Will energy change under Biden?
Prospects and challenges for the next U.S. administration
Joe Biden has been elected 46th President of the United States of America and now many observers expect a turnaround from Trump’s administration policy. During his long campaign Biden promised a change of course in energy policy. A vision, or better a revolution, which is expected to be measured with concrete interventions.
Biden presented his program during Clean Energy Revolution, a green manifesto for America (and the rest of the world) of tomorrow. The plan would pour $1.7 trillion of investment into achieving 100% clean energy and net-zero emissions by 2050. “We will invest in energy and climate research and innovation, and incentivize the rapid deployment of clean energy innovations” Biden said.
“We can lead America to become the world’s clean energy superpower. We can export our clean-energy technology across the globe to help others to reduce emissions”. According to Clean Energy Revolution, US will re-join 2015 Paris deal.
Biden presented Clean Energy Revolution, a green manifesto for America and the rest of the world
In the last years Trump made relationships between US and OPEC producers very complicated, promising custom duties and threatening to cut American supplies demand. Observers expect from Biden an energy policy more similar to Obama’s approach, which will influence oil market geopolitics more discreetly.
But it will be definitely hard to fix some relationships deteriorated in the last years, especially with Venezuela and Iran.
A Washington Post map with every power source in USA by type and size (2017)
Another challenge is the upstream, the sector in charge of the operations stages in the oil and gas industry that involve exploration and production. This sector, after the last decade boom, collapsed in prices and due to the COVID-19 pandemic.
Besides, Clean Energy Revolution could resize it even more, with bans related to new lease contracts and a possible reduction of the number of plants.
Observers expect an energy policy similar to Obama’s approach, influencing oil market geopolitics discreetly
As for renewables, Biden will probably make a 360° turnaround from Trump’s administration. US re-joining the Paris deal seems to be the first sign.
Two key points will be explored: the first is the lease contracts of clean energy and off-shore wind energy operators. The other is the institution of a new Federal Commission for the Regulation of Energy.
The Commission should invert the rule on minimum bid price, which has so far favoured State-owned companies, paralyzing the market. Besides, it would extend tax credits in the next years and this should generate a big growth of medium-long term renewables.
A large extension of tax credits should generate a big growth of medium-long term renewables
With the stalemate in Senate and parity between Democrats and Republicans, Biden is likely to use some personal initiatives (through executive orders), internal negotiations and others with international powers to carry out his energy policy.
It is possible that opposition will fight back with appeals and procrastinations, making Biden’s Green New Deal less effective. It will depend on his executive’s effectiveness, in a political arena more and more polarized between opposing factions and his administration’s response to incident management, inevitable elements in a US administration.