Joe Biden is set to be sworn in as America’s 46th president on the 20th January 2021. One of the tasks on the presidential “to-do” list is creating an energy sector that’s affordable and sustainable, while at the same time maintaining the nation’s status as a global energy leader.
In these uncertain times, this is no easy task. Along with most governments around the world, the new president faces a dilemma: how to generate affordable energy, while at the same time promoting financial stimulus packages to boost sustainable energy solutions in the wake of COVID-19.
The aftermath of the pandemic looks certain to generate low oil prices, according to the International Energy Agency (IEA). But while a glut of cheap oil may prove an attractive short-term solution to power economic recovery, failing to invest in clean energy now could prove costly for the future competitiveness of the U.S. energy sector.
Biden’s Power Policy
In the run-up to the November election, Biden announced plans for the U.S. to achieve net-zero emissions by 2050, unveiling what his campaign describes as a Clean Energy Revolution to address climate change. The plan includes a promised $2 trillion investment to create millions of new jobs in clean energy and position the U.S. as a world leader in the field.
It’s a popular platform, too. Polling shows that seven in 10 U.S. voters support government action on climate change. And the message is starting to resonate across party lines, with around two-fifths of Republican voters supporting the Green New Deal, despite scepticism of climate science by the Trump administration.
Throughout his first term in office, President Trump favored policy initiatives promoting fossil fuels. But we live in an era where demand for coal is faltering, and oil majors like BP predict that demand growth for oil will peak by 2030, cementing the role of natural gas as a bridging fuel to support the growth of low-carbon power.
At the same time, China dominates the global manufacture of clean-tech components like solar panels, wind turbines, and lithium-ion batteries, disrupting a playing field where countries with plentiful fossil fuel deposits hold an advantage.
With the global energy mix undergoing this transition, investing in a sustainable future will be essential for the energy sector of countries like the U.S. to remain competitive.
Despite Biden’s commitment to a green energy transition, making policy decisions that are sustainable is not always clear-cut.
President Trump’s major sustainability initiative was to introduce the 45Q tax credit to encourage carbon capture utilization and storage (CCUS) projects, which harness CO2 emissions from power plants and industrial processes to prevent them reaching the atmosphere.
The federal government currently offers a subsidy of $35 per metric ton of captured CO2, when it is used for enhanced oil recovery (EOR) and then stored underground. The credit has helped put the U.S. at the center of the global CCUS map, while the captured carbon has been used primarily to generate substantial new oil supplies.
While Biden has promised to slash fossil fuel subsidies, he has also pledged to support the 45Q initiative. Despite its use to generate new oil supplies, CCUS technology could also help natural gas fulfil its promise of supporting renewables as a transition fuel − but containing emissions adds to the cost of natural gas.
Natural gas with carbon capture can also facilitate the rise of alternative fuels like hydrogen, offering a low-emissions alternative to fossil-based fuels; a subject of much discussion at the Gastech Virtual Summit 2020 event.
When partnering with low-carbon gases such as hydrogen, natural gas can unlock long-term energy solutions. As Alex Volkov, Vice President & Head of Global LNG Marketing, ExxonMobil, told the Gastech virtual summit: “When combined with CCS, natural gas can provide a very cost-effective way to produce hydrogen. And in the near future − not in 2035 plus.”
The fact that CCUS is one area of sustainable energy where the U.S. can genuinely claim to be a world leader, coupled with its ability to decarbonize the States’ massive natural gas industry, all point to CCUS being a winner regardless of who occupies the White House.
“At the OGCI, we believe that integrating climate change in our business models is key to the sustainability of the industry,” said Jerome Schmitt, Chair of OGCI Executive Committee, at Gastech. “We have to make sure that new tools, new means, are there to increase the GHG (greenhouse gas) reduction journey that we are engaged upon.
“The tools we have with us are clear. This is natural gas, this is CCUS, this is renewables.”
Joe Biden’s green energy vision largely aligns with this thinking − but there’s a long way to go before he can strike from his to-do list the task of resolving America’s energy dilemma.
Johnny Wood has been a journalist for over 15 years working in different parts of the world – Asia, Europe, and the Middle East. As well as an accomplished features writer he has edited several prestigious lifestyle magazines and corporate publications.