US energy: ‘the more ambitious Biden tries to be, the more likely he is to fail’
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The Dunes Sagebrush Lizard did not vote in November’s presidential election, but it had a lot riding on the outcome. In the coming months, the US Fish and Wildlife Service will decide whether to list the lizard as endangered — a designation that would make it an offence even to disturb its habitat.
This matters a lot to the lizard. But it also matters to the drillers and frackers of southeastern New Mexico and western Texas, home both to the shinnery oak dunes in which the lizard lives but also to the shale rocks of the Permian, the world’s most prolific oilfield.
Environmental concerns are about to rise up the federal agenda, with the impact likely to be felt from the Permian to power plants, reptiles to renewable energy. After four years of a Donald Trump administration that sought to open protected areas to drillers, erase limits on pollution, and support fossil fuel production in the name of furthering “American energy dominance”, Joe Biden’s electoral triumph has brought the promise of abrupt change.
More than 81m Americans and a majority of electors backed a candidate who said he hoped to “transition from the oil industry” and put clean energy at the centre of a $2tn green plan to decarbonise American electricity in 15 years and create a net-zero-emissions economy by 2050.
Mr Biden pledged to reverse Trump-era environmental rollbacks and re-empower federal bodies such as the Environmental Protection Agency. His appointment of scores of federal officials — in dozens of energy-relevant bodies, from the departments of interior and agriculture to energy — will give conservation-minded officials power, letting them decide, for example, how to designate threatened species living beside Texan oil rigs.
Yet as the dust settles on Mr Biden’s victory, the political realities are starting to set in too. Despite retaining a majority, Democrats lost seats in the House of Representatives and at best can hope to split the Senate 50:50 by winning two run-off elections in Georgia in January. For all the enthusiasm of his supporters — and despite the mandate from the popular vote — the full gamut of Mr Biden’s transformative $2tn energy plan has little chance of progressing through such a divided chamber.
“The president has a lot of power to convene. He has the power to jawbone and he has the power to educate the public,” says John Podesta, a former chief of staff in the Clinton administration and adviser to former president Barack Obama. “But they’ll have to pick their shots in Congress.”
Others are more blunt. “The idea that their ideas won the day — there’s just no evidence of that,” says Tom Pyle, head of the American Energy Alliance, a libertarian think-tank. “There is no clean energy revolution. There’s just gains on the margins.”
Low hanging fruit
So what can be done? Presidential executive powers will give Mr Biden some leeway — but not enough to hit his decarbonisation targets, say environmental and constitutional lawyers.
Existing legislation, such as the Clean Air Act or National Environmental Policy Act, will empower federal bodies like the EPA and could drive gains in fuel-economy standards, reducing emissions. But an increasingly conservative judiciary will be an obstacle to federal bodies acting expansively. Congressional Republicans — many of whom cheered Mr Trump's assault on environmental rules — will also hinder his successor’s bolder ambitions, such as the huge planned spending on clean energy. Instead, Mr Biden will have to seek compromise and tactically deploy his executive authority.
“Do I wish that the Democrats controlled both the House and Senate and do I wish it by big majorities? Sure,” says Jody Freeman, a Harvard law professor who advised the Obama administration. “But presidential power in this domain, exercised strategically and smartly, can accomplish a lot. It doesn’t compare to what you can do if Congress passed a sweeping law. But it’s meaningful.”
Mr Biden’s appointment of several heavyweights to key energy positions points to a bold climate agenda. John Kerry will fill a new role as international climate envoy and sit on the National Security Council. His domestic equivalent, Gina McCarthy, a former head of the EPA, will be the administration’s climate tsar, co-ordinating policy. Jennifer Granholm, the former Michigan governor, has been nominated to be energy secretary. Her experience negotiating with Detroit automakers during the bailout of the car industry a decade ago may be useful as Mr Biden pushes electrification of transport.
He picked Michael Regan, an environmental regulator from North Carolina, to run the EPA — activists welcomed that news, saying it showed Mr Biden was determined to tackle environmental justice. “Personnel is policy,” says Kevin Book, an analyst at ClearView Energy Partners, a Washington consultancy, “and the policy is green.”
