More than anything, “massive cuts” in output outside government-driven reductions by OPEC+ countries, from producers in countries such as the U.S. and Canada, are helping the oil market show signs of a “gradual but fragile” recovery.

Countries that are not a part of the Saudi and Russia-led OPEC+ agreement cut their production 3 million barrels per day in April compared to the start of the year. The decline could reach 4 million barrels per day in June, “with perhaps more to come.”

Assuming OPEC+ fulfills its pledge to cut production by 9.7 million barrels per day, IEA estimates a reduction in global supply in May of 12 million barrels per day, falling to a nine-year low of 88 million barrels per day. The world normally consumes 100 million barrels per day of oil.

The IEA has also revised upward its demand forecast after overcoming the depths of a “Black April” when the U.S. oil price fell below zero for the first time ever. As countries begin opening their economies, and drive more, demand will likely drop in 2020 by 8.6 million barrels a day, instead of 9.3 million barrels per day as IEA projected last month.

But global oil demand would still be “sharply down” from last year by 19.9 million barrels per day, and a “resurgence” of the coronavirus is a “major risk factor” for demand going forward.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). 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.

WHAT IT MEANS FOR TRUMP AID TO OIL INDUSTRY: The signs of the recovery in the oil market have policy implications in the U.S.

Energy Secretary Dan Brouillette has suggested in recent media interviews and public comments that the Trump administration is not planning additional specific help for the oil industry beyond what it has offered already.

“For the time being, the first steps we’ve taken are going to be what we do. I’m not anticipating any broad strokes here beyond what we’ve already done,” Brouillette told Axios for a story posted Wednesday. “We’re not contemplating, as I sit here today, a specific second or third step. It may come if the results of the plan aren’t panning out the way we had hoped.”

That means our take from a few weeks ago proved prescient when we predicted the Treasury Department’s expansion of the Main Street lending program was the main component of its financial rescue plan.

Brouillette, in a recent conversation with Daniel Yergin, the vice chairman of IHS Markit, said extending eligibility of the program to the oil industry will allow for mid-sized companies access to liquidity to stay alive during the pandemic.

“It’s really that middle category of players—very strong companies, very good technologies, very good at what they do—but simply facing an extraordinary time given the lack of demand,” Brouillette said.

The Trump administration has also rented space for companies to store excess oil in its Strategic Petroleum Reserve, and is looking to make purchases of crude to fill the emergency stockpile. And it has helped Saudi Arabia and Russia to broker the OPEC+ agreement to cut production.

SPEAKING OF SPR…EXPLAINING DOE’S NEW ‘TEST’ PURCHASE: The Energy Department issued a solicitation for bids Wednesday to purchase up 1 million barrels of oil for the SPR.

In a press release, DOE touted the move, demonstrating the agency “acts on Trump’s order to purchase oil for the SPR.”

Energy analysts told Josh the DOE initiative is really a test run to understand the quality of light crude used by small U.S. producers in the event DOE can do a bigger SPR fill through funding from Congress, which Democrats have rejected so far.

“A priority from the beginning was to help reduce the domestic glut by storing crude smaller domestic producers that tends to be lighter in quality,” said Bob McNally, president of Rapidan Energy Group and a former top oil official in the George W. Bush administration.

Glenn Schwartz, director of U.S. energy policy at Rapidan, said there is no precedent for DOE doing a test purchase like this, but he expects the agency to argue it can do it without Congress since it’s for such a small amount of oil.

The research group ClearView also hypothesized another potential rationale for DOE’s action.

“Perhaps one of the potential ‘benefits’ of this test could be a signal to Capitol Hill that domestic producers might be willing to sell crude to the U.S. Government at very favorable prices,” ClearView wrote in a note.

ENERGY DEPARTMENT IMPLEMENTS ADVANCED NUCLEAR REACTOR PROGRAM: The Energy Department announced Thursday it is launching a $230 million program to demonstrate the viability of advanced nuclear reactors.

Through a cost-sharing agreement with private industry, DOE’s Office of Nuclear Energy will provide $160 million for initial funding to build two reactors that can be operational within the next 5 to 7 years. The program is implementing a directive from Congress, which appropriated funding for it in its fiscal year 2020 budget.

