Biden’s energy transition might not run so smoothly after all

Following President Trump’s effective surrender of his three-week protest of the election results on Monday by submitting to the government’s official transition to the incoming Joe Biden administration, the time has come for the new administration to set new energy transition plans into motion – but the plan might have more spanners in the wheels than originally suspected.

Monday was a positive day for the U.S. and this article should start in the same tone. Trump bowed to a growing wave of public pressure and allowed for the transition to begin – but stopped short of conceding to President-elect Joe Biden.

Trump authorised the federal government to initiate the Biden transition late Monday, setting in motion a peaceful transfer of power by paving the way for the president-elect and his administration-in-waiting to tap public funds, receive security briefings, and gain access to federal agencies.

Although all of this should have been just a simple procedural thing in nature, Trump finally accepted the General Services Administration starting the transition following an extraordinary 16-day standoff since Biden was declared the winner on 7 November.

By continuing to delay the transition, Trump risked becoming isolated within his party as there was a growing Republican voice who recognised a Biden win. Start of the transition was also key to the country’s security, economy, and above all else a solid preparation for the President-elect’s pandemic response once he assumes office.

Even though Trump yielded and stated via Twitter that it was “in the best interest” of the U.S. he, of course, vowed to continue his push to overturn the results.

“Our case STRONGLY continues, we will keep up the good […] fight, and I believe we will prevail!“, he added. But the wheel is turning at least.

Joe Biden’s campaign trail has revolved around climate change and the return to the Paris climate accord. But regardless of his goals, there was a positive regarding greenhouse gases emissions this year – albeit unintentional.

According to a study by BloombergNEF, the U.S. economy will slide 9.2 per cent in GHG emissions this year which will bring the country to its lowest level in at least three decades.

Although most of that progress can be attributed to the coronavirus pandemic, it is quite noteworthy that the stalled economy generated 5.9 billion metric tons of emissions – about the same level as 1983.

In a way, the United States has been inadvertently pushed back on track to meet the commitments the Obama administration made at the Paris climate agreement in December 2015, despite the fact the Trump administration pulled the country out of the pact. Trump’s actions led the U.S. badly behind the accord targets before 2020.

BloombergNEF claimed that an economic rebound in 2021 could further negate the drop in greenhouse gas emissions. Without the impact of the coronavirus, greenhouse gas emissions this year would have been only one per cent lower than in 2019.

Scientists agree rising greenhouse gases linked to human activity are driving up global temperatures and, left unabated, will cause irreversible damage to the planet.

Sarah Ladislaw, director of the Energy Security and Climate Change Program at the Center for Strategic and International Studies, said: “Like all major crises, there is a chance to turn this temporary downturn in emissions to a more permanent one by making investments and changing policy, but it won’t just happen on its own.

“Nothing about the economic hardship coming from Covid-19 points the way forward on climate change except that it points out how we often discount our own systemic vulnerability. Tackling climate change requires a systematic and complete overhaul of our energy system”.

Analysts at BloombergNEF stated the effects of the economic disruption would linger through 2021 and emissions in the coming year could still be 5 per cent lower than 2019 emissions. That level could, according to the organisation, become a “new normal” if people change driving habits and the power sector continues to shift to renewable power.

It is worth noting that not only a lack of consumption led to the drop since it was also a reflection of long-term reductions in the emissions intensity of the U.S. power sector. The biggest drop in emissions this year came from the transportation sector, where emissions fell 14 per cent, dragged down by a steep fall in air travel and automobile trips.

Although President-elect Joe Biden pledged to reenter the United States in the Paris accord on his first day in office, BloombergNEF study cautions the U.S. would still need stronger policy commitments outside of the power sector to hit the 2025 target.

So, there is a clear message for Biden there. Take advantage of what has occurred and create a systematic approach to overhauling and (or) creating a new, much greener, energy system. But such an opportunity never comes easy and free so – here come the spanners.

During Trump’s administration, the U.S. became the world’s largest energy producer, surpassing Russia and Saudi Arabia in oil production. It also became a net exporter of oil, when including refined products like diesel, jet fuel, and gasoline.

Being energy independent was a target for every president since Nixon, and after nine presidents came and went, Donald Trump was able to say that the country was energy independent.

Government data showed that U.S. oil production peaked at 13.1 million barrels a day in 2020, before declining as Covid-19 hit the world economy hard and decreased oil demand.

But, according to the EIA, only a small amount of crude oil is directly consumed in the United States. Nearly all of the crude oil that is produced in or imported into the United States is refined into petroleum products, such as gasoline, diesel fuel, heating oil, and jet fuel, which are then consumed.

Liquids produced from natural gas processing are also consumed as petroleum products. Renewable biofuels, such as ethanol and biodiesel, are used as substitutes for or as additives to refined petroleum products.

In such a mix, transportation is the sector that uses up most of the products refined from crude oil. To be more precise it takes a huge chunk – 68 per cent in 2019.

