Biden’s Energy Plans And Our Future
On December 9, the United Nations released an Emissions Gap Report that tracked the progress various nations are making on their commitments to the Paris Climate Accords to reduce carbon emissions to certain targets by 2030. The U.N. has released these reports every year since the accords were signed in 2015.
The report highlights an inconvenient truth that many anti-carbon activists would rather ignore or minimize: The United States is already doing better at reducing its carbon emissions, despite having left the Paris agreements under President Donald Trump. Meanwhile, very few of the countries that signed the Paris agreement are living up to their (non-binding) commitments.
According to the report, the U.S. is today responsible for 13 percent of global emissions, while China is responsible for about 25 percent. But while America still contributes the most emissions per capita, those emissions have been steadily dropping for a decade, at an average of roughly 0.4 percent per year, despite an expanding economy. The International Energy Agency had earlier reported, “The United States saw the largest decline in energy-related CO2 emissions in 2019 on a country basis – a fall of 140 Mt., or 2.9 percent, to 4.8 Gt. U.S. emissions are now down almost 1 Gt. from their peak in the year 2000, the largest absolute decline by any country over that period.” The emissions of Russia, China and India, by contrast, have been steadily rising, both per capita and in absolute terms.
There’s no question that an energy transition is underway and will continue. The question is, how will it be managed? Much of the drop in America’s emissions is accounted for by the growth of hydraulic fracturing, which has allowed the rapid replacement of coal in hundreds of coal-burning plants with cleaner natural gas. But fracking is not the whole story. Energy efficiency is increasing across a range of industries, and many industries have committed to their own net-zero-carbon targets. Our energy transition has been mostly market-led, although tightening restrictions on already-aging coal plants played their part.
On top of those reductions from switching to natural gas, a recent report by the Rhodium Group shows that the COVID-19 driving restrictions and lockdowns resulted in 2020 having the largest fall in U.S. emissions since world War II, a 10.3 percent drop, “the single largest drop in annual emissions in the post-World War II era, outpacing the Great Recession of 2009 when emissions dipped 6.3 percent.” This COVID drop is temporary, and the U.N. report downplays it, but it still puts U.S. greenhouse gas emissions below 1990 levels.
In a report last summer, the U.S. Chamber of Commerce warned that a ban on energy production from federal lands and waters could cost the U.S. “billions” in royalties and 380,300 jobs, including 101,600 direct jobs. (The rest would be indirect or induced.)
On his first day in office, President Joe Biden followed through on campaign promises by taking actions to rejoin the Paris Agreement and canceling the Keystone XL Pipeline permit. In response to his Keystone XL decision, Mark McManus, general president of the United Association of Union Plumbers and Pipefitters said, “In revoking this permit, the Biden administration has chosen to listen to the voices of fringe activists instead of union members and the American consumer on Day 1. … When built with union labor by the men and women of the United Association, pipelines like Keystone XL remain the safest and most efficient modes of energy transportation in the world. Sadly, the Biden administration has now put thousands of union workers out of work.”
Biden is also pledging to keep his campaign promise to ban all new fracking on federal lands. Uncertainty about Biden’s energy agenda, combined with last year’s price plunge from the devastating effects of the coronavirus, has brought most new oil and gas exploration to a screeching halt for now.
As bad as the economic impacts from COVID-19 have been in the U.S., low interest rates and cheap, cleaner energy have helped keep them from being worse.
While low oil and gas prices benefit the average consumer and energy user, prices do have to rise to make oil and gas investment profitable again. There is a lot of pent-up demand waiting to be served. Oil services company Schlumberger reported double-digit growth in the fourth quarter of last year, despite the virus. Kinder Morgan, too, reported solid growth in the last quarter and said it has brought its long-awaited Permian Highway Pipeline online, only three months behind schedule.
How aggressively will Biden continue to move on climate and energy? Will he bet that a few big, early, long-promised moves will pacify his anti-carbon base for the time being? The U.S. has shown that it’s possible to combine economic growth with carbon reduction. It would be a shame if too-aggressive climate and energy moves crimped an economic recovery poised to take off as vaccines are distributed, restrictions are lifted and demand returns.