“Advanced nuclear energy systems hold enormous potential to lower emissions, create new jobs, and build a strong economy,” said Rita Baranwal, assistant secretary for the Office of Nuclear Energy. “This new program creates a tremendous opportunity for the U.S. to provide clean energy and expand our market opportunities.”

DEMOCRATS WORRY BIG OIL COULD TAKE ADVANTAGE OF COVID LIABILITY FIGHT: Dozens of Democratic lawmakers are on high alert that fossil fuel companies could be seeking more than just liability protections from virus-related lawsuits.

“The fossil fuel industry is looking for ways to immunize itself against liability for the massive environmental damage it has caused, and we should make sure that doesn’t happen in the chaos of the COVID-19 crisis,” Rep. Jamie Raskin, a Maryland Democrat, told Abby in a statement. Raskin led a letter May 4 with 60 Democrats calling on Congress to “categorically oppose” any efforts to limit fossil fuel companies’ liability for the damages they cause.

Industry groups say Democrats are playing politics, accusing them of something they aren’t even asking for. Environmentalists, though, say lawmakers shouldn’t be fooled, because any liability waiver fossil fuel companies seek would be accomplished behind closed doors.

More in Abby’s story posted this morning.

FORMER INSLEE STAFFERS LAUNCH CLIMATE POLICY GROUP TO HELP BIDEN: Former Jay Inslee campaign staffers launched a policy advocacy group Thursday called Evergreen to function as a “comprehensive roadmap” for the next president and Congress to confront climate change.

The former Inslee staffers, led by Sam Ricketts, who was climate director for the Inslee campaign, and Bracken Hendricks, the campaign’s senior adviser for climate policy, are fulfilling their promise of keeping their former boss’s ideas alive and pushing for presumptive nominee Joe Biden to borrow from it.

Evergreen’s policy platform, modeled after Inslee’s, is based on three principles: setting standards, or mandates, to reach net-zero emissions in various sectors; investing trillions in public and private funding on infrastructure and clean energy R&D to create an “Evergreen Economy”; and confronting environmental and economic injustice.

Evergreen is also proposing a $1.5 trillion stimulus policy called “Clean Jumpstart” that includes 11 ways Congress can make clean energy part of an “aid to states” package coming out of the pandemic.

Ricketts told Josh in an interview that he has been in touch with the Biden campaign about the Evergreen plan, and is impressed with the presumptive nominee’s efforts to engage with progressives, youth groups, and others in the climate movement who were initially skeptical of Biden’s centrist background.

“Their campaign has clearly demonstrated they see the climate crisis as a galvanizing urgent priority and see it as a galvanizing force for unity in the Democratic party,” Ricketts said. “They have already made commitments to continue on their climate vision, knowing policy is iterative and there is always something else to do.”

Maggie Thomas, Evergreen’s political director who worked on Inslee’s campaign and later was a climate adviser for Elizabeth Warren‘s campaign, told Josh the new group would help Biden fulfill his pledge to add more detail to his climate agenda in the coming months.

“You can’t do climate policy without the politics, and you can’t do politics without the policy,” Thomas said. “It’s really important to do those two things together and get it right.”

CLEAN ENERGY JOBS TAKE A BIG HIT: In just two months, the coronavirus pandemic has wiped out more than three years of employment growth in the clean energy sector, as nearly 600,000 jobs in energy efficiency, renewable energy, and clean vehicles have been lost.

Those numbers come from analysis of unemployment data released Wednesday by BW Research, Environmental Entrepreneurs, the American Council on Renewable Energy, and E4TheFuture. The groups project the clean energy sector could lose 850,000 jobs, or a quarter of its total U.S. workforce, by the end of the second quarter.

Will the numbers be a wake-up call? House Democrats’ latest coronavirus relief bill doesn’t include any clean energy provisions. But advocates are hoping the employment losses can prompt Congress to make the tweaks to renewable energy tax credits companies have been asking for, especially since the changes wouldn’t be a heavy lift or cost the taxpayer.

At least one Democrat is already on board. “The next #COVID19 package needs to include support for the clean energy sector, which has been devastated by the pandemic,” Massachusetts Sen. Ed Markey tweeted Wednesday, citing the job loss data. “Our response can’t just be a reaction, it has to be an investment in the technologies & workers who will power this country’s future.”

Dig into the data, and the politics, in Abby’s story from yesterday.

