With humility and ambition: What’s next for US energy policy?

On the morning of 20 January 2021, players in the energy sector held their collective breath as they watched the inauguration of Joseph Biden as the President of the United States, alongside his vice president Kamala Harris.

During his election campaign, the Delaware native and former vice president had made it clear that his administration would take a tougher stance on tackling climate change than had been the case during the term of his predecessor, Donald Trump. Claire Volkwyn ponders what the future holds for American energy policy.

Given the independent position of many of the individual states, what is the impact of a climate-focused federal policy likely to be? To what extent will the new president’s plans be hampered by politicking, horse-trading and bickering about budgets? What are the climate and energy policy opportunities and challenges for this 46th President? From an international perspective, does the US have sufficient international standing to take on the positions assumed by the European Union and China on the global energy stage?

Already, President Biden has acted on his campaign promise to rejoin the Paris Agreement (the agreement took effect on 19 February). Key to influencing the US’s position internationally is John Kerry, Special presidential envoy for climate.

Kerry has suggested that there is a need for humility and ambition as the US re-engages with countries around the world. The US Special Envoy said rapid action was needed after four years of “reckless behaviour” under Donald Trump, continuing that the COP26 meeting, taking place in Glasgow in November, would be the “last, most important opportunity” to make progress.

Building back

Taking into consideration that the Biden-Harris administration is still fi nding its feet, there are already some clear indications of the direction the President is taking. For example, look at the appointments being considered for his administration. It has been announced that David Turk*, who worked formerly for the International Energy Agency as deputy executive director, has been nominated as deputy energy secretary.

Turk will help energy secretary nominee, former governor of Michigan Jennifer Granholm, manage a department that’s at the forefront of enacting President Biden’s climate agenda. Granholm, who was governor between 2003 and 2011, worked previously with then vice-president Biden to help invest in clean energy technology to help create jobs in Michigan. Granholm led the creation of Michigan Saves, one of the nation’s first and most effective green banks financing job-creating clean energy solutions

Granholm and Turks’ main objective? To transition the US economy toward less polluting forms of energy while still keeping blue-collar jobs intact.

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Undoing the last four years

During his first four week’s in office, President Biden has signed several executive actions including freezing new oil and gas leases on public lands and doubling offshore wind produced energy by 2030. Others include cancelling the extension of the Keystone pipeline system and ordering agencies to start unravelling the previous administration’s environmental policies.

The President has further instructed the Environmental Protection Agency and the Transportation Department to relook at fuel-efficiency standards for cars and fuel subsidies. It is said he will also “revive an interagency working group Trump disbanded in 2017 that sets the ‘social cost of carbon’, an estimation of the economic damage caused by the release of a ton of carbon dioxide into the atmosphere.” [Washington Post]

KERRY HAS SUGGESTED THAT THERE IS A NEED FOR HUMILITY AND AMBITION AS THE US RE-ENGAGES WITH COUNTRIES AROUND THE WORLD

Paris Agreement

Since the American President has made climate change, net zero goals for 2050 and the commitment to large scale renewable energy infrastructure a central part of his administration’s goals, rejoining the Paris Agreement was an obvious ‘must’.

US emissions are around 20 tons of carbon dioxide equivalent per head per year, compared to 11 metric tons per capita for the OECD and G20 and 9.4 tons per capita in China. As the second largest contributor to greenhouse gases (China is first, accounting for almost 30% of the world’s total CO¥ emissions), the United States has a critical role to play in the global energy discussion.

However, the US has a lot of catching up to do. The EU has committed to a 55% reduction in emissions by 2030 and carbon neutrality by 2050. Even China’s President Xi has committed to net zero emissions by 2060 and the US will have to work particularly hard to regain its standing on what has been called the biggest challenge facing mankind.

It is hoped, however, that the US will be able to influence Agreement members such as Saudi Arabia, Brazil and India for instance, who have been reluctant to implement their Agreement commitments. The question, of course, remains whether the United States has sufficient moral high ground to provide such influence at this point in the Agreement’s implementation.

But what does it mean?

In order to make up for lost time, the US is going to have to re-enter the Paris Agreement, showing it is serious about being back, with targets more ambitious than that of past president Barack Obama.

Speaking to the achievability of any targets put in place, Kelly Simms Gallagher, professor of energy and environmental policy at Tufts University’s Fletcher School, said during a webinar hosted by Columbia University: “It’s going to take a little time for the Biden administration to figure out what is possible — what policy pathways are possible and what legislative pathways are possible. It’s going to be very important to do everything that can be done to ensure we actually can meet the target.

