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WHAT PRICE CAP WOULD TAKE: The U.S. and its allies must be prepared to implement secondary sanctions to have any prospect of success for the price cap on Russian oil exports endorsed by G-7 members in June, according to a top lobbyist for Ukraine in D.C.

Such aggressive enforcement will be necessary, said Daniel Vajdich, the president of Yorktown Solutions consulting group, in the absence of support from key holdouts, such as China and India, which now account for more than 41% of Russia’s oil exports, roughly doubling last year’s amount of just 21.7%.

“Personally, I am skeptical that countries outside of the G-7 or that aren't aligned with the G-7, like South Korea, can be brought into this fold,” Vajdich told Breanne. “We've also seen Turkey this month increase its purchases of Russian oil. So there are a lot of holdouts around the world when it comes to this issue.”

Vajdich, a senior fellow at the Atlantic Council’s Europe Center specializing in issues of energy policy and business, has worked on behalf of Ukraine’s state-owned energy company, Naftogaz, including to oppose construction of the Nord Stream 2 gas pipeline linking Russia to Germany, which was halted at the start of the war.

With global buy-in appearing increasingly unlikely ahead of Dec. 5, when leaders hope to impose the cap, G-7 nations could adopt secondary sanctions— or the enforcement mechanism by which any countries, entities, or individuals who violate the price cap agreement could be sanctioned and cut off from G-7 financial systems.

Vajdich noted that the U.S. successfully used such secondary sanctions to impose major hardship on Iran.

It’s not clear that such a step is in consideration, and some European Leaders in particular have seemed reluctant. But Vajdich said it would have to be: “I’m very skeptical about the enforcement of a big global price cap that the Russians would really feel unless we had this secondary sanctions component included or agreed to, at least between G-7 countries.”

Russian oil “is going to find consumers at a discount throughout the world if [the price cap plan] is not enforced globally,” he told Breanne. “It's going to be a variation of the status quo if there isn't this sort of enforcement.”

“At some point, if you're talking about a truly global sanctions regime; asking countries nicely to voluntarily abide by these sorts of things isn't going to work. There's going to be too much leakage,” he said. “And the only way to disincentivize that leakage is to create a cost … or framework where the cost is clear'' for countries or entities that don’t adhere to the plan, he said.

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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…MEANWHILE, RUSSIA TRYING TO GET AHEAD OF PRICE CAP IN ASIA: As the U.S. seeks to drum up support for its oil price cap plan, Russia has approached several Asian buyers to float the possibility of offering highly-discounted, long-term oil contracts at heavily discounted rates of up to 30% off global market prices, Bloomberg reports.

As one Western official told Bloomberg, the overtures could be a sign that Moscow could be looking to preempt the G-7 effort to cap its oil export prices, or to lock in replacement buyers for the oil it’s currently sending to Europe.

Indonesian Minister of Tourism Sandiaga Uno  said in an Instagram post this weekend that Russia has “offered to sell it oil at a price that’s 30% lower than international market price.” Indonesia is considering the offer, he said, but noted there was “disagreement,” and “fears that we will be hit by US embargoes” (through the form of the aforementioned secondary sanctions).

...AND IN INDIA, TREASURY OFFICIALS SEEK SUPPORT FOR PRICE CAP PLAN: U.S. Deputy Treasury Secretary Wally Adeyemo traveled to India yesterday to meet with government officials and industry executives on a range of topics, including the oil price cap plan.

During the visit, Adeyemo is expected to ask India to strengthen its monitoring of products made from Russian crude, as well as where those products are sold, a person familiar with the discussions told Bloomberg.

A Treasury spokesman declined to characterize India’s posture on the price cap plan, and India has not yet signaled whether it would support the effort.

Speaking at an event in Mumbai yesterday, Adeyemo said the coalition of countries who support the price cap plan is growing. Adeyemo stopped short of saying which countries had signaled support, however, saying he was “not going to get ahead of announcements by the coalition.”

CALIFORNIA MOVES TO IMPLEMENT 2035 BAN ON NEW GAS-POWER CARS:  California regulators are expected to vote today to ban the sale of all new gas-powered vehicles beginning in 2035, a major step for the largest auto market in the U.S. and one that Democrats hope can accelerate the transition toward electric vehicle adoption.

The rule is slated to take effect following a vote by the California Air Resources Board. It also sets interim targets to help phase out the sale of internal combustion engine models: By 2026, it states, 35% of new cars sold must be zero-emissions vehicles — an amount that climbs to 68% in 2030. (Currently, just 12% of new cars sold in the state are electric vehicles.)

In announcing his support for the plan in 2020, California Gov. Gavin Newsom noted that transportation accounts for more than 50% of California’s greenhouse gas emissions.

