Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what's going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!

NEW ENGLAND FACING TOUGH COMPETITION FOR LNG: Energy supplies for New England this winter are shaping up to be much tighter and more expensive than normal as utilities prepare to bid against insatiable demand from European and Asian buyers for liquefied natural gas.

The war in Ukraine’s disruption to global energy markets has transformed the LNG segment, sending tanker charter prices to records and boosting exporters’ profits exponentially.

The Northeast is unique for bringing in LNG during winter to supplement its gas supplies during peak demand periods, leaving it now to a bidding war for LNG against the Europeans, who are buying up cargoes left and right because of the gradual breakup with Russian energy, and customers in a red-hot Asian market.

New England and LNG: New England uses three regional LNG import terminals, which have been utilized to receive LNG supplies over the last several winters: the Everett LNG onshore terminal near Boston, the offshore Northeast Gateway terminal near Boston, and the Saint John LNG terminal in New Brunswick, Canada.

During the winter of 2020–21, 12 tankers delivered cargoes to the region, six to each of Everett and Saint John, according to the Energy Information Administration.

Charlie Reidl, executive director for the Natural Gas Supply Association’s Center for LNG, said New England’s LNG purchases have always come at a premium but stressed that the current market conditions are an aberration, where buyers in the Northeast are looking at paying for spot LNG at three and four times the Henry Hub benchmark.

“Historically this hasn't been an issue with buying LNG on an open market and not paying some astronomical number,” he told Jeremy. “Well, obviously, world events have changed significantly, which then sort of tightens the market on an international level.”

The Jones Act factor: Making things more challenging for New England, Reidl and its governors say, is that it can’t make use of the closest-to-home solution by bringing in U.S. LNG because of the Jones Act, which confines intra-U.S. shipping to ships that are built, owned, staffed, and flagged in the U.S.

That means foreign tankers can’t bring LNG that’s liquefied at, say, the Elba Island LNG terminal in Georgia to New England, and the U.S. doesn't have any Jones Act-compliant LNG tankers, leaving New England to source LNG from abroad.

Governors from the six New England states asked Energy Secretary Jennifer Granholm in late July to waive the Jones Act for LNG deliveries this winter.

Granholm responded that the Department of Homeland Security, which takes up waiver requests, would review requests “expeditiously” but said the law doesn’t provide for a blanket waiver.

Domestically sourced or not, for a number of grid officials and utility leaders at FERC’s recent New England winter gas-electric forum, LNG cargoes were recognized as the default fuel solution when supplies get constrained this winter, even if they’re to come at a premium.

If Jones Act waivers were granted, Reidl said his members “would gladly be able to provide LNG to the Northeast.”

“But it seems like a completely illogical solution, even from an LNG trade association’s perspective,” Reidl said, “because a pipeline is the obvious answer to this.”

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.

ADVERTISEMENT

RUSSIA OFFERING ‘ENORMOUS’ OIL DISCOUNTS TO CHINA, INDIA, SAYS YELLEN: U.S. Treasury Secretary Janet Yellen said yesterday that the Russian oil price cap endorsed by G-7 leaders earlier this year is already making a difference in the energy market, noting that Moscow has been offering “enormous” discounts to China and India as it looks to find other buyers to redirect its crude exports.

Speaking at a conference hosted by The Atlantic, Yellen noted that Europe still receives roughly 3 million barrels per day of Russian crude—meaning that the ban, which is slated to take effect in early December, will cut even further into Vladimir Putin’s warchest.

"Russia is now seeking very actively to find places to sell their oil,” Yellen said. “They're giving enormous discounts to China and to India, who were two big purchasers.”

Yellen also predicted inflation would be under control next year: Despite the looming European energy supply crisis this winter, Yellen said, she “wouldn’t exaggerate” its impact on potential U.S. growth.

…MEANWHILE, IEA CHIEF WARNS LOOMING ENERGY CRISIS COULD SHATTER EU UNITY: International Energy Agency chief Fatih Birol warned yesterday that the looming energy crisis in Europe could shatter EU unity in the months ahead, saying he feared a “Wild West scenario” this winter if countries began restricting their energy exports or stopped complying with bloc-wide restrictions to help ease the transition from Russian supplies.

There were “two scenarios,” Birol said yesterday at an event in Pittsburgh. “EU and members will work in solidarity, supporting each other ... or there is another scenario, if everybody is for himself.”

“One of the founding values of the EU is solidarity. It will negatively affect the EU’s weight across the world,” Birol said of the second scenario, according to the Financial Times. 

Birol also warned that the energy crisis would last “well” into 2023 in Europe, due to what is expected to be steep competition for new LNG imports in the years ahead, coupled with already-tight global demand for existing supply: “When we look around there are not many new gas [projects] coming …” he said. “And the Norway, Algeria, Azerbaijan pipelines are near their maximum capacity. It will be another challenging period.”

Still, Birol reiterated his view that Russia had already “lost the energy battle” in Europe, saying of Moscow’s efforts to redirect supplies to Asia: “You are not selling onions in the market. … You have to build pipelines, infrastructure, logistics. This will take at least 10 years.” Read more from his speech here.

SOUTHERN CALIFORNIA BRACES FOR ANOTHER HEAT WAVE: Southern California is bracing for another heat wave, with temperatures expected to climb into the triple digits once again in parts of the state beginning today and lasting through Tuesday, according to the National Weather Service. The heat is expected to peak starting on Sunday, when forecasters said temperatures could climb as high as 15-20 degrees above normal.

