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THE LIMITS OF DEMAND REDUCTION: Authorities in New England are staring down a similar predicament this coming winter to Europe’s: keeping people warm during extreme cold without breaking the bank.

Infrastructure and other constraints mean neither region can suddenly access additional volumes of natural gas adequate to bring down prices, pushing leaders to promote demand reduction measures for electricity and gas.

But some have pointed out that such measures can only go so far when consumers are in the thick of winter and temperatures are in the teens.

The demand side of the equation: Tight and therefore pricey supplies of natural gas, fuel widely used for home heating in New England (and Europe, too), are the heart of the problem.

Charles Crews, president and CEO of the Northeast Gas Association, is preparing consumers for $40 per MMBtu this winter.

“If you do the math, that could equate to a $1,000 utility bill for an everyday consumer here in our region,” Crews warned during a panel discussion at last week’s FERC-hosted New England Winter Gas-Electric Forum. “I don’t know about you, but I don’t want to spend a thousand dollars on my utility bill.”

As some other participants explored, in the absence of a few billion cubic feet more of pipeline capacity or some other structural solution, the way to avoid a 1k bill is to burn less gas.

The rub: Charles Dickerson, president and CEO of Northeast Power Coordinating Council, offered a candid assessment of the limits of demand reduction as a strategy for bringing down prices this winter.

“When it’s 16 degrees outside, there’s only so much reduction you can do on demand,” Dickerson said, recalling a television appearance he made years ago where he learned this lesson.

“I made the unfortunate mistake of telling people to put sweaters on. My family killed me,” he said to laughter from the audience. “There’s not enough sweaters you can put on when it's 16 degrees outside.”

No quick and easy solutions: Proposed pipeline projects to increase gas supplies to the region have faced special challenges in recent years from environmental groups and some Democrats, such as former New York Gov. Andrew Cuomo, who blocked permitting for pipelines.

The prospect of allowing more shipments of LNG into New England by easing enforcement of the Jones Act, too, has proved controversial — and caused a significant rift among advisers to President Donald Trump.

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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PATAGONIA FOUNDER AVOIDS $700M TAX BILL VIA CLIMATE MANEUVER: Patagonia founder Yvon Chouinard made headlines this week after he announced plans to give away his company, opting to funnel all its future profits into a public trust and the Holdfast Collective, a new nonprofit organization aimed at fighting climate change.

But as Bloomberg reports, the deal is also structured in such a way that allows Chouinard to avoid paying the federal capital gains tax that he would have owed, had he sold the company in a traditional way. That amount could have been as high as $700 million, given Patagonia’s current $3 billion valuation. Chouinard also opted to designate the Holdfast Collective nonprofit as a 501(c)(4), which as we noted yesterday, allows it to make unlimited political donations.

Had he opted to give the company to his adult children, another move some had expected, he would have been forced to pay the hefty U.S. estate and gift tax, which is a 40% levy on large fortunes when they are transferred to heirs.

HOTTEST AUGUST ON RECORD FOR NORTH AMERICA AND EUROPE: Last month brought severe drought, wildfires, and sweltering-hot temperatures to many parts of the world, including North America and Europe—two areas that saw their hottest-ever Augusts on record, according to a new National Oceanic and Atmospheric Administration report.

Overall, NOAA said, record-warm temperatures encompassed a whopping 8.2% of the world’s surface last month. Both Europe and China saw their warmest-ever summers, while North America had its second-warmest summer.

August’s extreme heat exacerbated wildfires and drought around the world: A sustained heat wave and drought in China caused its Yangtze River to fall to half its normal width in August, halting production in the hydropower-dependent provinces of Sichuan and Chengdu.

And along Germany’s Rhine River, water levels fell so low that one of its key waypoints became virtually impassable, restricting cargo shipments along one of the region’s most bustling commercial routes.

Fires also raged in many parts of the world: More than 33,000 fires were detected in the Brazilian Amazon this August, NOAA found, the highest monthly amount since 2010. Antarctic Sea ice also reached a record low, falling to 4.2% below average in August.

Globally, NOAA said, last month ranked as the sixth-hottest August ever recorded since 1880, when it first began collecting such data. Read more on the report here.

GERMANY TAKES CONTROL OF MAJOR RUSSIAN-OWNED OIL REFINERIES: The German government is taking control of three Russian-owned oil refineries in the country, officials said yesterday, risking retaliation from Moscow as it seeks to avoid a disruption in gasoline, diesel, and aviation fuel ahead of the EU’s forthcoming Russian oil embargo.

In a statement, Germany’s economy ministry said the subsidiaries of Russian oil giant Rosneft would be placed under the control of its industry regulator, a move to help “counter the threat to the security of energy supply” posed by Russia.