STATES CHALLENGE EPA’S VIRUS ENFORCEMENT POLICY: Nine state attorneys general, led by California and New York, sued the EPA on Wednesday, arguing the agency’s decision to allow enforcement flexibility during the pandemic is unlawful in part because the EPA failed to show why it needed the “sweeping change” to normal enforcement procedures.

“The Trump Administration is trying to use the current public health crisis to sweep environmental violations under the rug,” said California Attorney General Xavier Becerra, a Democrat, in a statement. “What’s worse, the Administration is doing so even as evidence grows that communities exposed to air pollution are at increased risk from coronavirus.”

The EPA has come under heavy fire from Democrats and environmentalists for its decision in March to generally not seek penalties if companies miss routine pollution monitoring and reporting deadlines amid the pandemic. A coalition of environmental groups has also sued over the agency’s policy.

Pot calling the kettle black: In separate letters Wednesday to Becerra and New York Attorney General Letitia James, EPA enforcement chief Susan Bodine defended the policy. The agency is still enforcing environmental laws, she wrote, and she cited several examples of what she said are similar enforcement discretion decisions from state and local agencies.

“I find your criticism of EPA’s Temporary Policy to be particularly surprising given the enforcement discretion offered by California agencies,” Bodine wrote in her letter to Becerra.

FERC’S CHATTERJEE REJECTS REQUEST TO HALT PIPELINES: Republican FERC chairman Neil Chatterjee formally rejected a request by Virginia’s Democratic attorney general asking the commission to halt approvals of pipelines during the course of the pandemic.

Virginia’s Mark Herring is one of several Democratic attorneys general who’ve urged FERC to halt fossil fuel infrastructure approvals, arguing the public can’t properly weigh in on projects when it’s being told to stay home.

Chatterjee, in a letter to Herring, said FERC retains a “deep commitment to transparency and public participation in all its proceedings” and has transitioned successfully to a largely remote work environment, continuing to absorb public comments through the web.

“The public’s need for strong energy infrastructure is not lessened by this pandemic,” Chatterjee said.

Mary O’Driscoll, a FERC spokeswoman, said Chatterjee plans to respond to all attorneys general asking for a moratorium on approvals.

YOUNG CONSERVATIVES WANT CONGRESS TO BUILD BACK SUSTAINABLY: The American Conservation Coalition is looking to build momentum for clean energy and conservation policies as part of economic recovery legislation, with a call to action campaign that ends Thursday.

“As Congress looks at how to get Americans back to work, we hope that they will prioritize creating economic prosperity and environmental sustainability,” said Quill Robinson, ACC’s vice president of government relations, in a statement. The push follows ACC’s recent release of its overarching climate agenda, which lays out a framework to move toward net-zero greenhouse gas emissions globally by 2050.

STIMULUS PRESENTS OPPORTUNITY FOR CLEAN MANUFACTURING: If the U.S. doesn’t take it, it risks ceding even more of the growing clean energy market to China and other countries, according to a new report from the Progressive Policy Institute.

China currently controls 73% of the market for electric car batteries (compared to 12% from the U.S.), and nearly 50% of electric cars globally are built in China, the report notes. But a forthcoming economic recovery package offers the U.S. the chance to capture some of that market share, if it includes ambitious incentives for electric cars and charging infrastructure investments, the report says. The report lays out a number of similar scenarios for other clean technologies, including battery storage, next-generation biofuels, carbon capture and storage, advanced nuclear, and hydrogen fuel cells.

“Clean energy manufacturing represents perhaps the biggest new growth opening for American industry in the coming years,” said Paul Bledsoe, a strategic adviser at PPI who authored the report. “If Republicans in Congress will not support this agenda, then Democrats including Joe Biden should make these issues a centerpiece of the 2020 election debate.”

The Rundown

New York Times In a first, renewable energy is poised to eclipse coal in US

Bloomberg World’s biggest wealth fund dumps $3 billion in fossil fuels

Axios Climate-change funders shift focus amid pandemic and election

New York Times Venezuelan oil company sues Miami ex-congressman over $50 million deal

Utility Dive Duke CEO decries ‘assault’ on natural gas as shareholders, others blast company’s resource plans

Calendar

THURSDAY | MAY 14

The Senate is in session.