The next relatively easy step for Mr Biden would be swift approval of clean energy projects that have been left on the shelf by the Trump administration — such as offshore wind developments in the north-east of the US. He might add urgency by issuing executive orders instructing agencies to reshape energy production, invoking powers in statutes such as the Defense Production Act or National Emergencies Act, says ClearView. A reversal, or even cancellation, of dozens of rule changes by the current White House will be another immediate priority.
“It is certainly within the president’s power to direct the agencies to put Humpty Dumpty back together again,” says Ms Freeman. But resuscitating laws changed or weakened by the Trump administration will take time, she adds: up to two years “for really complicated rulemaking” common to environmental regulations.
The Biden camp will definitely overturn the Trump administration’s decision to revoke California’s waiver under the Clean Air Act — which lets the state set tougher tailpipe emissions and greenhouse gas standards. He will also reverse Mr Trump’s weakening of Obama-era fuel economy standards. In both cases, the Biden White House will simply stop defending the Trump rules in lawsuits brought by the states and could ask the courts not to rule at all, so the Biden EPA can fix the policies, says Ms Freeman.
The car-buying power of California’s drivers, combined with other states that follow its rules, will improve fuel economy across the fleet and cut emissions. Carmakers do not want to build two supply chains to create different engines to meet different rules in the same country. And, even if these kinds of legal remedies stutter, Mr Biden can negotiate directly with Detroit’s big car companies and their unions to make the changes, says Mr Podesta. He could also instruct the government to electrify its own considerable car fleet.
Federal agencies will also be deployed. The Securities and Exchange Commission could compel companies to disclose climate risks, for example, pushing investment towards cleaner energy. The Department of Labor’s oversight of some pension funds could do the same.
These are steps that would “raise the cost of capital for fossil [fuels] and lower it for greener energy”, says Mr Book. “Not creating a carbon market, but putting more awareness of carbon into the markets that exist today.”
Neil Chatterjee, ousted by Mr Trump as head of the Federal Energy Regulatory Commission just after November’s election, says the body could set rules to integrate renewables into the grid and accelerate deployment of battery storage capacity. Ferc had also begun exploring ways to support state initiatives on carbon pricing before Mr Chatterjee was sacked.
Yet, legal experts argue that Mr Biden’s federal powers will be limited — especially in the face of a legal system filled with Trump-appointed judges.
“The more ambitious the Biden administration tries to be, the more likely they are to fail,” says Jonathan Adler, an expert in environmental and constitutional law and professor at Case Western Reserve University School of Law.
While the EPA might be able to tackle sector-by-sector emissions from stationary sources such as power stations, or reinforce measures set by states, sweeping initiatives to enforce clean energy standards or CO2 limits will be challenged, say legal experts.
“There is no explicit authority, say in the Clean Air Act, that would let the EPA set up a nationwide cap and trade system,” says Ms Freeman, citing one example. “So if the agency were to decide to do that, I think it would meet with trouble.”
David Bookbinder, chief counsel for the Niskanen Center think-tank in Washington and the lead litigator in the landmark 2007 Massachusetts vs EPA lawsuit that established the agency’s authority to regulate greenhouse gas emissions, thinks activists have not appreciated the obstacles.
“You’re getting a lot of happy talk, which is not unusual for the environmental community,” he says. “The options that the president has, using just executive branch powers, are actually limited.”
Either way, Mr Biden will need to move quickly. The Obama administration waited until its second term to push its clean power plan, which arrived about 18 months before Mr Trump entered the White House and tore it up.
The administration will have a freer hand outside its own country, say analysts. Mr Biden has promised that the US will immediately rejoin the Paris climate pact and begin an effort to reclaim global leadership on clean energy.
Yet, with an uncertain path to make widespread regulatory changes domestically, Mr Biden will need to rely on old-school politics at home, say former officials.