Thankfully, the high heat conditions are not predicted to be as extreme as the 12-day heat wave that gripped much of the state earlier this month—shattering nearly 1,000 records across the West coast in a single week, and marking what California Gov. Gavin Newsom called the “hottest and longest” heat wave ever recorded for the month of September.

(That heat wave prompted Newsom to sign a new law this month establishing the first U.S. heat wave “ranking system” in California, which will help state officials better track the duration and frequency of extreme heat events, and to make recommendations based on the potential health hazards they pose.)

NEW STUDY SAYS EV CHARGING SHOULD HAPPEN DURING THE DAY: During California’s recent heat wave, state grid operators activated their “flex alert” system, urging residents to avoid EV charging and use of most large appliances between the hours of 4 p.m. to 9 p.m., when the grid is most strained.

That’s in line with the habits of most EV owners, who have long been asked to charge their vehicles overnight to reduce demand. (Some utilities even offer consumers lower electricity rates to do so.)

But a new study published by Stanford University researchers in the journal Nature turns that common belief on its head. Researchers instead found that, in order to reduce the strain on the power grid, EV drivers in the West should charge their vehicles during the day—taking advantage of the region’s abundant solar power resources during daylight hours.

The study found that a large increase of EV purchases, coupled with dark-hours charging, could put the U.S. side of the Western Interconnection (WECC) grid under high stress by 2035, and increase demand at peak hours by up to 25%. (WECC currently links 11 U.S. states, ranging from California to Colorado.)

“We considered the entire Western U.S. region, because California depends heavily on electricity imports from the other Western states,” said Siobhan Powell, one of the lead authors of the study. “EV charging plus all other electricity uses have consequences for the whole Western region given the interconnected nature of our electric grid,” Powell added.

Residents should also utilize public charging stations or charging stations at their workplaces when possible to help reduce emissions, researchers said.

BIDEN ADMINISTRATION TO FUND “100%” OF FIONA RELIEF FOR THE NEXT MONTH: The U.S. government will cover “100%” of damages caused by Hurricane Fiona relief over the next month, President Joe Biden announced yesterday, after Hurricane Fiona barreled onto the island with winds of up to 115 mph Sunday, knocking the island’s power grid offline and causing catastrophic flooding and landslides.

More than 60% of the island still does not have electricity, local officials said yesterday, while one-third of residents remained without access to water. They said it is unclear when power will be restored.

“We’re laser-focused on what’s happened to people in Puerto Rico again,” Biden said at Federal Emergency Management Agency headquarters yesterday in New York, appearing alongside FEMA Administrator Deanne Criswell, who traveled to the island Tuesday to assess damage caused by the storm.

“We’re talking almost to the day, at least to the week, five years after Hurricane Maria was devastating [the island],” Biden said. “We’re surging federal resources to Puerto Rico and we’ll do everything, everything we can to reach the urgent needs they have.”

BIDEN OFFICIALS WEIGH OUSTER OF WORLD BANK CHIEF OVER CLIMATE REMARKS: Biden administration officials are considering trying to push for the ouster of David Malpass, the Trump-appointed World Bank president, after his remarks on climate change sparked international uproar earlier this week.

The news, reported by Axios, comes after Malpass dodged three separate questions at a New York Times event Tuesday over whether he believes that the “man-made burning of fossil fuels” is contributing to global warming. Malpass finally said in response, "I don't even know— I'm not a scientist."

The remarks prompted calls for his resignation from some environmental activists. It also set off alarm bells among some Biden administration officials, who see Malpass as weak on climate.

Axios reports that some in the administration have even started gaming out potential replacements to lead the institution—tossing around names like former U.S. vice president Al Gore and U.S. climate envoy John Kerry. (Biden’s stance on Malpass is not known, and White House officials did not respond to a request for comment.)

Malpass, who was appointed by then-President Donald Trump in 2019 to serve a five-year term, has since attempted to walk back his remarks— both in an interview on CNN and a note to World Bank staffers.

“I’m not a denier,” he said on CNN, saying his remarks had been “tangled” and he was “not always good at conveying” his message. “I don’t always do the best job in answering the questions or hearing what the questions are,” he said.

In his letter to World Bank staff, Malpass said the "sharp increase in the use of coal, diesel, and heavy fuel oil in both advanced economies and developing countries is creating another wave of the climate crisis."

"Anything seen in a different light is incorrect and regrettable,” he added.

The Rundown

New York Times Europe’s shrinking waterways reveal treasures, and experts are worried

Texas Tribune EPA may try to block what could be the first seawater desalination plant built in Texas

Bloomberg A great copper squeeze is coming for the global economy

E&E News Illinois grapples with implementing 100% clean energy law

ADVERTISEMENT

Calendar

MONDAY | SEPTEMBER 26

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

TUESDAY | SEPTEMBER 27

2 p.m. The Federalist Society for Law and Public Policy Studies will hold a virtual discussion titled, "Sackett v. EPA: How Will the U.S. Supreme Court Define 'Waters of the United States'?" Learn more and register here.

THURSDAY | SEPTEMBER 29

1:30 p.m. 210 Cannon The House Select Climate Crisis Committee will hold a hearing examining the various climate provisions included in the Inflation Reduction Act.