• Biden administration’s climate ambitions likely to be curbed by hostile senate and buffeted by market forces, but presidential powers are considerable

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      Patrick Lavery

      Combustion Industry News Editor

With the US presidential election all but decided in favour of Democrat Joe Biden, and the likelihood of the Senate being in control of the Republican Party, numerous commentators have given their view on how the new administration will affect US energy policy, and how this will ricochet across the world.

The most talked about is that President-elect Biden plans to return the USA to the Paris Agreement on Climate Change on his first day in office (20 January, 2021).  While it will require submitting a new emissions reduction target (the USA already having achieved the target it set in 2015), in the short term, the USA’s entry will be more symbolic than concrete, but over the medium and long term it seems likely to have some impact in shaping the energy-related decisions not only of the USA, but also of other countries.

In regards to Biden’s domestic energy policy (including the goal of decarbonising electricity production by 2035), Vox suggests that without control of the Senate, the new President will be limited to what he can do through executive orders, as well as perhaps being able to agree some form of infrastructure spending package on a bi-partisan basis.  In terms of executive orders, there is quite a bit of scope, including re-orienting the Environmental Protection Agency’s rules towards stricter regulation, and limiting oil and gas development on public land.  (The article curiously does not mention influencing Department of Energy research and development funding.)  In addition, federal financial rules could be made to include climate risk, and Mr Biden could even declare climate change a ‘national security emergency’, giving him control of industrial policy.  However, as Vox writes, to “implement anything close to what’s needed, to muster the necessary investments and properly protect affected communities, Biden would need [to legislate].”  Many of these considerations are temporary, it must be remembered – mid-term elections in 2022 could result in a Democrat-controlled Senate, and by the same token, the 2024 presidential elections could return a new Republican president.

Power Magazine took a rather different view to Vox – that market forces, company policies and innovation are more likely to shape energy sector outcomes, as they always have.  However, it does point to Biden’s plan to establish an Advanced Research Projects Agency to concentrate research work on grid-scale storage, advanced nuclear power, carbon capture, utilisation and storage, ‘green’ hydrogen, and the heating of buildings.  The article points out that some of Biden’s energy transformation policies will be “an extension of the Trump administration’s priorities” (especially in regards to nuclear and carbon capture and storage, but presumably also grid security from foreign attacks).  Forbes landed more on the Power Magazine side, recognising that market forces will be the largest factor in the energy sector but also recognising that Biden’s own power to influence outcomes will be affected by his control, or lack of it, over the Senate.

For its part, the Financial Times pointed to how it is almost certain that with an economic recovery in 2021, both coal firing and carbon dioxide emissions will increase in absolute terms from 2020, which will be awkward for President-elect Biden in terms of messaging, even if it is a perfectly logical outcome.  What might exacerbate it from a policy point of view is that, as the FT’s John Dizard noted in mid-October, an end to new leases for fracking on federal land (a Biden policy) could lead to higher gas prices, which in turn would make coal a more attractive fuel to utilities.  Overall, one gets the sense that the Biden administration will oversee some significant change in the energy sector, with a considerable part beyond the administration’s control, some part of it a political continuity, and the remainder Biden’s own attempt to shape events.