Debt fight, China shadow Biden's climate goals: Takeaways from POLITICO's Energy Summit

Government and industry energy leaders warned of clouds ahead for the transition away from fossil fuels — including the near-term threat of a debt default and larger questions about U.S. dependence on nations like China.

Meanwhile, President Joe Biden’s administration continues to try to walk the line between championing green energy and approving projects that help fossil fuels.

POLITICO hosted its first-ever energy summit on Thursday to discuss how the United States is positioning itself on that path toward a clean energy future.

Here are the takeaways from the day:

China’s dominance of supply chains won’t be easy to end

Energy Secretary Jennifer Granholm acknowledged the United States’ reliance on China for clean energy technologies such as batteries and solar panels, but said the Biden administration is moving to shore up supply chains domestically through Democrats’ climate law and other legislation.

“I don't think we should be satisfied with saying, ‘We'll give this component to China.’ We've seen what it's like when any country relies on one supplier — it makes you vulnerable,” Granholm said. “If we're going to be strong, we have to develop our own American-made energy, the whole thing, soup to nuts.”

The Biden administration has had to balance two sometimes contradictory goals of switching the nation away from fossil fuels, while also cutting reliance on China. Its efforts to meet the second goal included protectionist measures that have angered U.S. allies in Europe.

“We have been at the whim of our economic competitors, particularly China, that has obviously had a strategic plan to corner the market in this area,” Granholm said. "And that's something we should be doing for us.”

The secretary touted the clean energy tax incentives under the Inflation Reduction Act, last year’s mammoth climate law, which strive to spur both a demand for and supply of zero-carbon energy. She also cautioned against anti-China rhetoric that could send signals that the U.S. is not welcoming of the Chinese diaspora.

“It's an economic competitiveness game and I think we ought to be careful — really careful — about sounding that we are anti-Chinese or anti-Chinese Americans,” Granholm said.

Jigar Shah, the director of the Department of Energy’s loan programs office, said the U.S. wants to attract foreign direct investment, but outlined processes DOE takes to mitigate foreign influence.

And Sharon Burke, president of the research firm Ecospherics and a former Obama administration defense official, noted that “we can’t decouple [from China] even if we wanted to.”

Debt ceiling fight looms over the energy industry

The White House and congressional negotiators are nearing a deadline to come to an agreement on the federal debt ceiling or else risk an economically catastrophic default.

House Speaker Kevin McCarthy expressed optimism earlier Thursday that an agreement can be made in time, but the parties have been divided on crucial issues, including Republican demands on fossil energy policy.

Both sides of the debate have expressed interest in attaching some change in energy permitting requirements — aimed at ensuring faster approval of energy projects — to a broader budget deal, but the parties have not yet agreed on what that would look like.

Democratic New Mexico Gov. Michelle Lujan Grisham warned that holding the debt ceiling “hostage” could threaten states’ economic growth and ability to take action on climate change.

Former Maryland Rep. John Delaney, also a Democrat, said debt ceiling fights are “utterly pointless and a complete waste of time,” but was optimistic about a deal.

“They’re always a roller coaster of emotions, there’s standoff, but they ultimately all get solved,” he said.

And Sen. Ed Markey (D-Mass.) urged the White House to invoke the 14th Amendment to end negotiations over the debt limit, rather than accede to Republican policy demands. Legal scholars are divided on whether the president could use the amendment, which says the validity of the national debt “shall not be questioned,” to get around the limit.

Everyone wants permitting changes

Leaders from both the fossil fuel and clean energy sectors called on Congress to act on changes to permitting, calling it necessary to provide the certainty that is required by the industry.

But Markey said progressives and advocates for communities burdened by pollution won’t accept a permitting deal struck under the pressure of a debt limit deadline.

“We’re not going to get to a solution [on permitting] if it’s stuck into a last minute deal in order to make sure that the United States government does not default on its financial obligations,” Markey said. “It’s by definition, unacceptable.”

Granholm added during her remarks that there is “an urgent need’’ to move on permitting.

“In the context of the debt ceiling, that’s happening right now, but we should also be negotiating permitting,” Granholm said. “We all feel this huge sense of urgency about it. It is insane that it can take 10 years or more for a transmission line. It’s just not acceptable.”

Critical minerals are creating an environmental dilemma

The U.S. lacks many of the critical minerals needed for the clean energy transition. The Biden administration is facing pressure to boost domestic supply while also maintaining environmental protections.

Burke said environmental groups are beginning to recognize that increasing domestic mining and refining will be necessary to meet climate goals.

“We have to make this transition, and the only way to do it right is to put all the rocks on the table,” she said.

The nuclear industry, too, has a supply chain that relies on a foreign adversary, a top nuclear official at the Energy Department acknowledged.

Michael Goff, principal deputy assistant secretary for the Office of Nuclear Energy, said Russia supplies roughly 20 percent of U.S. uranium, but “can’t remain a long term supplier for us.”

DOE is looking for ways to replace that, he said, while maintaining reliability for Americans who rely on nuclear power and ensuring supply of the specialized form of uranium needed for proposed advanced nuclear plants, which is now dominated by Russia.

Biden’s balancing act

Granholm defended her support for moving forward with the Mountain Valley Pipeline in the face of several protesters who disrupted the event to protest the project.

The pipeline, which would carry natural gas from West Virginia to Virginia, has attracted fierce opposition from environmental groups.

“We know that there is a real desire to have energy security in areas where there's huge demand for power,” the secretary said. “We also know that we have got to accelerate investment in clean.”

The remarks underscores the Biden administration’s balancing act in keeping its climate goals intact while acknowledging the continued role of the oil and gas industry in the economy.

“To the point of the protesters here, these are really hard decisions,” Granholm said. “We are in this transition. We want to be able to ensure that our allies can turn on the lights.”

Markey said he is optimistic that the U.S. will be looking at fossil fuels in the “rearview mirror” as the nation moves toward electric vehicles.

“This era of oil is coming to an end very quickly,” Markey said. The senator added, however, that opposes “unnecessary” leasing to oil and gas companies.