Trump’s Unplanned Gift to Biden: Clean Energy on the Rise
by Ben Lefebvre and Kelsey Tamborrino (Politico) … Biden is expected to speed the adoption of electric vehicles and boost power line transmission networks that will open up new opportunities for renewable power generators, analysts said.
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But the situation for fossil fuels is notably darker. U.S. crude oil production, which climbed to a record at more than 13 million barrels a day before the pandemic sapped fuel demand, has slipped to 11 million barrels a day, according to the latest government data. Natural gas production, which has doubled since the spread of fracking began in earnest in 2005, is expected to post a modest decline this amid weak prices caused by a glut of supply.
Those weak prices for natural gas and crude oil — which briefly turned negative as the pandemic took hold in April — have forced 45 oil and gas companies to file for bankruptcy through the first 11 months of 2020, according to law firm Haynes and Boone.
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Still, renewable energy won’t supplant fossil fuels anytime soon, and it remains a small portion of the overall energy market, even with the rapid growth, said Erik Olson, climate and energy analyst at the Breakthrough Institute. He cautioned that while that clean energy growth will continue, it will take time for it to ramp up at a scale to where it’ll dramatically alter the energy markets.
“You’re really seeing right now the early wave of renewables starting to reshape the power sector,” Olson said.
The dramatic fall in fuel demand amid the Covid-19 pandemic accelerated the debt-laden oil and gas industry’s need to shrink, and companies like Exxon Mobil, which saw its market value cut by as much as half earlier this year, have been forced to lay off tens of thousands of employees and ramp down their spending as a bulwark against a flood of red ink.
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The oil and gas industry will eventually return to profitability, albeit with a smaller footprint, said Dave Meats, director of energy research at market analysis firm Morningstar. Companies stocked up enough drilling permits in the waning months of the Trump administration to keep their activity on federal land relatively unchanged for the next two years or so even if Biden immediately halts new permits, Meats added. Meanwhile, drillers will move their rigs to private land to make up for the loss of access to federal land.
But, Meats added, it would be “unrealistic to expect further growth” by the end of this decade.
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In the U.S. energy capital of Houston, the oil industry is preparing for a future in which companies return to profitability — but with fewer players around, said one Texas-based oil and gas lobbyist. For now, they’re preparing to hire new teams of lobbyists to try and negotiate the edges off of Biden’s plans or to start looking for ways to adapt to the new normal. READ MORE
Biden wants to make the climate fight central to his presidency. What do big oil and gas firms think about that? (Washington Post)
Excerpt from Washington Post: The pressure for changes could threaten to shrink the fossil energy sector radically.
Well before Biden’s White House win, some oil companies were already contemplating that scenario. Occidental Petroleum, Total, BP and Royal Dutch Shell have been thinking about what it would mean to go to a net-zero carbon future just 30 years from now. They want to make sure they have a seat at the table as the Biden administration develops its climate policies.
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The incoming administration, along with big financial industry fund managers, are increasingly demanding that major oil companies make themselves more transparent, giving investors the tools needed to pressure management or simply divest, ultimately making it more expensive for the companies to borrow.
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Biden also campaigned on eliminating long-standing tax subsidies for the oil and gas industry as a way to partly pay for his $2 trillion climate plan.
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Perhaps even more worrisome for the industry is Biden’s promise to stop issuing oil and gas drilling permits on federal land, although the prospect of doing so faces legal and political hurdles in places such as New Mexico and other Western states that rely on drilling revenue to help fund schools and other state programs.
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An even more threatening part of Biden’s climate plan involves cajoling Americans to buy more cars that use little to no gasoline — striking right at the heart of the oil business. The oil industry has a history of fiercely opposing the sort of incentives Biden is proposing for electric-vehicle buyers. Tightening fuel-economy standards on gas guzzlers, which Biden has promised to do, also would tamp down demand for oil.
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The sale of more electric vehicles means more demand for electricity. READ MORE
