Biden Gambles on Placing Climate Change at Heart of Us Energy Policy

Biden Gambles on Placing Climate Change at Heart of Us Energy Policy

Reprinted from the FT – 17/08/2020

Republicans say the promise to invest $2tn in green energy threatens tens of thousands of jobs in the oil and gas sector.

He served in an Obama administration that oversaw a historic surge in American oil and gas production, as shale went mainstream. Tens of thousands of wells were drilled, and energy-bearing rocks fractured from North Dakota to Texas. And the industry cheered when the government he was part of lifted a ban on crude exports in 2015. Yet, Joe Biden — armed with a commanding lead in the polls ahead of November’s US presidential election — now promises a root-and-branch overhaul of the American energy system that will put climate change at its heart and which one worried industry adviser describes as “a Tet offensive” on the fossil fuels industry.

The plan, which will be aired again at the Democratic party convention this week, earmarks $2tn in spending over the next four years to use climate policy to drag the economy out of its pandemic-era recession.

But Mr. Biden’s plans for the energy sector would reach into everything from Middle East geopolitics to the global race with China over cleantech and is likely to prove unpopular among parts of the US electorate — dependent on oil and gas for jobs — in an election year.

It stems from an urgency about climate change that has animated much of his party — especially the younger supporters he will need to mobilise. And is made possible by a coming together of factors: drastic falls in clean-energy costs, rapid technological progress, and the devastation of the pandemic, which makes even a $2tn plan seem politically viable.

“Biden did gain key climate and clean energy provisions in the 2009 stimulus [during the financial crisis],” says Paul Bledsoe, a former Clinton White House climate adviser. “But he also recognises that climate has emerged over the past decade as a premiere issue of global security and foreign policy and is now suddenly a crucial element in America’s green recovery from the COVID crisis, as well.”

Mr. Biden said in July that he would not “tinker around the edges” with his plan.

“We’re going to make historic investments that will seize the opportunity.” It means energy will be pivotal to November’s election — and the election pivotal to the future of the energy industry, with huge domestic and international implications.

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On one hand is the status quo of Donald Trump — who, as president, has proclaimed an era of American “energy dominance”, torn up rules hindering drilling, weakened environmental oversight, and taken advantage of the US’s reduced dependence on foreign supplies to impose sanctions on oil exporters from Venezuela to Iran.

On the other, the green revolution proposed by Mr. Biden, who has also committed to re-joining both the Iranian nuclear deal and the Paris climate accord — multilateral agreements that Mr. Trump withdrew from, claiming they were bad for the US.

“The plan is very bold,” says Leah Stokes, an expert on climate policy and a professor at the University of California, Santa Barbara. “There is no [US] state right now that has a target this ambitious.” If elected, Mr. Biden is promising net-zero emissions by 2050 and to electrify the US’s transportation sector, installing a vast network of new car charging points, upgrading the grid, and deploying utility-scale battery storage across the US.

Members of the US administration watch as Donald Trump announces his decision to pull out of the Paris climate agreement because he said it was bad for the US © Chip Somodevilla/Getty Presidents Barack Obama of the US and François Hollande of France in Paris in 2015.

American oil and gas production soared under Obama, as shale went mainstream © Thibault Camus/AFP/Getty Critics say it will destroy the country’s world-beating oil and gas industry — a claim that has forced Biden supporters in shale heartlands to insist local economies will be secured. The plan, they say, will resurrect American manufacturing and the country’s leadership — and, by including elements of the Green New Deal supported by Alexandria Ocasio-Cortez and Bernie Sanders, satisfies the Democratic party’s left-wing without scaring its middle.

The language of the climate plan — devised by Stef Feldman, a Biden policy adviser, but with input, say people familiar with it, from a range of experts — try to ease those tensions, with the creation of “millions of jobs” as frequent a motif as climate. Congressional support for Mr. Biden’s energy vision will also be critical to its progress. Even if the Democrats win control of the Senate, this is not guaranteed. If they do not, Republicans would mount stiff opposition. “It’s hard to overstate how far Joe Biden’s Democratic party has shifted on fossil fuels, especially natural gas, in just four years,” says Bob McNally, a former adviser in the George W Bush White House and now head of Rapidan Energy Group.

“A Biden victory would unleash a Tet offensive against the US oil and gas sector.” ‘Technically, financially do-able’ The most significant pledge is to “decarbonise” the US electricity sector by 2035. Power generation accounted for about a third of US energy-related emissions last year and offers the best chance for fast and deep cuts. And, claims the Biden camp, “the biggest job creation and economic opportunity engine of the 21st century”. It is certainly ambitious.

The plan pledges the installation of tens of thousands of wind turbines, millions of solar panels, and a doubling of offshore wind by 2030. It is similarly aspirational — and vague — on other technologies, analysts think will be essential in any shift to clean electricity. Carbon-free hydrogen fuel, advanced nuclear reactors, and grid-scale storage “at one-tenth the cost of lithium-ion batteries” are envisaged. None yet exists at the necessary scale.

Despite its thin details, the plunge in the costs of renewable energy makes the plan plausible, say clean-energy advocates. Installations of everything from rooftop solar to onshore wind turbines are happening faster than expected just a few years ago. Spending on US offshore wind capacity may even get close to matching that of offshore drilling in the next decade, believes Wood Mackenzie, a consultancy. The market’s shift to more clean energy is why the US Energy Information Administration forecasts a doubling of renewables’ share of power generation by 2050.