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METHANE FEE INCOMING: Senate Democrats’ tax credit and grant-laden reconciliation bill aims to facilitate greenhouse gas emissions largely by handing financial incentives to clean energy project developers, but it also includes a fee on excess methane in a win for those advocating emissions-pricing policies to mitigate greenhouse gas pollution.

The bill’s methane emissions reduction program establishes a methane fee schedule targeting emissions of the potent greenhouse gas in the oil and gas sector, which environmentalists and green policy advocates have long considered a kind of low-hanging fruit for climate change mitigation.

Under the program, owners and operators of wells, pipelines, or other applicable facilities that report more than 25,000 metric tons of carbon dioxide equivalent per year would be subject to charges for excess methane emissions, defined for each source in the legislation.

The fees would begin in 2024 and would be charged at $900 per metric ton, increasing to $1,200 and $1,500 over the next two years respectively.

In addition, the bill would also target un-captured methane by assessing royalties on “all gas produced” on federal lands and waters, including gas that is vented, flared, or released.

It comes with help: The methane fee is paired with financial assistance measures to enable emissions reductions. Some $1.5 billion would be provided to EPA in the form of grants and other incentives to operators for the purposes of emissions monitoring, obtaining technical and financial assistance, and installing equipment.

The lowdown on methane: Methane, the primary component of natural gas, has roughly 25-times the warming potential of carbon dioxide.

For that, environmental groups and the Biden EPA have focused a lot of attention on reducing emissions and some industry groups, most prominent among them the American Petroleum Institute, have endorsed methane regulations.

Dan Grossman, associate vice president for global energy transition at the Environmental Defense Fund, said companies and industry groups “see the writing on the wall” on methane regulation. He argued, too, that limiting methane emissions is in their business interest.

“When you’re talking about reducing pollution from industry, reducing methane emissions is so cost effective because after all, this is the product that they’re selling,” Grossman told Jeremy.

“Here we’re talking about just improving the efficiency of the supply chain in ways that really, to a large extent, offset the costs of the investments that [operators] need to reduce emissions,” he said.

There are holdouts: Some other industry groups, including the Marcellus Shale Coalition and the American Exploration and Production Council, have come out against the methane fee in this bill and in earlier iterations of Democrats’ negotiations from last year.

AXPC, which represents independent oil and gas firms, said it favors reducing methane emissions but opposes the approach in the reconciliation bill, which it dismissed as a “poorly designed tax.”

What EPA is already doing on methane: The methane fee would add to rules that the Biden EPA is currently formulating to strengthen regulations covering methane emissions from new oil and gas sources. The administration is also crafting rules covering existing sources.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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SIEMENS SAYS RUSSIA IS TO BLAME FOR DELAY IN GAS TURBINE RETURN: The manufacturer of a key Nord Stream 1 turbine said today that Russia’s refusal to accept the return of a pipeline component is not due to economic sanctions, as Moscow has insisted—adding credence to the widely-held theory that Russia is using the turbine as a pretext to halt gas deliveries to the EU.

In an interview today on CNBC’s “Squawk Box,” Siemens CEO Christian Bruch confirmed that the turbine, sent to Canada for maintenance last month, was a spare—meaning that any repairs would not have forced Russia’s Gazprom to reduce gas flow via its Nord Stream 1 pipeline.

We “still have no major announcement of any breakdown from operations. And this is why I cannot reconcile a technical reason to the supply of gas,” Bunch said. “There might be other reasons—and this is where I cannot really comment,” he added.

In the meantime, the turbine is ready to be shipped once Moscow gives the all-clear. The turbine “still sits in Germany, and we have prepared all import papers to Russia, but we obviously do need certain import information from the Russian client which has not taken place yet,” he said, adding that Gazprom has not given a “clear timing” for that.

German Chancellor Olaf Scholz said last week that it is “fully operational” and ready to ship at any time. "The turbine works," Scholz said, after visiting the Siemens factory where the turbine is stored. He said the point of the trip was to show "there was nothing mystical to observe here."

"We called [Putin’s] bluff," Canadian Foreign Minister Melanie Joly said at a meeting last week with her German counterpart. "It is now clear that Putin is weaponising energy flows through Europe."

GAS PRICES EXPECTED TO RISE AGAIN, REVERSING WEEKS-LONG TREND: U.S. gas prices are set to rise to roughly $4.35 per gallon by the end of the year, according to a new report from Goldman Sachs Research, which cited supply shortages and sustained global demand as the primary drivers of the expected uptick.

Prices will continue to climb next year as well, rising to a national average of $4.40 in 2023, according to the report. (For context, gas prices today are at just $4.05 a gallon, according to AAA.)

"Our updated fundamental forecasts point to continued disappointments in supply, with demand instead supported by the still ongoing COVID reopening and gas-to-oil substitution," the Goldman researchers said. "This requires demand destruction on top of the ongoing economic slowdown, requiring high retail fuel prices to end the market deficit."

Though the report does not expect prices to surpass the record-high set in June, the increase could still be damaging to the Biden administration, which has sought to capitalize on the recent drop in prices and play up actions it has taken to increase oil supply.

White House officials have pointed in particular to President Joe Biden’s March decision to release 180 million barrels of oil from the U.S. emergency stockpile, which they said likely caused prices to drop by some 40 cents per gallon.

U.N. WARNS OF ‘VERY REAL RISK’ OF CATASTROPHE AT UKRAINE NUCLEAR PLANT: The chief of the United Nations’ nuclear watchdog agency warned Saturday of a "very real risk of a nuclear disaster" at the Ukraine’s Zaporizhzhia power plant, ramping up the urgency of his warnings after Russian troops fired twice at the facility.

International Atomic Energy Agency director Rafael Mariano Grossi said he is “extremely concerned” by the shelling at Zaporizhzhia, Europe’s largest nuclear power plant, saying it underscores the “very real risk of a nuclear disaster that could threaten public health and the environment in Ukraine and beyond.”

“Any military firepower directed at or from the facility would amount to playing with fire, with potentially catastrophic consequences,” he said.

Ukraine said the shelling did not damage its reactors or release damaging radioactive material into the air. "However, there is damage elsewhere on the site,” Grossi said. He also reiterated his pleas to allow a team of IAEA experts to visit the nuclear plant to conduct safety inspections and make necessary repairs.

Ukrainian President Volodymyr Zelensky confirmed the attack, which he described as “an open, brazen crime … an act of terror,” and called for sanctions against Russia’s nuclear industry.

GLOBAL FOOD PRICES DROP FROM ALL-TIME HIGH: Global food prices declined during the month of July, according to the United Nations Food and Agriculture Organization, following a newly brokered U.N. agreement that allowed Ukraine to resume its grain exports.

Overall, the July decline was the steepest monthly fall in the price index since October 2008, the group said, and comes after prices hit an all-time high in February following Russia’s invasion of Ukraine.

The Black Sea agreement caused wheat prices to drop more than 14% between June and July, and prompted a nearly 12% drop in cereal prices, according to FAO.

Prices remain much higher than the same month last year, however, with cereal costs up 17%, and wheat prices up by a whopping 25%.

The Rundown

Politico EU Gas wars: How Putin sent EU energy prices rocketing

Washington Post How a four-day workweek could be better for the climate

Wall Street Journal Wood-pellet exports boom amid Ukraine war, environmental concerns

Reuters The unwitting winners of France's drought: salt farmers

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TUESDAY | AUGUST 9

12:00 p.m. The American Security Project is holding a virtual discussion titled, "Moving Mountains: Energy, Climate, and National Security in West Virginia."