One person to start: Joe Biden. In energy terms, the administration is already flying. The US rejoined the Paris climate agreement within hours of the inauguration yesterday and a salvo of other big moves demonstrated the White House’s change of attitude on energy and the environment — from scrapping the Keystone XL pipeline permit to scores of agency reviews.
Welcome to Energy Source. Clean energy policy is suddenly at the centre of a vast federal plan to revive the American economy. And an era of deregulation and fossil fuel promotion in the world’s biggest and most consequential energy market is over.
Amid the celebratory mood among Mr Biden’s supporters, it is still worth pointing out that the battle to revolutionise the US energy system has only just begun. Congress, specifically the divided Senate where Mr Biden’s Democrats hold the most narrow of majorities, will decide the future of the sweeping clean-energy legislation the new president seeks.
Then there’s the conservative-leaning judiciary too. Despite this week’s stunning DC Circuit ruling against the Trump administration’s power emissions rules — a telling coda to an era of rampant deregulation — the Supreme Court and its Trump-appointed justices await.
But don’t overlook this ground-shifting moment for global energy. With the White House arrival of Joe Biden, a man who said the US needs to “transition away from the oil industry”, America will re-enter the collaborative global climate effort and put renewables at the heart of an urgent economic stimulus programme.
Naturally, we’re focusing on Mr Biden today: what the first main energy steps are and what they mean. Data Drill looks at the Trump era in energy charts. Endnote picks up news about the ever-falling costs of solar power.
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“It’s time for boldness for there is so much to do,” said President Biden in his inauguration speech. Chief among the “cascading crises” he vowed to tackle is climate change.
He has not wasted time. A barrage of executive orders relating to energy and climate has led environmentalists to proclaim yesterday as the best first presidential day ever. ES took a look at some of the big shifts.
Within hours of entering the Oval Office Mr Biden informed the UN that the America was rejoining almost every other nation in pursuing the goals of the Paris climate accords.
It may be no surprise, but the significance of the move is enormous. It signals the US is serious about overhauling its economy to tackle emissions — and setting itself the challenge of proving it.
“I think that it’s symbolic to do that on the first day, obviously, but it’s also a way to set it as a top priority for this administration — a top domestic priority, top foreign policy priority and one of the biggest national security priorities,” said David Levaï, a former Paris agreement negotiator and researcher at the Institute for Sustainable Development and International Relations (IDDRI) think-tank.
It commits Mr Biden to moving beyond his campaign rhetoric to tangible action. Ahead of November’s UN climate change conference in Glasgow, the US will have to lay out a plan defining how it will cut emissions by 2030.
Mr Biden aspires to take a leading role on tackling climate on the international stage, pushing other nations for deeper emissions cuts too. For that to happen, the targets he sets out will have to align with his promises to eliminate emissions from power production by 2035 and achieve net-zero emissions across the economy by 2050. They will also have to seem realistic to the rest of the world.
Revoking the Trump administration’s permit for the Keystone XL pipeline, which would carry ultra heavy Canadian oil to the Gulf coast, is another big move. It doesn’t just kill a project that had become a front line in the climate battles, it signals to the oil and gas industry that the new administration will take a tough stance on all new infrastructure.
“This isn’t a story that’s only specific to Keystone,” said Jackie Forrest, executive director at the ARC Energy Institute in Calgary. “I would say in North America it is more and more difficult to build pipeline projects.”
Midstream operators are nervous. Dominion Energy abandoned its Atlantic Coast Pipeline last year after protracted court battles. The Dakota Access Pipeline, already operational, was almost shut down by a federal court and sparked protests supported by the incoming interior secretary. The North Dakota-to-Illinois pipeline remains mired in a legal fight and could come across Mr Biden’s desk.
Oil and gas supporters say hindering pipelines will kill production growth. Opponents, energised by the Keystone XL decision, say that is the entire point.
