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EUROPEAN COMMISSION PROPOSALS: The European Commission announced a new package of emergency measures today to help tackle its worsening energy crisis, the last in a string of remarkable steps to curb historic electricity prices for consumers and avoid a bloc-wide supply crisis this winter.

The plan calls for a windfall tax on fossil fuel companies, mandatory electricity rationing for countries during hours of peak consumption, and extending emergency credit lines for power companies. In total, European Commission President Ursula von der Leyen said those steps should raise some $140 billion euros to “cushion the blow” of electricity costs for households and small businesses.

Under the plan, the excess profits from energy companies would be redistributed to individuals and small businesses. It also calls for cross-border agreements to help distribute the clawed-back windfall revenue across multiple countries.

“In these times it is wrong to receive extraordinary record profits benefiting from war and on the back of consumers,” von der Leyen said.

Speaking to members of the European Parliament, von der Leyen said leaders are working to comprehensively overhaul the EU's power market, which links electricity prices to the cost of natural gas. “Consumers should reap the benefits of low-cost renewables,” she said. “So we have to decouple the dominance of the price of gas on the price of electricity.” (Instead, she said, EU leaders will work to find a more “representative” benchmark for prices.)

The plan comes after EU energy ministers convened in Brussels Friday for an emergency meeting to discuss how to accelerate the bloc’s transition away from Russian fossil fuels and shield consumers from crippling energy prices, which have spiked nearly tenfold in the last 12 months.

The EU has seen success on the first part of that plan: Russian piped gas now represents just 9% of EU imports, compared to 40% before the start of the war in Ukraine. And the EU has overshot its goal of filling its gas storage tanks to 80% capacity by November. But even with gas storage at maximum capacity, there is a very real risk that countries could burn through those supplies well before the end of winter.

A cap on natural gas prices—widely seen as a key component of the EU’s energy saving plan— was notably absent: Fissures emerged over the weekend as leaders began debating whether such a gas cap would be applied only to Russian imports; which threatened a complete cutoff of all Russian energy supplies, or whether it would be a broader cap on all gas imports.

The latter would be a more effective tool to curbing energy costs within the bloc, but also risks disincentivizing other suppliers, such as Algeria and Norway, who could instead redirect their exports to higher bidders in other parts of the world. (Yet another source of debate: whether the cap would be applied solely to piped gas, or all imports, including LNG.)

Germany, the Netherlands, and Denmark expressed opposition to an overall gas cap, citing fears of market competition. And EU Energy Minister Kadri Simson echoed this sentiment, noting, “There is very strong competition in the [liquefied natural gas] market and now it is very important that we can replace the decreasing Russian volumes with alternative suppliers.”

Italy, Austria, and Greece are deeply opposed to a Russian-only gas cap, fearing a complete supply cutoff from Moscow.

But whether Russia could actually do so without draining one of its key sources of war revenue remains to be seen: Although Russian state-owned energy giant Gazprom started producing its first LNG last week, analysts have noted that it lacks the large-scale capacity necessary for overseas shipment—making any gas redirection, at least in the short-term, incredibly difficult.

“Somebody like Putin loves the optics of closing the pipeline, closing the supply spigot — but in reality, natural gas doesn’t really work like that,” Margarita Balmaceda, a professor and author of a book about Russian energy chains, told Marketplace Morning Report. “You cannot really stop producing natural gas so quickly. And if you do not have somewhere to store natural gas that you have already produced, your only choice is either to let it flare in the air, or to continue shipping it.”

What’s next: Leaders will convene Sept. 30 to vote on the energy package, which will require approval of all 27 member states. But that’s a high bar, especially given that early reaction to the plan was mixed.

Apart from the windfall tax plan and electricity rationing, the EU proposal was short on many real specifics—meaning that leaders have their work cut out for them in crafting more concrete proposals before the Sept. 30 meeting. And without the gas cap provision, some diplomats fear the plan does not go far enough in tackling the EU’s energy cost crisis.

As S&P Global Commodity Insights’ Laurent Ruseckas told the Financial Times, the new EU proposals are “all extraordinarily complex” and “would be impossible to work out and implement in time for winter even if there were political consensus behind them — which there isn’t.”

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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BOEM REINSTATES GULF OF MEXICO SALE: The Interior Department’s Bureau of Ocean Energy Management announced the acceptance of high bids today pursuant to Lease Sale 257, the 2021 Gulf of Mexico oil and gas lease sale that had been invalidated but that Congress recently ordered to be reinstated.

