The energy and climate policy of the US is expected to experience fundamental changes under the administration of President-elect Joe Biden, who has pledged to focus on clean energy and rejoin the Paris Climate Agreement.
Biden, having surpassed the necessary 270 Electoral College votes needed to claim the White House along with many projections, has claimed victory.
He signals a new era in US federal climate policy, as he campaigned on creating a $2 trillion economic recovery and jobs program with clean energy and climate-resilient infrastructure as its core pillars.
The president-elect committed to returning to the Paris Climate Agreement on the same days that President Donald Trump's withdrawal went into effect on Nov. 4.
"Today, the Trump Administration officially left the Paris Climate Agreement. And in exactly 77 days, a Biden Administration will rejoin it," Biden wrote in his Twitter account on that day amid the counting of votes.
"We definitely can be sure that Biden will remake the US a part of the Paris Climate Agreement once again," Sinan Erensu, assistant professor at the Sociology Department of Bogazici University told Anadolu Agency.
As Biden formed unexpected cooperation with climate and environment activists during his campaign, Erensu considers that Biden’s campaign is in line with the principles of a just transition with the promise of a carbon-neutral economy by 2050.
- Hurdles for oil and gas infrastructure projects
According to Wood Mackenzie, Biden offered American voters a radically different energy policy vision from Trump, with a focus on addressing the threat of climate change.
"He will enter the White House with a goal of setting the US on course for net-zero greenhouse gas emissions by 2050 and will take the US back into the Paris climate agreement. But there is a good chance the Republicans will retain control of the Senate, limiting how much of his agenda he will be able to deliver," Wood Mackenzie said in a statement.
The key influences shaping the US energy industry are likely to be market forces but the change of federal government will have some significant consequences, the statement said.
According to Wood Mackenzie vice-chair Ed Crooks, for the Americas, five key issues could be of more importance under a Biden administration.
The first is the expected capacity increase of offshore wind, as the Biden administration will act faster to support states and companies seeking to develop offshore wind turbines.
The second issue involves the possibility of applying restrictions on oil and gas development, in stark contrast to the Trump administration.
"There will not be a ban on fracking, but Biden has pledged to end sales of new leases for oil and gas development on public lands and waters. Onshore, the impact would be minimal. Offshore, the effects would be more significant although they would take some time to become apparent," the statement read.
A ban on new leasing, if permanent, would mean that by 2035 the US offshore oil and gas production would be about 30% lower than if lease sales had continued, Wood Mackenzie forecasted.
The third issue involves possible new hurdles for oil and gas infrastructure projects.
Greenhouse gas emissions and climate change will be taken into account in federal permits decisions for these infrastructure projects, Wood Mac said.
- Trump-era headwinds are reversed
"Biden’s victory positions the United States to regain its competitive position in the global marketplace as nations and businesses race to transition to net-zero emissions economies," Sue Reid, principal finance advisor at climate think tank Mission 2020 said.
She said that despite the Trump Administration’s efforts to prop up outdated and polluting fossil fuels over the past four years, clean energy has proven its resilience and ability to win in the market.
"Now, as Trump-era headwinds are reversed, clean energy is expected to scale much more rapidly and deliver on its unparalleled promise for job creation, pollution reduction and economic opportunity. Investors are ready to ride this tidal wave," Reid noted.
The fourth consequence of the new administration on the energy sector, Wood Mackenzie forecasts will be support for electric vehicles.
Biden plans to impose tighter fuel economy standards that will help increase electric car sales.
"By 2030 there could be 4 million electric vehicles (EVs) on US roads as a result of those standards, almost 60% more than if the Trump administration’s rules had taken effect. However, the impact on US fuel demand this decade will be minimal," Wood Mackenzie's statement said.
"Even 4 million EVs represent only about 1.5% of the total of 275 million vehicles we expect on US roads in 2030," it continued.
- No quick relaxation on Iran sanctions
Although Biden has strongly criticized Trump's decision to take the US out of the international deal over Iran's nuclear program and has promised a change in approach, no quick relaxation of sanctions on Iran is expected, it said, referencing the fifth policy issue.
"Negotiations about a possible renewed deal are not likely to begin until June 2021 at the earliest, after Iran’s elections, and there is no guarantee that the two countries will reach agreement," Wood Mackenzie forecasts.
By Nuran Erkul Kaya