PITTSBURGH–Ensuring energy security and addressing climate change are not mutually exclusive goals, insists Senator Joe Manchin, D-W.V., and it is imperative for the United States to pursue both.

The chairman of the U.S. Senate Energy and Natural Resources Committee offered his perspective on the outlook for the country’s energy policy during a “Message to the Industry” video conversation included in The 2022 Babst Calland Report–Legal & Regulatory Perspectives for the U.S. Energy Industry, which the law firm released in late June. Joining Manchin in the report’s introductory webinar recording were Babst Calland energy attorneys Joe Reinhart, Moore Capito and Jim Curry.

The firm says its 12th annual energy analysis also contains perspectives from energy attorneys on critical issues facing the industry, including:

• Regulatory developments and enduring concern about climate change;
• Cybersecurity risks and the steps companies can take to minimize them;
• The U.S. Securities and Exchange Commission’s environment, social and governance-oriented disclosure requirements, as well as federal and state efforts to promote environmental justice;
• The role hydrogen and carbon capture and sequestration can play, as well as the factors influencing how quickly both technologies can expand;
• Recent and pending regulations related to permitting and operating pipelines; and
• The challenges renewable energy companies must overcome as they secure land and permits.

During the half-hour discussion with Manchin, the senator emphasized that laudable environmental ambitions must be rooted in reality. “You cannot just be aspirational and think ‘This is my wish; I wish it would work that way,’” Manchin advised. “It’s not the real world that we live in–and I have seen the real world. The world depends on the United States of America and West Virginia to provide what they need: life-saving energy that provides for them, their families and their economies.”

U.S. companies produce energy with environmental standards that are much higher than their counterparts in places such as the Middle East, Russia and Venezuela, but American producers must continue shrinking their environmental footprint, he said. Such improvement will come through the industry’s creativity, Manchin predicted, and not through artificial constraints intended to speed fossil fuels’ demise.

“Elimination is not the way to go,” the senator assessed. “Innovation is the way to go.”

Secure Energy Supplies

Reflecting on the United States’ top energy challenges and opportunities, Manchin said the United States must protect itself from the sort of supply chain limitations that have confronted many European countries since Vladimir Putin ordered Russian forces to invade Ukraine. The senator noted that when Germany’s Green Party gained power years ago, it not only embraced alternative energy sources, but also moved to shut down affordable and dependable traditional energy.

“They had nothing to replace it with and got themselves in one heck of a mess,” Manchin observed. “Now they are trying to scurry around and build portable liquefied natural gas terminals.” 

Alternative energy sources face their own supply chain vulnerabilities that the United States and its allies will do well to avoid, the senator advised. Efforts in Washington to greatly expand the share of electric vehicles in U.S. fleets without securing and diversifying the components critical to building and powering them is short-sighted, he warned.

“China has captured 80% of processing of all rare earth minerals in the world, which is exactly what we need to have to build the batteries these vehicles run on,” Manchin observed. “I am old enough to remember standing in line trying to buy gasoline in 1974 when OPEC decided to shut us off . . . I sure as heck am not going to sign up to wait for that next battery in 2030 or 2035 when (China) won’t ship over the products we need to build that battery because we have not become self-reliant.”

To advance local supply chains, the senator said he was helping arrange a North American alliance on matters such as energy and critical minerals. After all, he suggested, Chinese Premier Xi Jinping is drawing lessons from the energy leverage Putin has used against Europe.

As for the leading opportunities Manchin mentioned, the senator pointed toward the United States’ ability to replace significant volumes of Russian oil and gas with production from plays such as the Marcellus and Utica shales. By contrast, he noted, Russian gas is “produced with much more emissions (that harm) the atmosphere.

“This is going to be truly historic,” he predicted. “We have to make sure we can give (European countries) all that support. The greatest support they need is dependable, reliable energy and that is what the United States can do.”

Ultimately, the senator urged, “We must demonstrate that the United States and our allies are going to lead the global decarbonization and produce fossil fuels with lower emissions than any other countries in the world. This includes continuing efforts to minimize methane emissions, growing the production and use of hydrogen, and deploying carbon capture utilization and storage.”

During the half-hour discussion with Manchin, the senator emphasized that laudable environmental ambitions must be rooted in reality. “You cannot just be aspirational and think ‘This is my wish; I wish it would work that way,’” Manchin advised. To hear Senator Manchin’s remarks, request access to the report at https://reports.babstcalland.com/energy2022-2/.

Transmission Infrastructure

Attorney Moore Capito posed a question that centered on opportunities that Manchin perceived to boost U.S. energy production and plausible policy paths to enable them. The senator acknowledged that U.S. political realities limit the scope of possibilities, in part because the Senate has 50 Republicans and 50 Democrats.

“We are in historic times,” he said. “The Senate has never been evenly split for this long in . . . 237 years. Never. Five-six months is as long as it was ever split before. So how do we navigate that?”

As the country works to mitigate energy supply risks, he suggested, policymakers should adopt a broader perspective that integrates big-picture considerations. The country should steer clear of skewed trade practices that make it easy to import from foreign countries with poor records on human rights and environmental protection, Manchin argued.

“Not that we are protectionist, we are just basically trying to level the playing field,” he characterized. “If you are just going to (ignore human rights and the environment) in your country–because it’s communistic or an autocracy–and . . . ship goods into our markets, that has got to stop.”

Although many of Manchin’s congressional colleagues assure him they understand the importance of U.S. energy supplies, he said they also cheer efforts to frustrate pipeline construction. “The Mountain Valley Pipeline is almost 90%-95% completed and the Third Circuit (Court of Appeals) keeps stopping us from moving forward to complete it. That would put 2 billion cubic feet a day into the market,” he lamented. “Until I see those people . . . making a deal in the real world, with its real challenges, I am sure not going down their path and saying, ‘Throw caution to the wind.’

“I want to develop the new technologies for the future,” he assured. “It’s going to have to coexist with realizing that we have to have a real robust fossil industry here.”

Manchin took issue with fossil fuel opponents’ contention that the United States should stop building pipelines to address climate change. “They have been shutting us down everywhere they can,” Manchin described. “They talk a good game, but then they put up so many obstacles. So I said, ‘Fine. Don’t count on me helping you on other areas until you are able to have a clear path of 10 years of how we are going to be able to drill (and) . . . produce.’”

To that end, the senator highlighted the senselessness of imposing strict methane regulations without supporting more transmission infrastructure. “You cannot fine me for methane escape when you will not let me build a pipeline to take the methane,” he mused. “You are either going to be on the team with us or sitting on the sideline watching us play the game.”

Babst Calland’s report also discusses the business outlook for the energy industry and contains sections on climate change; cybersecurity; ESG and environmental justice; hydrogen and carbon capture and sequestration; pipelines; and renewables. To request access, visit https://reports.babstcalland.com/energy2022-2/.