After the 2020 elections, Democrats control the White House and Congress. President Biden promises an all-out attack on climate change, which should reduce opportunities to develop new oil and gas reserves, shrink oil and natural gas markets, and likely limit the development of new gas pipelines and liquefied natural gas (LNG) export facilities.
President Biden is committed to a whole-government approach to tackling climate change and plans to spend $2 trillion to “put the United States on an irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.” Even with a Democratic Congress, it is unclear how much of that plan can be implemented. Yet he can do much without Congress. On his first days in office, he took a flurry of executive actions to reverse those by his predecessor. In a single executive order addressing the environment and climate change, he revoked the Presidential Permit authorizing the Keystone XL pipeline to cross the Canadian/US border, suspended oil and gas leases in the Arctic Refuge, directed agency decision-making “to capture the full costs of greenhouse gas emissions as accurately as possible” (i.e., use the “Social Cost of Carbon” and other metrics), and directed all agency heads to “immediately review and … take action to address the promulgation of Federal regulations and other actions during the last 4 years that conflict with these important national objectives.”
The President also issued an executive order recommitting the U.S. to “every article and clause” of the Paris Climate Agreement, which will restore the U.S. commitment to cut overall greenhouse gas (GHG) emissions by 26-28 percent from 2005 levels by 2025. But Biden wants to do more — convene another world climate summit to seek additional GHG reduction commitments from other nations. To do that, he must lead by example and slash GHG emissions even more. Biden pledges:
To keep more oil and gas in the ground. Biden has promised no new oil and gas leases on public lands. Some urge him to ban new drilling permits and hydraulic fracturing or “fracking” on public lands too, but that would invite legal challenges. Instead, many expect the administration to bottle up fossil fuels (from private and public lands) by limiting the development of new gas pipeline and LNG export facilities.
Carbon-free electricity by 2035. This goal is much more aggressive than Obama’s Clean Power Plan, which sought a 32 percent reduction in GHG emissions by 2030. To date, most of the power sector’s GHG reductions have resulted from replacing coal generation facilities with new, more efficient generation facilities fueled by abundant supplies of natural gas. Carbon-free electricity means that gas-fired generation (which accounts for almost 40 percent of the country’s natural gas consumption) would be replaced with renewable resources. Demand for natural gas would be reduced.
Reduced methane emissions from oil and gas activities. The administration will not only revive the Obama-era rules covering methane escaping from new oil and gas operations, but also expand the limitations to cover methane leaks from existing production, transportation, storage, and distribution operations. Methane is valuable, but it will cost more to capture leaks, and the costs might make smaller, older facilities uneconomical to operate.
Cleaner cars. Increased fuel economy standards (e.g., 50-plus miles per gallon by 2026) and reduced emission levels for cars will initially drive the goal, while research and regulatory initiatives facilitate the long-term move from internal combustion engines to electric vehicles (EVs). Demand for gasoline would be slashed.
These initiatives will take years and require multiple administrative rulemaking proceedings at different federal agencies. The leaders of those agencies will play a large role in determining the success of these initiatives. President Biden has nominated his choices to lead these agencies (all Democrats committed to combatting climate change), but most require confirmation by the Senate, which will take time given other issues requiring Senate attention.
Biden’s Green Team
Jennifer Granholm, Secretary of the Department of Energy. Jennifer Granholm (61) was the first female Governor of Michigan, serving from 2003-2011. Granholm, who has deep ties to Detroit, the “car capital of the world,” will help further administration’s goal of encouraging EVs. However, under Granholm, the “Department of Everything” — which oversees a network of 17 national research labs, sets appliance standards, collects energy data, and issues grants — will do much more. To start, the Department will have $40 billion to lend to clean energy companies (from unused stimulus funds), with ten times that amount to follow over the next ten years, if Biden has his way.
Deb Haaland, Secretary of the Department of Interior. Deb Holland (60), a Congresswoman from New Mexico, will be the first Native American to hold a cabinet seat. Haaland, through the Bureau of Land Management, will oversee approximately 30% of the nation’s mineral rights and through the Bureau of Indian Affairs, manage the country’s relations with the Indian nations, as well as their oil and gas leases. As such, Haaland will play an integral role in banning new oil and gas leases, reducing methane emissions, and possibly limiting new drilling permits on federal land (all of which will adversely impact her home state of New Mexico), while also promoting environmental justice.
Pete Buttigieg, Secretary of the Department of Transportation. Pete Buttigieg (38), the Mayor of South Bend, Indiana, will be the youngest Secretary of Transportation. Biden tapped Buttigieg to help implement the new administration’s plan to “build back better” a new climate-resilient infrastructure and restore crumbling roads, bridges and ports. Buttigieg will be tasked with increasing motor vehicle fuel economy standards and encouraging the development of electric transportation.
Michael Regan, Environmental Protection Agency (EPA). Michael S. Regan (44), currently the Secretary of the North Carolina Department of Environmental Quality, would become the first African American man to act as EPA Administrator. A few years ago, he ended a speech with paraphrased quote from Union Army Captain William Mattingly, who repelled Confederates at the Battle of Bulltown: “Let’s fight till hell freezes over and then we’ll fight them on the ice.” Regan will need that kind of intensity, if he is to establish new emissions standards for cars and trucks, develop the “Clean Power Plan 2.0,” require reductions in methane leaks from new and existing oil and gas operations, and reverse Clean Water Act reforms recently finalized by the Trump administration.
Gina McCarthy, Domestic Climate Czar (66), Obama’s EPA Administrator, will coordinate climate action across multiple federal agencies and Congress. Her international counterpart will be John Kerry, International Climate Envoy. Kerry (77), Obama’s Secretary of State, will work to convene a new world climate summit and seek more aggressive GHG reduction commitments from foreign countries, including China which emits twice as much GHG as the US and continues to add new coal generation plants at a record pace. Meanwhile, the new Chairman of the Federal Energy Regulatory Commission, Richard Glick, will likely (1) include a Social Cost of Carbon analysis in the environmental review of pipeline projects, thereby reducing both the number of certificate applications and approved projects, and (2) establish policies to promote decarbonizing the power sector.
Washington Watch is a regular report on the oil and gas pipeline regulatory landscape. Steve Weiler is partner at Dorsey & Whitney LLC in Washington, D.C. Contact him at email@example.com.