“We pushed really hard to encourage countries to increase ambition and join the Paris Agreement and we negotiated that agreement diligently and in good faith,” Gallagher says. “But because of the Trump administration, the US literally walked away from the Paris Agreement, didn’t uphold any of its commitments on climate finance or in terms of domestic action. So, we’re not coming to foreign policy from a position of strength right now. To me, the most important step is an intensive effort on domestic policy and getting our own house in order, and that would then put us in a much better position in terms of our foreign policy on climate.”

Larger than one man

During his term, Donald Trump largely appealed to the disenfranchised and his messaging spoke to a part of the population that felt that many of the traditional carbon-intensive industries upon which America had been built – such as automotive, oil and gas, and intensive manufacturing – had been sidelined. The test of the Biden administration will be to provide genuine support for these industries and communities, without undermining its environmental objectives.

Despite Donald Trump’s climate denialism and efforts to undermine climate regulation, many states, institutions and organisations in the United States refused to follow the example being set by the Trump administration.

This has been most forcefully shown by the formation of the US Climate Alliance, an organisation made up of 25 states which have committed to continuing to lead on climate change; growing clean energy economies and creating new jobs; and showing the nation and the world that ambitious climate action is achievable. The bipartisan coalition of governors was formed and committed to reducing greenhouse gas emissions consistent with the goals of the Paris Agreement on the same day that Donald Trump announced the withdrawal from the Agreement.

This does bring to the fore the question of the role of federal government vs state government in pursuing a cleaner energy strategy. According to a report by the Policy Center for the New South, despite policy put in place by the previous administration, coal generation in the United States has fallen by 22% over the period 2016-2019. This speaks to the ability of state-specific energy policy to continue to drive changes that may not have federal political will or support. Additionally, the price parity between renewable energy and coal should not be discounted as an influencing factor.

President Biden’s “all-of-government” approach to climate change has not been seen since the Second World War. According to Sam Ricketts, co-founder of Evergreen Action, an advocacy group that advised President Biden’s transition team, “every agency is a climate agency now”.

What this means is that the head of almost every federal agency will now focus on increasing renewable energy, decreasing fossil fuel production and prioritizing environmental issues. Significant efforts will be made across all government agencies to procure, supply and utilise the cleanest energy technologies or low carbon fuels. Financing will consider climate risks and more effort will be put into funding education programmes around climate change. Even public transport will likely see a shift toward cleaner, more environmentally friendly transport modes.

In a recent conversation, Patrick Lee, president and CEO of PXiSE Energy Solutions and VP of infrastructure and technology at Sempra Energy, says “Many state policies did not change regardless of the [then] changes to federal policy.

“I see having federal support as helpful to individual states. Because, for instance, Federal policy could allow the Bureau of Land Management to utilise federal land for renewable energy sites and that will be helpful in some states.

“If you look at the number of states that have renewable portfolios, standards and goals, there’s a large number of them that have started committing to 100% clean or zero-carbon by 2045/2050. We’ve even seen individual companies committing to that kind of sustainability goal. I think we see the trend is quite strong. It’s important for companies to also be leaders in the energy transition, and not just wait for government policy to forge a path.”

This policy direction was welcomed by the US Climate Alliance, which issued a statement on 27 January saying: “In just a week, the new administration has forcefully backed many of its promises with swift action, real commitments, new staff, and sound science. This is a remarkable shift, but now comes the hard part. Averting climate catastrophe and rebuilding our country will take all of government and all of America, including the Alliance’s governors and states. Let’s get to work – together.”

Biden’s ‘climate warriors’:

Gina McCarthy, appointee for national climate adviser. Former EPA administrator and current president of the Natural Resources Defense Council.
Deb Haaland, interior secretary designate. Congresswoman representing New Mexico’s first congressional district and a member of the Laguna Pueblo.
Michael Regan, EPA administrator designate. Current secretary of the North Carolina Department of Environmental Protection.
Ali Zaidi, deputy national climate adviser-appointee. Former Obama-Biden administration climate official, current New York state deputy secretary for energy and environment.
Special presidential envoy for climate: former secretary of state John Kerry.

Challenges …

One of the biggest challenges facing the administration is the enormous cost associated with the Administration’s Climate Plan. At between $1.7 and $2 trillion over 10 years, there is a considerable financial commitment to be made – at a time when the world is reeling from the effects of the COVID-19 pandemic.

There is, however, an opportunity to ensure that any COVID-19 stimulus is associated and aligned with green recovery. The Brookings Institute, for instance, suggests that: “… the massive amounts of federal recovery aid disbursed to corporations due to the COVID-19 pandemic present an occasion to leverage federal funds already in use to advance our progress in addressing climate risks. Many other developed economies have already taken similar measures by incorporating climate provisions in their COVID-19 recovery packages.”

