Biden Win May Curb US Oil Drilling, Super-Charge Renewables
Biden’s victory could end up reshaping the U.S. energy sector in years to come, although the president-elect may have limited room to maneuver given that control of the Senate remains unclear.
The president-elect has pledged to spend trillions of dollars to speed up the transition from fossil fuels, slash emissions and curb climate change. Biden has also promised to ban new fracking on federal lands, which he may try to achieve via an executive order. Such a move would limit shale companies’ operations in several states, including New Mexico.
Oil & Gas
Biden’s electoral win adds to the hurdles facing the oil and gas industry, already hammered by a crash in demand amid the pandemic. The Democrat is expected to block new drilling permits on federal lands, something he could do via an executive order. His move to clamp down on the industry’s emissions would reverse the Trump administration’s relaxation of environmental regulation, and likely increase the cost of producing, transporting and processing hydrocarbons. Biden’s target for a 100% clean electricity grid by 2035 could squeeze natural gas’s share of power generation, and his aim to boost electric vehicles sales would erode demand for gasoline and diesel.
To be sure, Biden’s proposal to curb production on federal lands could have a positive effect on prices by trimming supply expansion. Stimulus spending to revive the economy could also boost demand for fossil fuels in the shorter term.
Biden’s climate plan doesn’t mention liquefied natural gas. Still, the construction of new pipelines and LNG terminals in the U.S., which has emerged in the last few years as a major global exporter of LNG, could face higher scrutiny should Biden be able to form a Democratic majority at the Federal Energy Regulatory Commission, which oversees the construction of energy infrastructure.
U.S. LNG exporters could eventually benefit in one way under a Biden administration: if his administration succeeds in its efforts to reduce emissions from America’s shale fields, that may attract climate-conscious buyers in Europe. Similarly, a thaw in U.S.-China relations could give U.S. exporters greater access to a major world market.
Biden’s presidency could super-charge growth of clean electricity in America. During the campaign, he said he’s aiming to eliminate carbon emissions from the power sector by 2035.
Investor interest in green stocks and technologies has surged recently. Among the things driving growth: mounting homeowner demand for rooftop solar and batteries amid blackouts from hurricanes and wildfire risk and a growing appetite for environmental, social and governance, or ESG, investments. Wind and solar power are already the cheapest electrical sources in many markets.
Biden’s victory is likely to accelerate the decline of coal. Demand has slumped as utilities continue to shift to cheaper and cleaner natural gas and renewables, and Biden’s call for a carbon-free electricity grid within 15 years will leave little room for the dirtiest fossil fuel. Trump vowed during the 2016 campaign to revive the industry, and once in office he rolled back numerous environmental regulations to aid miners. But his efforts did little to counter a decline that’s been driven by inexorable market forces. Coal will account for about 19% of U.S. electricity this year, down from more than half as recently as 2006.
A Biden victory may put pressure on Mexico President Andres Manuel Lopez Obrador to damp down his nationalist energy agenda. Lopez Obrador has stoked tensions between the trade partners by halting foreign energy projects — including suspending competitive oil and electricity auctions, calling on regulators to stop issuing new permits, and announcing that he may change the constitution to reverse the energy privatizations of his predecessor. Last month, a group of U.S. senators wrote to Trump, an ally of Lopez Obrador, saying that Mexico’s actions “undermine the spirit” of the USMCA trade agreement covering the U.S., Mexico and Canada.
A Biden victory could mean a halt to the Environmental Protection Agency’s granting of refinery waivers for the U.S. Renewable Fuel Standard, which in turn could help stabilize prices and demand for fuels made from corn and soybeans. The RFS also will reset for biofuel use in 2023, meaning the EPA will help decide how much ethanol and biodiesel are mixed into petroleum-based fuels in the U.S. Biden could keep blending targets near current levels or raise them to prevent plants from shutting down, even as his administration looks to transition away from an oil-based vehicle fleet.
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Author: News Max Staff
Source: News Max: Biden Win May Curb Oil Drilling, Super-Charge Renewables