ESG Insight From Washington

We share views from Christopher Sheeron - The first-ever guest author for C-MACC's most recent ESG and Climate report titled "Does DC Understand Economics – Energy Proposals Suggest No".

Main Points from this report include:

• Discussing some likely unworkable “band-aid” legislative initiatives emerging to combat energy inflation.
• Everything proposed looks to have potentially damaging unintended consequences, except the “produce everything” Republican plan.
• The Republican plan falls short, in our view, by not mentioning greenhouse gases and the party has likely missed a great opportunity to show holistic leadership.
• We highlight more challenges for wind and solar capacity growth, despite the tariff removal in the US – the answer is more CCS and possibly hydro-power.
• Otherwise, we look at chemical recycling and waste disposal vs recycling. We also look at water, as a source of renewable power and a source of lithium!

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In other news from Washington, two issues warrant significant attention. Both fit neatly into the theme of bad energy policies. The first is NOPEC, short for the No Oil Producing and Exporting Cartels Act. Political followers know that Congress has been advocating for, in some form or another, legislative language that would rein in OPEC for almost 20 years. For the uninitiated, NOPEC would give the U.S. Justice Department the authority to sue OPEC over antitrust violations. It has failed to succeed under Presidents Bush, Obama, and Trump. Rightfully so. NOPEC is now rearing its ugly head again amidst the backdrop of soaring crude oil prices and skyrocketing gasoline and diesel prices. Last month, the Senate Judiciary Committee advanced the bill (S.977) by a vote of 17 – 4. Lawmakers supporting the bill are equally bipartisan – and injudicious. NOPEC is sponsored by Sen. Chuck Grassley (R-IA) and co-sponsored by Sens. Patrick Leahy (D-VT), Mike Lee (R-UT), and Amy Klobuchar (D-MN). It remains to be seen when, or even if, Senate Majority Chuck Schumer (D-NY) brings the bill to the Senate floor. Regardless, the timing of such political theatre could not be worse.

As detailed in the Exhibit below, OPEC member countries account for roughly 40% of global crude oil production, with the 13 member countries producing 33.75 MMB/D in Q1 this year.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, June 2022

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