Burning so much of its refined crude oil just for transportation purposes comes with a large GHG emissions price and the decline of such emissions this year can be linked to the massive decrease in transportation during the Covid-19 pandemic.

Also, most U.S.-made cars, trucks, SUVs, or pick-up trucks use massive engines which have no real regard for fuel economy and are widely known as “gas-guzzlers” which can’t be helpful in the long run. But there are solutions – some that might be copied from other countries and some that Biden himself is advocating.

Some countries have decided years ago that the way to go was with liquified natural gas (LNG) or liquefied biogas (LBG). Nordic countries – Finland, Norway and Sweden – have been using LNG to decrease GHG emissions for both cars and trucks.

Energy company Gasum has been one of the main proponents of this transition to lower emission fuels for vehicles with internal combustion engines and currently has 35 fuelling stations of LNG and LBG in the Nordics.

Today, there are already more than 200 gas-driven trucks on Swedish roads, and the company expects their numbers are expected to increase rapidly. LNG, used as a competitive fuel solution, reduces emissions more than 20 per cent than those made by diesel.

The Nordic countries seek to utilize LNG to reduce GHG emissions but just last week a major German car manufacturer went a more drastic route and stated that it would be eliminating the production of cars with internal combustion engines in the country.

Namely, BMW said it will retool its German factories to build electric cars and components and shift manufacturing of combustion engines to plants in England and Austria as part of a broader shift toward low-emissions cars.

By the end of 2022, all of BMW’s German factories will make at least one fully electric car, and its plants will stop producing internal combustion engines in 2026. Production of standard engines will move from Munich to Hams Hall in England and Steyr in Austria.

This is all in line with Germany’s announcement from earlier this month that it created a $3.56 billion scheme to promote low-emissions cars. Britain is also a country on the crusade against gasoline and diesel cars as it will ban the sale of new gasoline and diesel cars and vans from 2030. If Britain will still be producing such vehicles it remains to be seen.

Also last week, which turned out to be a big week for electric cars, General Motors announced it was expanding the number of electric vehicles it will bring to market by 2025.

At the Barclays Global Automotive Conference, GM CEO Mary Barra said the automaker will bring to market 30 all-electric models globally by mid-decade.

According to Barra, the company created a new organisation to focus on making EV adoption desired by everyone, noting that GM wants to lead the world in EV adoption.

Only a day before this reveal, President-elect Joe Biden pitched union and business leaders on a plan to build half a million electric vehicle charging stations.

Among the labour and corporate heads who met virtually with Biden and Kamala Harris on Monday to discuss the economic recovery were United Auto Workers boss Rory Gamble and GM’s Barra.

In remarks after the meeting, Biden stated that constructing a charging network to power those cars could put people to work.

“We talked about the need to own the electric vehicle market [and] talked about the climate a lot”, Biden said.

In an even more “electrifying” note, two next-generation all-electric Maid of the Mist ferries were launched in New York just a couple of months ago.

The newbuilds — the first passenger vessels of their kind in the United States – have been approved to enter service on 6 October 2020. The zero-emission ferries are the first all-electric vessels built in the U.S., which draw power from ABB’s high-capacity battery pack.

Moves made by both one of the largest car manufacturers in the world and the new President-elect, as well as creating the first-ever all-electric U.S. tour boats, show intent and at least a plan towards an, almost inevitable, energy transition.

Little sidenote – Tesla, Uber, and utility companies also decided to join forces to lobby for electric vehicles. Namely, they formed the Zero Emission Transportation Association to lobby for emissions targets that enable full electrification of vehicles by 2030 and federal investment in infrastructure for electric vehicles.

So, what could go wrong? Well, now we must remember one simple fact – Joe Biden and his staff are politicians. And so are his party members as well as his opposition. That is where we find the other, much larger, spanner.

The economy and the coronavirus pandemic dominated the U.S. 2020 presidential election. But analysis shows that voters concerned about climate change still helped Joe Biden win the White House.

According to polls, a surge of voters — many of them young and casting ballots for the first time — helped the man with the most ambitious climate plan of any major-party candidate secure the presidency. But it is quite clear that the seriousness of global warming has not yet been fully comprehended at the ballot box.

A poll last year by The Washington Post and the Kaiser Family Foundation found that a growing number of Americans describe climate change as a crisis, and two-thirds said Trump is doing too little to tackle the problem.

It also found that a strong majority of Americans — about 8 in 10 — say that human activity is fuelling climate change, and roughly half believe action is urgently needed within the next decade if humanity is to avert its worst effects.

But Biden did not win in an 80-20 split. According to this data, there was a sizable chunk of voters who are concerned about climate change but still voted for Trump anyway — even though he often dismisses it as a “hoax.”

As is the case with so many other issues, it is obvious that political polarisation locked people into voting for their own party.

Edward Maibach, director of George Mason University’s Center for Climate Change Communication, said that many moderate Republicans who think climate change was real still were not willing to cross the aisle when deciding who should be the next president.