Other suggestions include corporations receiving COVID-19 relief should report on their exposure to climate risks and on their climate impact; and as well as the implementation of an internal carbon pricing scheme through favourable terms for COVID-19 relief loans.

The main challenge to enabling all of President Biden’s climate policies, however, will come down to congressional support and it is here that the biggest threats lie. According to Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia University: “Without Congress locking in progress, the next president could undo much of what Biden has done just as Biden is now undoing what Trump did, and Trump undid much of what Obama did.

“Without explicit congressional action, we’re very vulnerable to this kind of back and forth, which destroys the momentum that is needed to drive industries to work at the nonstop breakneck pace that is necessary.” Unless these actions are enacted into law, executive orders always have the chance of being rolled back by a new administration.

Recent outages in Texas and the ensuing backlash against renewable energy couldn’t have come at a worse time for the President.

Recent outages in Texas and the ensuing backlash against renewable energy couldn’t have come at a worse time for the President. However, strong responses from the industry have indicated that the claims made by Republican Governor Greg Abbott and others are misleading or even false. Abbott originally blamed ‘frozen wind turbines’ for the outages, stating: “This shows how the Green New Deal [In 2019 Rep. Alexandria Ocasio-Cortez and Sen. Ed Markey sponsored an attempt to get legislation passed for a Green New Deal. It did not make it through Senate but the plan has raised its head multiple times. It is not part of the current administration’s plan] would be a deadly deal for the United States of America.

“It just shows that fossil fuel is necessary for the state of Texas, as well as other states, to make sure that we will be able to heat our homes in the wintertime and cool our homes in the summertime.”

It has since been clarified that a failure within natural gas distribution was in fact at fault. However, it does show that the use of renewable energy has become a political issue, divided it would appear, along party lines. One does have to wonder whether the slim control the Democrats have over the House and the Senate may yet present an opportunity or a challenge?

… and opportunities

The upcoming COP26 provides an ideal opportunity for the US to contribute toward the Green Fund, a $100 billion commitment to climate finance. Ironically, it was the US that pushed for this provision to be included in the 2009 Copenhagen Agreement – but the country is yet to make a single contribution.

In particular, there is an opportunity for the US to regain some of its lost leadership by driving global adaptation and resilience, particularly in developing economies. While developing economies’ emissions may well be on the lower side, adaptation to climate change is a particular challenge for them. Mitigation spending currently makes up around 70% of climate finance. The opportunity to work directly with developing nations on issues of adaptation will provide the US with an unprecedented opportunity to gain ground and unseat China’s position as the biggest funder of renewable energy in the world.

The new administration believes that a domestic green focused recovery plan is not only good for the environment but will also significantly contribute to economic recovery. Speaking in early February, the President said: “A key plank of our Build Back Better Recovery Plan is building a modern, resilient climate infrastructure and clean energy future that will create millions of well paying union jobs – not 7, 8, 10, 12 dollars an hour, but prevailing wage and benefits.”

The President believes that upward of 10 million new jobs could be created that are related to clean energy – and this is in addition to the 3 million clean energy jobs which already exist.

President Biden has indicated that in order to have a green electric grid by 2035, batteries will be needed to back up solar plants, wind farms etc. This storage will be manufactured in the US, not in China and the President has, as such, committed to funding research into new chemistries and large-scale energy storage technologies. The aim is to bring the costs down by 9% on today’s prices.

Final word

Whether or not the Biden Administration succeeds in putting into action each one of the various objectives mentioned, the fact of the matter is that this Administration has made a good start at recognising that the United States is part of a larger, global community and that significant effort is needed to reclaim the country’s position on the world stage.

As the saying goes – Rome wasn’t built in a day – but this Administration has already taken some significant steps to Building Back… Better.

*At the time of publication, none of the appointments had been confirmed.

  • Biden’s climate commitments:
  • $2 trillion in investments over ten years
  • Creation of one million “quality jobs” in the automobile industry (manufacturers, equipment suppliers, infrastructures)
  • Support to cities with more than 100,000 inhabitants for public transport (zero-emission transport, improvement of transport infrastructure)
  • Energy renovation of 4 million buildings, construction of 1.5 million low-energy cost houses, measures to improve the quality of jobs on these sites
  • Financing of innovation (batteries, decarbonated technologies, building materials)
  • Job creation in resilient agriculture (smart agriculture, agricultural reconversion of mine sites …)
  • Environmental justice: job creation in deprived areas, repairing the environmental damage experienced by some communities
  • No federal funding for coal production, a position unfavourable to the opening of new unconventional hydrocarbon deposits on federal sites
  • Zero emissions for electricity production in 2035 and for the whole economy in 2050.