would achieve between 54 and 117 million metric tons in emissions reductions over current policy in 2031, the report says. Making the incentives flexible — or breaking down the rigid barriers that allow solar to only qualify for an investment tax credit and wind to only qualify for a production tax credit —…

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