“The last 30 years has seen a perverse merry-go-round of regulate, deregulate, regulate, deregulate,” says Paul Bledsoe, a former adviser to the Clinton White House who is now at the Progressive Policy Institute, a Washington think-tank. “What we have learned is that we need to legislate and I think Biden as a creature of Congress is going to turn there first.”
He will face opposition though, says Mr Pyle, with pro-fossil fuel Republicans in control of key Senate committees — including environment and public works — and a number of other priorities, not least the pandemic, taking legislators’ attention.
Where climate change meets business, markets and politics. Explore the FT’s coverage here
“Biden wants to mandate clean energy by 2035 — that’s not going to happen,” says Mr Pyle. “Will they get a lot of money out of Congress? Yes. Will they get sweeping climate legislation? Will they get a carbon tax? No, they will definitely not, at least not in the first two years.”
Mike Sommers, head of the American Petroleum Institute and a former Republican official, says he expects Republicans on the Hill to “rediscover fiscal discipline” next year and resist any big spending proposals. “Given the small majority in the House of Representatives and toss-up in the Senate, it’s hard to see big legislative accomplishments being done.”
The most plausible energy compromise is a stimulus bill laced with green investment to boost jobs, say political analysts. New infrastructure such as electric car charging points, solar installations and more transmission lines — critical to any increase in clean electricity generation capacity — could win support in Republican states, say analysts. Mr Pyle says renewable energy subsidies and a renewal of clean energy tax credits could win support from Senate Republicans.
A bipartisan deal on clean energy would be more modest than the $2tn one pledged before the election, but more likely to stick than one forced through by one party, adds Bob Inglis, a former Republican Congressman who lost a primary race in his seat in North Carolina partly because of his position on climate change. Just a few Republican senators, such as Mitt Romney and Susan Collins who joined six others in urging their congressional leader Mitch McConnell to support clean energy funding earlier this year, could make it happen.
Mr Biden’s long history in Congress — and relationship with Mr McConnell, the Senate majority leader — makes him the perfect candidate to strike a grand bargain, says Mr Inglis, especially as clean energy grows in popularity among Republicans.
Almost two dozen Republican senators face re-election in the 2022 midterms and it is no longer clear that continued scepticism about renewables will help them. Mark Pischea, head of the Conservative Energy Network and a Republican strategist based in Michigan, a swing state Mr Trump lost in November, says Republicans made a “colossal mistake” in thinking their attacks on the Biden clean energy platform would win them votes.
Even traditionally red states such as Texas, Oklahoma and Kansas have emerged in recent years as clean energy powerhouses. “Without the denier-in-chief,” Mr Pischea says, referring to Mr Trump’s climate scepticism and criticisms of clean energy, “Republican lawmakers will be more at liberty to take their own position.”
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Analysts point to a bipartisan bill introduced to the Senate in November to support nuclear power — a technology Mr Biden has also endorsed.
A bipartisan deal allowing for more funding of clean energy and tax credits for renewables and batteries, plus incremental changes to rules, would mark progress on the climate and clean energy files but would fall short of the pre-election dreams of progressive Democrats. Some activists worry that Mr Biden’s proposed appointments already betray a lack of radical ambition. Others warn that the president-elect must remain resolute, or lose the support of progressives.
“He should be reaching out across the aisle and bringing his agenda to Republicans, to Democrats to try to make it happen,” says Evan Weber, political director of the Sunrise Movement, a youth-led group that backed Mr Biden at the election. “But I don’t think that means necessarily compromising and watering it down. Because this agenda is something that’s popular with the American people.”
It seems the changes will, however, amount to less than the clean energy revolution many of the president-elect’s supporters sought. “Biden will make significant progress,” says Mr Bledsoe. “But not the sweeping change he could have done with a Democratic Congress.”
Additional reporting by Myles McCormick in New York
This article has been amended to reflect that Mike Sommers, was a former Republican official, not congressman
Letter in response to this article:
The humble lizard’s moment in the sun / From Dr Mia Bennett, Assistant Professor, Department of Geography and School of Modern Languages & Cultures, The University of Hong Kong