The Mountain Valley Pipeline in the mid-Atlantic and the Enbridge Line 3 Pipeline in the Midwest are among the projects that will provoke an activist push, said Josh Axelrod at the Natural Resources Defense Council. “We’d really like to see a lot of attention focused on the permitting of fossil fuel infrastructure in general,” he said. “It’s not just about emissions, but about the [production] they lock in for many years.”
The president ordered all departments and agencies to “immediately review and take appropriate action to address” all regulations imposed by the Trump administration that are bad for public health, the environment, science or the national interest.
The list is extensive. Trump-era rules on everything from methane emissions and fuel economy standards to wildlife protection and fracking reporting requirements on federal lands will be revisited.
Some actions that were imposed late in Mr Trump’s term can be quickly tweaked. The loosening of standards on detecting and fixing methane leaks, for example, could be reversed relatively speedily through congressional review.
Reimposing and tightening the methane rules, said Matt Watson, vice- president of energy at the Environmental Defense Fund, would be the “biggest thing that the Biden administration can do” to chalk up a quick win on emissions. It will win support from some in the oil industry, who opposed the Trump rollbacks.
Other Trump era policies will take more time to change.
“There’s clamour among climate advocates for things that Biden can do immediately with a stroke of the pen that take effect from day one — and we are already seeing that happen on an incredible scale,” said Melinda Pierce, legislative director at the Sierra Club. “Still, it's important to recognise that a number of other high priority administrative actions will take time to implement properly, and that many of these orders are about initiating a process, not completing one.”
And the Biden administration’s signals alone will trigger responses — especially when it comes to fuel economy standards.
The formality of the process means an official rule change could take months, said Michael Gerard, faculty director of the Sabin Center for Climate Change Law at Columbia University. But that does not mean that automakers can afford to rest on their laurels in the interim, he said. They are already planning ahead.
“The signal has already gone out to the manufacturers that this is what’s coming and they are responding accordingly.”
Mr Biden has halted new oil leasing in the Arctic National Wildlife Refuge — slapping a moratorium on the Trump administration’s last-gasp effort to open the area to drillers. Stopping this process outright, however, will be trickier.
Environmentalists and analysts expect a further, much more far-reaching freeze on all leasing of federal lands for oil, gas and coal — something Mr Biden promised on the campaign trail — to follow swiftly.Such a ban would reduce US oil production by up to 4 per cent a year, according to Scott Sheffield, chief executive of Pioneer Natural Resources, a big shale driller. It would, he said, mark the end of the country's brief flirtation with energy independence.“It means we're going to import more foreign crude. We're going to import more from the Middle East,” said Mr Sheffield. (Myles McCormick)
Donald Trump championed American fossil fuels. What transpired?
US oil production soared during Mr Trump’s first years — before the pandemic ravaged the industry. Output is now around 11.1m barrels a day, says the Energy Information Administration, up nearly 25 per cent from the start of his term.
Crude and fuel exports rose too. The US is today less reliant on imports than it has been in decades, even if last year’s Saudi-Russian supply war exposed the US oil industry’s vulnerability to price-moving events abroad.
Meanwhile, the coal revival never arrived. Ultra-cheap natural gas and surging renewables dominated the electricity sector.
And Mr Trump did not derail a long-running decline in US carbon emissions from the energy sector as many had feared. The pandemic pushed emissions to new lows in 2020, but that is likely to be unsustainable.
Few analysts advised people to put their money into clean tech stocks as Mr Trump came into office, but that would have been a wise bet.
Solar power costs will fall by as much as a quarter over the next decade, becoming the cheapest source of new power in every US state, Canada, China and 14 other countries, according to a new report from Wood Mackenzie.
Solar will account for most of the 4 terawatts of solar and wind power added to the grid globally by 2030, as renewables’ share of total power capacity rises from 10 per cent now to 30 per cent in 2040.
After a 90 per cent cost decline over the past two decades, solar is already the cheapest form of new generation in 16 US states, plus Spain, Italy and India, the consultancy said. Despite the pandemic, global capacity installations rose to 115 gigawatts, compared with 1.5GW in 2006.
The advances may pose a problem for investors, however, as declining wholesale prices may reduce the sector’s profitability, Wood Mac said.