The Department of Energy is racing this year to finalize clean energy regulations and disburse billions of dollars in grants and loans as President Joe Biden’s prospects for securing a second term hang in the balance.
That administrative work will directly impact whether — and when — U.S. climate goals can be reached. The Biden administration also faces increasing pressure from environmental groups to crack down on fossil fuels, including liquefied natural gas exports — a dynamic that could affect the president’s support on the left heading into the 2024 election.
Front and center for DOE in 2024 is a full-scale blitz to implement clean energy programs in the 2021 bipartisan infrastructure law and Inflation Reduction Act (IRA) of 2022. Together, the laws awarded DOE $97 billion and hundreds of billions of dollars in loan guarantees, and the department is playing a central role in devising the tax credits that are spurring dramatic growth in energy manufacturing.
DOE Deputy Secretary David Turk recently told staff that 2023 was “the single most impactful year our Department of Energy has ever had,” pointing to dozens of new programs launched at DOE under Biden.
“But hold on, everybody rest up,” Turk said he told the staff, according to a December interview with E&E News. “Because 2024 is going to be even more impactful with even more of the [bipartisan infrastructure law] and IRA funding really hitting the floor, in terms of really helping real-world communities and companies [and] unions.”
Another test for DOE in the coming months will be its ability to stand up a $7 billion hydrogen hub program with the broad range of companies that are collaborating on seven projects nationwide to demonstrate commercial-scale production of the fuel.
Laurie Purpuro, a government affairs adviser in the public policy and law group at K&L Gates, said new guidance on the hydrogen tax credit could complicate the rollout of the hubs. But she hailed the “historic pivot” underway at DOE from its traditional role as subsidizer of early-stage research and development to its current status as a powerful market driver.
She also noted DOE initiatives on renewable energy supply chains and industrial decarbonization.
“They are the one agency, at least under the Biden administration, where decarbonization is all they do, even in the fossil energy office,” said Purpuro, who was a senior policy adviser at DOE in the George W. Bush administration.
Many environmentalists see it differently. They point to record levels of U.S. oil and gas production and exports under Biden.
U.S. liquefied natural gas exports, which DOE is tasked with approving or denying, have spiked dramatically in recent years. In the first half of 2023, U.S. exports averaged 11.6 billion cubic feet per day, making the U.S. the largest LNG exporter globally.
Greens say the increased fossil fuel production and exports are a threat to both the climate and the 81-year-old Biden’s reelection prospects.
“It is increasingly clear what needs to happen on fossil fuels, and Biden is objectively nowhere close to that,” said Collin Rees, U.S. program manager at the environmental group Oil Change International, an environmental group opposed to fossil fuels. “There is tremendous anger among young people. The poll numbers are really down. I think climate is a top issue, and it’s absolutely endangering his chances.”
Among Americans age 18 to 29, Biden still edges out his likely adversary in the election — former President Donald Trump — by 19 points on climate policy, according to a recent Harvard University poll. Biden is struggling to notch a 40 percent approval rating among voters of all ages.
At the COP28 climate summit last month in Dubai, United Arab Emirates, the U.S. and other parties agreed to triple renewable energy capacity by 2030 and transition “away from fossil fuels” to try to keep temperature rise at 1.5 degrees Celsius compared with the preindustrial era.
Here are three issues to watch at DOE in 2024:
Hydrogen blitz
The bipartisan infrastructure law is intended to help build a clean hydrogen industry in the U.S. The Biden administration says the zero-carbon energy source — now largely produced with fossil fuels and serious emissions — is front and center in its decarbonization campaign.
“We’re very optimistic that we can stand up a green hydrogen industry in this country,” John Podesta, senior adviser to Biden for clean energy innovation and implementation, told reporters in December. “It’s gonna be absolutely essential, particularly in the 2030s and 2040s, to decarbonize some parts of the economy.”
The $7 billion tentatively awarded to the hubs in October is still in DOE’s hands.
“The hubs haven’t gotten federal funding yet,” Turk said in the interview. “Those negotiations take months. We’re trying to have as many of them as quickly as we possibly can. But some of them will take a year or even more.”
The hub funding is leveraging $40 billion in private sector funds, according to Turk. He also pointed to a $1 billion federal purchase program for hydrogen. The Biden administration expects the seven hubs to produce 3 million metric tons per year.
But the release of guidance on the hydrogen tax credit — months late and just days before Christmas — was met with a fierce rebuke by many of the biggest hydrogen firms, including some that are pivotal to the hubs and will rely on the credit to boost bottom lines. Purpuro said the credit is a “problem” for the Biden administration.
“Some hubs are concerned that they won’t pencil out if the proposed rule becomes final,” she said.
To claim the full credit of $3 per kilogram of hydrogen, companies will need to immediately start using new clean electricity produced in the same region of a hydrogen facility. In 2028, eligible projects will need to match the electricity used to produce hydrogen with new clean electricity production on a strict hourly basis.
Hydrogen companies that plan to use electrolysis powered by zero-carbon energy praised the rules.
“We’re ready to take action to support the immediate advancement of renewable hydrogen as a decarbonized, zero-carbon, zero-methane clean energy alternative,” Laura Luce, CEO of Hy Stor Energy, told E&E News in a statement. “This essential decision will support long-term, economy-wide decarbonization.”