He also noted that without taking such a step to accelerate actions to reduce transportation emissions, the state will not be able to achieve its goal of a carbon-free economy by 2045.

FERC REGULATORS APPROVE FOUR-YEAR EXTENSION FOR MOUNTAIN VALLEY PIPELINE: The Federal Energy Regulatory Commission has granted a four-year extension to developers of the long-delayed Mountain Valley natural gas pipeline, giving them until October 16, 2026 to complete the project. The decision is a victory for supporters of the $6.6 billion pipeline, which, when completed, will span approximately 303 miles between northwestern West Virginia to southern Virginia.

In seeking the extension, developers cited hurdles such as community opposition and lawsuits from environmental groups that have significantly delayed construction beyond its original deadline of Oct. 13, 2022. (Developers said Mountain Valley construction is roughly 94% complete.)

Sen. Joe Manchin (D-W.Va) and Sen. Shelley Moore Capito (R-W.Va.) also asked FERC to approve the extension in a letter last month: “At a time when energy prices are soaring, it is imperative that FERC works to accelerate the development of domestic energy infrastructure so that Americans may have access to a reliable and affordable supply of natural gas,” they said.

FERC regulators, who first approved the project in 2017, unanimously ruled this week in favor of the extension, saying their original basis for approval remains unchanged. “Mountain Valley asserts that good cause exists for an extension as the project is substantially complete and is actively working to reinstate all required permits,” FERC wrote in its order.

WATCHDOG: FORMER INTERIOR SECRETARY ZINKE MISLED INVESTIGATORS IN CASINO CASE: Former Interior Secretary Ryan Zinke and his then-chief of staff intentionally misled federal investigators about his department’s decision not to approve two Native American tribes’ requests to build a casino in New England, according to a new report from the Interior Department’s Office of the Inspector General. The report says Zinke met with a number of lobbyists, a political consultant and U.S. senator who urged them to reject the request. Those conversations touched off the investigation into whether he had been improperly influenced.

Zinke and his chief of staff "made statements to OIG investigators with the overall intent to mislead them," and "presented an inaccurate version of the circumstances in which the DOI made key decisions," the inspector general’s office said.

In the report, which focused largely on their remarks, rather than the casino decision itself, inspector general Mark Greenblatt concluded that Zinke and his then-chief failed their “duty of candor” as federal officials. They “made statements to OIG investigators with the overall intent to mislead them," the report said, and "presented an inaccurate version of the circumstances in which the DOI made key decisions.”

Zinke, now seeking election in Montana’s newly drawn congressional district, has been the subject of multiple ethics investigations related to his conduct as Interior secretary. He resigned in 2018 over ethics controversies.

TEXAS RELEASES LIST OF 10 FIRMS “BOYCOTTING” ENERGY INDUSTRY: Texas could ban BlackRock, UBS Group AG, and eight other financial firms from doing business with the state after they made a list of firms “boycotting” the industry released by Texas Comptroller Glenn Hegar.

Hegar sent inquiries to more than 150 companies this spring demanding they disclose their climate policies in an effort to identify firms that are so-called “anti-energy,” or those that have attempted to restrict their ties to carbon-emitting energy companies.

“The environmental, social and corporate governance (ESG) movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy,” Hegar said in a statement. He added that his office “will continue to refine this process and gather additional information about how these firms may be boycotting energy companies.”

Still, the actual impact on taxpayers in the state could be hard to predict. “Will this announcement give a boost to Texas oil and gas companies? Morally, perhaps,” Felix Mormann, a law professor at Texas A&M who studies energy and climate change, said in an email to The Texas Tribune. “But, financially, Chevron, ExxonMobil, and other Texas oil-and-gas majors play in the global league... In other words, I strongly doubt that the Comptroller is setting off the next oil-and-gas boom in Texas.”

The Rundown

Bloomberg GOP fury over ESG triggers backlash with US pensions at risk

Wall Street Journal Energy crisis squeezes smaller firms that power Europe’s economy

Washington Post Forest fires burn twice as many trees as two decades ago, report finds

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Calendar

TUESDAY | AUGUST 30

9:30 a.m. Silver Spring, Md. The Department of Commerce and the National Oceanic and Atmospheric Administration will hold a meeting of the Science Advisory Board; tasked with reviewing NOAA activities and priorities. Learn more about the advisory board meeting and register here.

THURSDAY | SEPTEMBER 1

1 p.m. The White House, the EPA’s Office of Water, and the American Association for the Advancement of Science (AAAS) hold a virtual discussion titled. "Regional Reflections on Green Infrastructure and Nature-Based Solutions: Southwest." Register for the virtual event here.