Rosneft accounts for roughly 12% of Germany’s oil refining capacity, and imports roughly several hundred million dollars worth of crude each month.

In particular, Germany is looking to protect the Schwedt refinery, which meets roughly 90% of its fuel demand, and currently receives all of its crude from Russia. Germany says it has gamed out the possibility of a sudden stop in Russian crude, however, and Reuters reports that they appear to be in talks with the government of Kazakhstan to secure new oil deliveries.

German Chancellor Olaf Scholz acknowledged that the move is a “far-reaching energy policy decision” but one that is designed to protect Germany amid the EU’s energy crisis. “We’ve long known that Russia isn’t a reliable supplier of energy anymore,” he said.

“With today’s decision, we’re ensuring that Germany is supplied with oil in the medium- and long-term as well,” Scholz added.

SHELL CEO TO STEP DOWN, COMPANY ANNOUNCES: Shell CEO Ben van Beurden will step down from his position after nearly a decade of leadership at Europe’s largest oil and gas company, the company said yesterday. He will be replaced by Wael Sawan, the head of Shell’s integrated gas and renewables business, starting at the end of the year.

“It has been a privilege and an honour to have served Shell for nearly four decades and to lead the company for the past nine years,” said van Beurden, who spent the entirety of his 39-year career at Shell, including nine years as CEO.

He expected to stay on to advise the board through the end of June.

Van Beurden’s departure comes after Shell reported quarterly earnings of more than $11 billion in July, shattering its profit record for the second consecutive quarter.

Biraj Borkhataria, head of oil and gas equity research at RBC Capital Markets, told the Financial Times that Sawan was “respected” by the investor community, adding that the shift in leadership “is likely to be more of a continuation than revolution of the strategy put in place by van Beurden.”

OFFSHORE WIND GETTING MORE TIME IN THE SUN: The Biden administration is prioritizing deep water offshore wind in a new way, announcing a goal yesterday to oversee installation of 15 gigawatts of floating offshore wind capacity by 2035.

Officials have acreage off the coasts of California, Oregon, and Maine in mind for installing floating turbines. The Interior Department plans to hold its first lease sale for acreage offshore California by the end of the year.

More than half of the nation's offshore wind resources are in deep waters, where it's uneconomical to build traditional offshore wind foundations, Interior Secretary Deb Haaland said yesterday during a call with reporters. Floating wind technologies will enable developers to access windy areas “once thought unattainable,” she said.

Getting there: Floating offshore wind has not yet been proven economically viable on a commercial scale, and the administration intends to help it along with a new “wind shot” initiative also announced yesterday.

The Energy Department, which is overseeing the initiative, is running a prize competition with funding from the bipartisan infrastructure law to incentivize technological advancements with floating wind, aiming to lower costs of production by more than 70% by 2035.

WHITE HOUSE PROPOSES TRACKING CRYPTO’S ENVIRONMENTAL IMPACT: The Biden administration will explore whether to track how digital assets impact the environment and whether to develop performance standards for operators, according to a “comprehensive framework for responsible development of digital assets” the White House released this morning.

DOE, the Environmental Protection Agency, and other agencies will take the lead.

“Powering crypto-assets can take a large amount of electricity—which can emit greenhouse gases, strain electricity grids, and harm some local communities with noise and water pollution,” the White House fact sheet said, adding that “opportunities exist to align the development of digital assets with transitioning to a netzero emissions economy and improving environmental justice.”

FRANCE’S EDF EXPECTS A $29 BILLION HIT AMID NUCLEAR PLANT OUTAGES: French state-owned power company EDF said it expects to take a $29 billion hit from its core earnings this year due to outages in its fleet of nuclear reactors—pushing its energy supply close to an all-time low, and forcing it to buy from the wholesale market amid sky-high prices and stiff competition from other buyers.

The Financial Times reports that more than half of the 56 EDF-controlled reactors in France are currently offline, due in large part to corrosion problems and other maintenance delays caused by the COVID-19 pandemic. French grid operator RTE warned the country might need to order targeted power cuts in the coming months to ease the strain on the system during times of peak demand.

France said in July that it planned to make an offer to purchase the remaining 16% of EDF, seeking to take full control of the power company before it began an expensive and protracted series of repairs to the fleet. Reuters reported this morning that the government is now expected to hasten its takeover following news of the losses; and expects to make a formal offer before the end of September.

The Rundown

Financial Times German drinks makers suffer as energy crisis hits carbon dioxide supplies

E&ENews How the climate law may change energy storage

Associated Press State of unease: Colorado basin tribes without water rights

The Hill Nearly 1 in 10 US schools now using solar power

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Calendar

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.