[Editor’s Note: Phone2Action is writing a series of posts showing what is at stake in November’s election in different industries. See the inaugural post for an overview.]
Democrats and Republicans are offering vastly different visions for energy and environmental policy in America—and November’s election will decide which one wins.
Whatever the outcome, the next president and Congress will dramatically alter the landscape for the energy industry, deciding how America handles critical issues such as climate change, renewable energy, environmental regulation and the impact of the pandemic.
Raising those stakes is the idea that the long-term impact of COVID-19 on the energy industry is still largely unknown. The New York Times reported that as many as 250 oil and gas companies could file for bankruptcy in the next year, more than the previous five years combined. The industry as a whole, including clean energy, has lost more than one million jobs to the pandemic.
Even with oil prices hovering around $40 a barrel, the industry will continue to struggle. How much so could depend largely on the outcome in November.
Climate Change and Clean Energy
The major focus for this year and next, and the next administration, will be climate change and clean energy. President Trump has generally downplayed the effects of climate change, largely dismissing reports generated by the U.S. government. He is sure to finalize America’s exit from the Paris Accord.
Joe Biden, for his part, has sworn to address climate change through a number of major initiatives: cutting emissions in the electricity industry to zero by 2035; increasing energy efficiency in roughly 4 million buildings and 2 million homes; and creating an office at the Department of Justice for environmental and climate justice. And if Biden wins the election, expect the U.S. to return to the Paris Accord at the start of the administration.
While the U.S. is the largest oil producer in the world, the next administration is very likely going to have to address serious problems in the oil and gas sector.
Though companies are going bankrupt at an alarming rate and the market is consolidating through multiple mergers, acquisitions, and asset sales, it is unclear whether government subsidies will be considered.
In the 2008 recession, the industry was slammed for taking money from government assistance programs, so there is some hesitancy in the industry this time around. Several companies qualified for and were awarded Paycheck Protection loans authorized by Congress following the onset of the pandemic. But it is unclear whether there will be industry-wide financial relief.
Expect Republican lawmakers, and a Republican White House, to be more open to that kind of assistance. Alternatively, with climate change being a key driver for progressive activism, expect a Democratic White House and Congress to have very little sympathy for energy industry relief and bailouts.
Ultimately, the macroeconomics of the industry will weigh heavily on the next administration, regardless of whether it’s Biden or Trump, as it will have to navigate the ongoing effects of decreased demand and layoffs well into 2021 and possibly 2022.
Pipelines, Renewables and Infrastructure
COVID-19 has led to a global decline in greenhouse gas emissions, opening a new path for environmentalists making a case for more investment in renewable energy. The question of whether there are policymakers and regulators open to that depends on which party wins the White House and Congress.
Biden’s $2 trillion infrastructure plan will include significant investment in clean energy, including the continued support for achieving net-zero emissions by 2050. Biden is not, however, completely in sync with environmentalists. Specifically, he fell in line with the rest of the Democratic primary candidates and said he would ban fracking. He has since backtracked on that statement, telling his Pennsylvania supporters that he would not ban the practice. Pennsylvania’s economy is heavily dependent on fracking.
But these positions, whatever their nuances, are a stark contrast to Trump.
If Trump is reelected and the Republicans retain their control in the Senate, there will likely be a continued push for expanding energy exploration on federal lands. Trump has declared that under his leadership “the golden era of American energy is now underway.” At the Federal Energy Regulatory Commission (FERC), Trump’s reelection would ensure a Republican majority on this important five-member commission that reviews and approves infrastructure for interstate transmission of electricity, natural gas and oil.
More Obama-era Environmental Protection Agency regulations—which were already a target in Trump’s first term—may also be on the chopping block. Cuts in regulations are particularly relevant to projects like the Atlantic Coast Pipeline, which blamed an unpredictable and costly regulatory environment for its failure. Expect to see that argument come into sharper focus in a Republican administration.
In fact, there have been a number of losses for pipelines , with courts ruling against the Dakota Access Pipeline and the Keystone XL Pipeline. These three events (Atlantic, Dakota and Keystone XL) have reignited the broader pipeline debate, forcing oil and gas companies to underscore the importance of pipelines to their business and to fuel distribution while environmentalists use the debate to their advantage. Whichever party wins the election will no doubt influence the debate.
Join us Thursday, August 13 at 1pm EST for a webinar featuring officials from NABPAC and the National Rural Electric Cooperative Association to discuss the best advocacy strategies to use during this election cycle.
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