BOEM accepted 307 highest valid bids for tracts in the Gulf, which were auctioned for a total of $189,888,271. The bureau originally held the lease sale in November, but U.S. District Judge Rudolph Contreras invalidated the results in January of this year.

The bureau emphasized in an announcement this morning that it acted “in compliance with congressional direction in the Inflation Reduction Act” in accepting the bids and said the leases “include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential ocean user conflicts.”

Energy trade groups celebrated 257’s reinstatement. Erik Milito, president of the National Ocean Industries Association, which represents both oil and gas and renewable energy developers, said it’s been two years since the industry has secured new leases.

The Gulf’s oil and gas sector “continues to shine as an economic engine that operates under world class safety standards and produces among the lowest carbon barrels of oil in the world,” he said.

Environmental groups have been fighting against 257 and the provision of any new leasing on federal lands and in federal waters, arguing that leasing must end in service of climate change mitigation.

ENERGY SECTOR WARNS OF ‘DEBILITATING’ OUTCOMES FROM RAIL STRIKE: Trade groups are sounding the alarm on the threat of a rail strike to energy markets, warning Washington that a mass freight disruption would make resources more scarce and send prices of everything from coal to gasoline higher.

Catch up: Major rail carriers and labor unions have until Friday to reach an agreement on contract negotiations before a cooling-off period lapses and workers are permitted to strike.

The prospect of strikes has been looming for months, such that the White House created an emergency board to help mediate disputes between operators and the unions.

What they’re saying: If the administration’s efforts come up short and a strike ensues, it could result in “a debilitating logistics chokepoint for the movement of energy and materials resources essential to our grid reliability and energy affordability,” Rich Nolan, head of the National Mining Association, said in a statement.

Service issues are already taking their toll, said Nolan, who used the upcoming winter as his frame of reference. Disruptions to coal deliveries “[impede] the delivery of essential fuel as utilities work to shield consumers from soaring natural gas prices and build up stockpiles to ensure they have the fuel security needed for the winter.”

American Fuel & Petrochemical Manufacturers, which represents refiners, wrote congressional leaders yesterday to ask for their intervention. Service stoppages would potentially force refiners to cut production, AFPM president and CEO Chet Thomson said.

GOP SUPPORT FOR CAPITO PERMITTING BILL GROWS: Nearly the entire Senate Republican caucus has signed on to co-sponsor Sen. Shelley Moore Capito’s permitting reform legislation, a counter proposal to the in-the-works permitting reform deal struck between Sen. Joe Manchin and Majority Leader Chuck Schumer.

Forty-five members have co-sponsored the Simplify Timelines and Assure Regulatory Transparency Act, according to an updated list. New additions include Sen. Mitt Romney and Rob Portman.

The bill would codify Trump-era reforms of the National Environmental Policy Act into law and encourage more categorical exclusions for projects. It would also order agencies to finalize relevant permitting for the construction and operations of the Mountain Valley Pipeline.

Where the Dems are: Roughly a third of House Democrats have opposed the Democratic permitting reform deal for its provisions favoring oil and gas, but some Senate Democrats have spoken out in favor of permitting reform and the need to accept trade-offs, such as Manchin’s ask for the MVP to be approved.

Sen. Angus King, an independent who caucuses with the Democrats, said yesterday that “there’s no free lunch when it comes to energy” and that “there are always costs and benefits.”

Permitting reform is necessary to build more renewable energy, King also said, critiquing NIMBYism: “You can’t be in favor of electrification, you can’t be in favor of renewable power, you can’t be in favor of electric vehicles if you’re not in favor of mining the lithium that you need for the batteries.”

The Rundown

Energy News Network In Georgia, ratepayers face a big bill for coal ash cleanup, while a utility profits

E&E News What the Western drought reveals about hydropower

Bloomberg China rust belt province plans $87 billion clean energy overhaul

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Calendar

THURSDAY | SEPTEMBER 15 

9:00 a.m. 2154 Rayburn The House Oversight and Reform Committee will hold a hearing to examine the record-breaking profits reported by major oil companies Exxon, Chevron, BP, and Shell, and to look at the companies’ roles in fighting climate change. Learn more and register here.

MONDAY | SEPTEMBER 19

10:00 a.m. The 39th annual International Pittsburgh Coal Conference (PCC) begins. The four-day conference includes a range of events focusing on all aspects of coal utilization and sustainable development both in the U.S. and internationally, and will bring together key participants from industry, government, and academia. Learn more and register for the event here.

MONDAY | SEPTEMBER 26

The 6th annual, five-day National Clean Energy Week kicks off in Washington, D.C.