“They do care about the issue. But they clearly don’t care about it as a top-tier issue. In a general election, especially a general election, the question that voters are asking themselves has very little to do with the issues, and a lot more to do with their tribe”, he said.

But what all the data showed was the fact that only one candidate sought to address what many young voters see as their generation’s defining issue and that helped drive turnout.

For the longest time, lawmakers from both parties have welcomed drilling as a source of jobs and revenue for decades. President Barack Obama worked to curtail U.S. coal production on public land but praised natural gas production as an important bridge to clean energy.

The Trump administration moved aggressively to expand oil and gas drilling across the country, scaling back protected areas, offering more leases and accelerating federal approval for pipelines and other drilling-related projects.

Fossil fuel gas activity on federal and tribal land and offshore last year generated $11.7 billion in tax revenue, according to the Department of the Interior. Of that total, the U.S. Treasury kept $4.9 billion, more than $2.4 billion went to state and local governments, and the rest funded tribes, restoration, conservation, and other projects.

But as climate projections have become dire, Democrats have embraced a “keep it in the ground” strategy aimed at ending this activity altogether without the help of a sharply divided Congress. But not all of them.

According to a Washington Post survey, every 2020 Democratic presidential candidate pledged to ban fossil fuel leasing except for Montana Governor Steve Bullock and Senator Michael F. Bennet from Colorado, both of whom hail from energy-producing states.

Biden repeatedly stated on the campaign trail that he would shift the nation away from fossil fuels while allowing fracking to continue on private land in places like Pennsylvania, which happened to be a swing state pivotal to his victory.

He also opposed drilling in the Arctic National Wildlife Refuge, given the impacts of climate change on Alaska.

It is worth mentioning here that Trillium Asset Management, a shareholder in the Bank of America, raised concern about the bank’s refusal to rule out financing for oil and gas drilling in the Arctic — making it the only major U.S. bank that has not taken a stance on drilling in the Arctic National Wildlife Refuge.

Goldman Sachs became the first U.S. bank to limit financing for Arctic drilling in 2019, and other major banks, including JPMorgan Chase, Wells Fargo, and Citigroup followed suit in early 2020.

Another Democrat stronghold, New Mexico, may pose the biggest challenge for the new administration. The state accounts for 57 per cent of oil production on federal land and nearly a third of onshore gas extraction which means that New Mexico could lose $1 billion a year in federal revenue if all drilling activity ceased.

Governor Michelle Lujan Grisham, a Biden ally, already stated that she would ask for an exemption for New Mexico from any leasing ban.

On top of this, almost 70,000 Louisiana jobs and $74 billion of economic impact for the state are riding on Joe Biden’s plan for oil and gas. Although Republican, the state could be massively hit by any changes in policy.

With two months until Biden enters office, Trump and his administration will try to make it as difficult as possible for the President-elect to ban any sort of oil and gas drilling – onshore, offshore, on federal land, or in the Arctic.

Last week, Trump proposed to loosen Obama-era safety regulations for the oil industry in the Arctic Ocean off Alaska. The new proposal would revise a suite of Obama-era rules crafted to improve safety in the extreme conditions of the Arctic after a Shell drilling rig ran aground in the Gulf of Alaska in 2012.

Following the incident, the company abandoned oil exploration in the Arctic and there are no active drilling operations there.

Also, The U.S. recently held an oil and gas lease sale for acreage in the Gulf of Mexico, the last one under the Trump administration, which yielded more than $120 million in high bids.

Perhaps most consequentially, the Environmental Protection Agency (EPA) has rules in the works that could tie the hands of the Biden administration.

Under Trump, the agency has proposed limiting the use of scientific research that does not make public their underlying data. The EPA says it is doing so in the name of transparency. It comes after a failed effort by conservative Republicans in Congress to make the change through legislation.

But some of the most important studies documenting the detrimental health impacts of air pollution rely on private medical records — and would no longer be used when crafting regulations.

The Trump administration also wants to prevent future leaders of the agency from including certain positive health effects, known as “co-benefits,” when analysing anti-pollution rules going forward.

After overcoming one of the most polarising figures in modern U.S. history and defeating him in the election it turns out that the President-elect has much more to do.

Biden must first clean up every mess left behind Trump and prevent every attempt to open up more areas for offshore drilling if he wishes to fulfil what he promised on the campaign trail.

Then comes the simultaneous and tumultuous task of picking the right strategy for preventing climate change and, in parallel, make sure that most of his voters in and outside oil-producing states remain happy.

His optimistic $2 trillion plan, his discussions with GM and automobile manufacturers unions, GM’s move towards electric vehicles are telling voters who voted for him to transition the U.S. to cleaner energy that he “has got this.”

It remains to be seen how Pennsylvania, New Mexico, Louisiana, and other oil-producing states will be tagged along through this transition. Or – maybe, just because it’s politics – let them continue exploring and producing oil. Whichever way it goes, we will know soon enough.