international analysis and commentary

Biden’s energy transition challenge

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In living memory, never in any campaign for the presidential elections in the United States have energy policies played such an important role as in the one that has just ended. Evidently, the factual and objective question of climate change –  despite the denialist fringes that are found in any social or historical phenomenon, including Covid-19 or even the sphericity of planet Earth – is now a political and economic question that must inevitably be faced head-on. This is the case whether one is on the right or left wing, whether one is a Republican or a Democrat, because local communities as well as the global community are at risk of a no-return failure.

Solar and wind fields in California

 

On the one hand there was Donald Trump, a candidate staunchly supported by the Republican camp who during his term has always presented himself as the defender and protector of fossil fuels – oil, shale gas, and even coal – with the declared intention of ensuring the energy dominance of the USA in the world first through energy independence and then through oil and gas exports.

On the other hand, the Democrat Joe Biden, undoubtedly a genuine supporter of the energy transition, both for his personal beliefs and for the economic and social development that the renewable energy industry promises, but also, and most likely, for the necessary tactical opposition to his opponent in the race for the presidency of the American confederation.

The issue is complex and controversial, not can be reduced to a few inconsistent and contradictory political slogans.

Let’s start with the Paris Agreement between the member states of the United Nations Framework Convention on Climate Change. Its goal is the reduction of greenhouse gas emissions starting from the year 2020 in order to contain the increase in average global temperatures well below the threshold of 2°C above pre-industrial levels.

Of course, the US withdrawal under the Trump administration was a major blow to the difficult process of consensus building on which the whole effort rests. All the largest fossil fuel producing countries remain part of the agreement, from Saudi Arabia and Russia (with their respective eleven million barrels per day – second only to the United States), to Italy (with its 89 thousand barrels per day) and China, Canada, Iran, Iraq, as well as many others.[1]

Next is the great terror in the face of an increase in US household spending following a reduction, or even an elimination, of the share of energy generated by fossil fuels, as alternative energies would be more expensive. According to some politicians such as Frank Lasee, a former senator from Wisconsin, the energy bill would arrive to over five hundred dollars a month with a consequent movement of national economic activities to China and other countries with lower energy costs, but this is a claim never supported by truthful data produced by reliable sources.[2] A completely different matter is the result of Rewiring America, a non-profit organization on energy policies that, in its latest study No place like home, shows how the United States would save $321 billion annually, equal to almost $2,585 on average per family, without installing or using any miraculous technology, but simply by heating their homes with heat pumps and replacing their petrol vehicles with electric cars powered only by renewable energy.[3]

It may be worth remembering that five decades ago, Saudi Sheikh Ahmed Zaki Yamani, therefore not an environmentalist-fundamentalist, declared in an unofficial circumstance cited by The New York Times that the Stone Age did not end because the stones ran out, and the oil age will not end because oil will run out. From this simple observation and prediction, we can deduce that the oil industry is oscillating towards an inevitable consolidation with a consequent reduction in jobs. According to The future of work in oil, gas and chemicals, a study published by Deloitte in October 2020, the oil, natural gas and chemical industry in the United States eliminated 107,000 jobs between March and August of this year, a rate of redundancy never seen before in this industry. This was certainly worsened by the effects of the Covd-19 pandemic, but is certainly symptomatic of the sector’s health and the future that awaits it.[4] What matters most is that if on the one hand employment is showing clear signs of contraction in a given industry, on the other it is growing in another, and this is precisely what is happening to the renewable energy industry. According to the National Association of State Energy Officials, employees in the renewable energy industry have grown annually at an average rate of 6% and now represent 40% of the entire energy industry workforce.[5] Also, according to the American Council of Renewable Energy, workers in the American clean energy industry are paid 25% more than the average wage in the United States and are more likely to join unions and have health benefits and pension schemes.[6]

Joe Biden, Kamala Harris and the other members of their team have understood that in this time of profound crisis there is an opportunity to build a more resilient and sustainable economy, which can put their country on that visionary but perhaps irreversible in the long term, path to achieve net zero emissions by the half of the Century. Such a course would really create new professions, new businesses and consequently millions and millions of new well-skilled and well-paid jobs.

The President-elect’s program envisages an expansion of the clean energy sector with the allocation of two trillion dollars in the first four years of his presidency: a very ambitious plan, especially in terms of implementation. While some see it as almost impossible, the investment figures are in line with estimates already provided by other research centers, such as that of Wood Mackenzie about a year ago. The estimate foresees investments of about 4.5 trillion dollars over a period of ten to twenty years to add 1,600 gigawatts of power to the national electricity grid produced from wind and solar energy alone to definitively replace energy produced from fossil sources.[7] But Joe Biden goes beyond the simple expansion of electricity production capacity, as his plan ranges from infrastructures to electric cars, from public transport to housing, from 5G broadband to the conversion of brownfield sites, all strictly made in the USA and without anyone being excluded or deprived of the well-being generated by it.

“I would transition from the oil industry, yes,” Joe Biden told National Public Radio, an independent non-profit organization comprising over 900 US radio stations, during his election campaign. Sure, Biden may not be able to stop the “fracking” operations that create cracks in the deep-rock formations through which natural gas, petroleum and brine will flow more freely, a technique that generates substantial collateral effects such as air emissions and climate change, high water consumption, groundwater contamination, land use, risk of earthquakes, noise pollution and health effects on humans. But this time around, the US seems to have reached the conclusion that a quick turnaround is urgently needed. Its peers must also take action, as this is not the time to stand on the sideline and watch – especially for the European Union.

 

 


[1] Statistical Review of World Energy, British Petroleum, June 2020, https://tinyurl.com/y93mc5yc

[2] Biden’s Energy Policy Would Cost American Families Thousands, RareClear Energy, November 2020, https://tinyurl.com/y6qg2kms

[3] No place like home, Rewiring America, October 2020, https://tinyurl.com/y44pon53

[4] The future of work in oil, gas and chemicals, Deloitte, October 2020, https://tinyurl.com/y3jyjgty

[5] 2020 U.S. Energy & Employment Report, National Association of State Energy Officials, https://tinyurl.com/y6gyyow8

[6] Clean Energy Jobs Pay 25% More Than National Median, American Council on Renewable Energy, October 2020, https://tinyurl.com/y5fotduk

[7] Decarbonising US power grid ‘may cost US$4.5 trillion’, Wood Mackenzie, June 2019, https://tinyurl.com/yyojyt4a