Also in 2024, DOE is shepherding $6 billion in industrial decarbonization funds; $3.5 billion in battery processing grants; new transmission projects to transport clean energy from production sites to load centers; and major demonstration projects for carbon capture, utilization and storage (CCUS), which industry is eyeing to continue producing fossil fuels without the climate damage.
Charles McConnell, who ran DOE’s Office of Fossil Energy in the Obama administration, said permitting roadblocks for carbon capture storage sites are stymieing private sector investment.
“There’s very little construction progressing right now in CCUS as the majority of significant spending is in development dollars,” he said in an interview. “It’s a troubling circumstance that we’re in right now with permitting and the regulatory uncertainty. One does not invest billions of dollars into an investment portfolio on the come.”
On Dec. 28, EPA gave Louisiana regulatory primacy over CO2 storage sites in the state.
LNG firestorm
So far, DOE hasn’t denied a single LNG export project under the Biden administration.
Tyson Slocum, director of energy at the consumer advocacy group Public Citizen, said the Natural Gas Act of 1938 gives DOE “unbelievably strong statutory authority” to regulate or deny exports. The law says federal regulation on exports “is necessary in the public interest.”
But LNG supporters say other provisions favor exports.
“There is a presumption in the Natural Gas Act that LNG exports are in the public interest,” said Fred Hutchison, CEO of the industry group LNG Allies. “DOE has to find that an application for authorization for export is inconsistent with the public interest. So it’s a fairly subtle nuance but one that’s very important.”
Podesta recently hinted at a change in U.S. LNG export rules.
“We have those under advisement. We’ll have more to say about that in the future,” he told reporters.
A spokesperson for Podesta did not respond to an E&E News request for more details of the administration’s LNG plans. The spokesperson also did not respond to a request for comment on the environmental criticism of exports.
The White House has previously said U.S. LNG exports are instrumental in keeping the lights on in Europe following Russia’s invasion of Ukraine, which prompted European countries to cut off Russian gas supplies. Biden administration officials also say LNG exports are replacing coal globally, leading to billions of tons of avoided carbon emissions.
Both arguments are championed by the U.S. LNG industry.
“If you don’t stop the production of CO2, mostly from the burning of coal … you’re not getting anywhere globally. That’s what’s overlooked,” Hutchison said. “What role can U.S. LNG play in a couple-of-decades kind of time frame? We still think it’s a very significant role.”
While natural gas emits far less CO2 than coal, environmentalists say previously misunderstood methane emissions and leaks are fueling climate change. Methane has more than 80 times the warming potential of carbon dioxide over two decades, climate scientists say. Hutchison said environmentalists overlook methane emissions from coal beds.
A recent report from Oil Change International projects a doubling of U.S. LNG exports by 2035, alongside a 23 percent increase in petroleum product exports over the same time. A separate analysis from the Center for Biological Diversity, another environmental group, suggests fossil fuel emissions under Biden will eclipse the decarbonization gains produced by the infrastructure law and the Inflation Reduction Act.
Slocum is aggressively contesting U.S. LNG plans like Venture Global’s CP2 project near Lake Charles, Louisiana.
“It’s just terrible policy positions by the administration. They’re giving the oil and gas industry largely what they want and get beat up every day for it,” said Slocum. “Exports are the Achilles’ heel of the Biden administration’s climate efforts. The IRA — an amazing feat and having real impacts — is being eviscerated by unregulated fossil fuel exports.”
Climate and efficiency
The Biden administration is looking for major climate wins with regulations on a sweeping range of household products and energy equipment like transformers.
DOE says “past and planned” efficiency rules under the Biden administration will — over the next 30 years — cut at least $570 billion from U.S. utility bills and avert more than 2.4 billion metric tons of greenhouse gas emissions. The department is required by law to periodically update efficiency regulations, which are meant to decrease energy use rather than greenhouse gas emissions.
In 2024, the department is finalizing sensitive efficiency rules. After months of pushback from Republicans, some Democrats and many companies, DOE is poised to settle on a compromise standard for gas stoves that averts legal challenges.
A residential water heater standard at DOE, due by April, could avoid more than 500 million metric tons of carbon dioxide over 30 years. That’s more than 20 times the carbon savings of the agency’s potential gas stove regulation.
The department also plans to finalize efficiency regulations for dishwashers, clothes dryers and washers, ceiling fans, consumer boilers, vending machines, electric motors, commercial ice makers, and other appliances. And a new final rule on distribution transformers could cut 256 million metric tons of CO2 over 30 years.
U.S. greenhouse gas emissions totaled 6.3 billion metric tons of carbon dioxide equivalents in 2021, according to EPA’s most recent data.
Efficiency supporters say the energy savings required by DOE regulations are critical to help address climate change.
“Completing these rules is essential for meeting climate goals and reducing costs for consumers at the same time,” said Andrew deLaski, executive director of the Appliance Standards Awareness Project. “2024 is going to be a big year for saving energy.”
But parts of the energy industry, led by the American Gas Association, are pushing back. The gas sector is suing DOE over a recently finalized regulation on residential gas furnaces, arguing that rule will ban some furnace models and spike costs for consumers.
Some critics of the Biden administration predict more fights in 2024.
“[The gas industry’s] concern broadly — and it’s my concern too — is that the standards process is being used to tilt the balance in favor of electric versions,” said Ben Lieberman, a senior fellow and environment expert at the conservative Competitive Enterprise Institute. “The natural gas industry clearly doesn’t like that.”
The American Gas Association didn’t respond to requests for comment about the organization’s litigation strategy over the coming months.
