Daily on Energy: The energy and climate stakes of the election

It makes the energy stakes of this election high, with the future makeup of the U.S. energy mix and the country’s greenhouse gas emissions trajectory hanging in the balance.

One of the most immediate examples comes tomorrow, when Trump’s withdrawal from the Paris climate agreement becomes official.

As Josh has reported, if Biden wins, that exit will be short-lived, and all eyes will be on his administration to put forth a much stronger emissions pledge to reorient the U.S. as a climate leader. If Trump wins, don’t expect him to change his mind on the Paris deal. Climate activists will be watching to see if a second-term Trump administration tries to undermine global climate efforts by pushing other countries like Saudi Arabia, Russia, and Brazil to also exit the pact.

Here’s what else we’ll be watching for, based on the election outcome.

If Trump wins a second term: We’re expecting a continued focus on boosting U.S. energy production, especially oil and natural gas (Trump does love fracking, as he’s noted many times recently on the campaign trail).

It’s unlikely Trump will focus much on climate change or reducing emissions. Certain parts of his administration are already looking for ways to undermine climate science, through the upcoming fifth National Climate Assessment due out in 2023, the New York Times has reported.

A second term would also allow the Trump administration to cement changes to the federal bureaucracy that would have a significant effect on the way environmental and climate regulations are crafted. Nowhere is that more evident than at the EPA, where several rules are pending to change the way the agency considers scientific studies in policymaking and to alter the way it calculates the costs and benefits to justify pollution rules.

A second-term Trump administration would also have the time to defend many of its climate and environmental rollbacks still stuck in the courts (though that doesn’t necessarily guarantee success).

It’s unclear, though, whether Trump, in a second term, could boost coal’s fortunes at all. So far, he has been unable to counter market forces pulling away from coal and toward cheaper natural gas and renewables.

If Biden wins: The pendulum on climate and energy policy would swing back hard. If the former vice president keeps his campaign promises, he’d be implementing the most aggressive climate policy agenda of any presidential administration.

How big and bold he’s able to go on climate will depend in part on how down-ballot races shake out. If Democrats keep the House and also take the Senate, we’re expecting a push for comprehensive climate legislation (Biden would need Congress to set his proposed 100% carbon-free power by 2035 standard, for example). A big question will be whether Biden and other Democrats try to get rid of the filibuster to pass a climate bill or whether they try other legislative avenues (see more on this below).

Either way, Biden would seek to fundamentally reorient the federal government to combat climate change. He’d also have to grapple, however, with undoing the Trump administration’s climate and environmental rollbacks, a regulatory process that could take years. And as his federal agencies look for new ways to regulate greenhouse gas emissions, a Biden administration would undoubtedly face challenges from industry and Republican-led states who oppose heavy-handed mandates.

We’re also expecting tensions within the Democratic Party and its constituencies on climate change, which have been simmering under the surface during the general election, to break out into the open if Biden wins. Left-wing environmental groups and Democratic lawmakers are already gearing up to pressure Biden to exclude anyone remotely linked to the fossil fuel industry from his cabinet and to bring down the hammer on fossil fuel production.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

DOWN-BALLOT RACES TO WATCH TONIGHT: Climate and energy has been central to a few House races that we’ve spotlighted throughout the campaign.

Here are some we’ve been watching:

*Oklahoma’s 5th District: Freshman Democrat Kendra Horn is running as a defender of the oil and gas industry, which is dominant in her district, even as her party is demanding reducing fossil fuel use to combat climate change.

Whether Horn can establish herself as an industry ally will be a key factor in whether she can hang onto her seat in a face-off with GOP state Sen. Stephanie Bice.

Horn recently separated herself from Biden’s debate comment that he’d like to transition away from oil.

*South Carolina’s 1st District: Freshman Democratic incumbent Joe Cunningham and Republican Nancy Mace have tried to outdo each other as the biggest opponent of offshore drilling. Mace was in the audience in Florida when Trump announced his election-year flip-flop expanding an offshore moratorium in the Eastern Gulf and Atlantic, while Cunningham last year sponsored a bill that passed the House to forever ban offshore oil and gas drilling off the Atlantic.

Cunningham has also criticized Mace for making skeptical comments about climate change.

*Pennsylvania’s 1st District: Rep. Brian Fitzpatrick will have the distinction of being the only Republican in Congress who backs a carbon tax if he can hang on to his seat covering the Philadelphia suburbs. He also voted for a bill to keep the U.S. in the Paris agreement.

Democrat Christina Finello doesn’t talk much about climate change on the campaign trail, mostly emphasizing Trump’s struggles containing the coronavirus. But her campaign told Josh she would work to restore environmental rules weakened by Trump, invest in renewable energy jobs, and “put science ahead of politics.”

*Michigan’s 6th District: Jon Hoadley, a 37-year-old liberal, is pushing a Green New Deal-style climate change agenda as a wedge issue to defeat longtime Republican incumbent Rep. Fred Upton in a purple district of southwest Michigan. He’s been endorsed by the Sunrise Movement.

Upton, a 67-year-old centrist Republican first elected in 1986, is no stranger to environmental and energy issues. A former chairman of the Energy and Commerce Committee, he argues Hoadley’s ideas are too extreme for a centrist district. Upton led a recent effort by House Republicans to adjust their messaging around climate change.

DEMOCRATS EYE BUDGET RECONCILIATION: House Speaker Nancy Pelosi said yesterday Democrats will use a legislative process known as budget reconciliation next year to ease passage of policy priorities. Reconciliation is a procedural tool that allows for passing of fiscal measures with a simple majority.

“We’ll almost certainly be passing a reconciliation bill, not only for the Affordable Care Act, but for what we may want to do further on the pandemic and some other issues that relate to the well-being of the American people,” Pelosi said on a call sponsored by the liberal group Protect Our Care.

The climate angle: Pelosi did not mention climate change, but reconciliation could be a good fit for passing something like a carbon tax.

But much of Biden’s climate plans are dependent on regulations and mandates that don’t directly impact the budget, so those would seem to be unlikely to qualify for reconciliation.

Filibuster safe? Still, Biden is likely to push to pass “as much as possible” of his agenda under budget reconciliation, Axios’ Mike Allen reported this morning. Biden is “unlikely” to quickly push for repeal of the Senate filibuster, which has been a top ask of liberal climate groups.

BIDEN WIN COULD LIFT OIL…FOR A BIT: A Biden administration could be bullish for oil demand in the short-term if Democrats in full control of government move to pass a hefty stimulus bill, the research group Rystad Energy said in a note this morning.

An additional $1 trillion in stimulus in the U.S. would translate into roughly 400,000 barrels per day of increased oil demand in 2021, the group projects.

Improved trade relations with China, the largest oil importer, could be another area where a Biden presidency would be good for short-term demand. The ongoing trade war instigated by Trump has cost the oil market about 300,000 b/pd of oil demand through 2019, Rystad said. A cessation of the trade war would return a similar amount of oil consumption.

What about that oil transition though? Less surprisingly, Biden’s proposed climate agenda would be bearish for oil demand beyond the short-term. Biden has proposed strict fuel economy standards, while aiming for 100% zero-emission new vehicle sales. A return to Obama-era fuel economy standards would lead to 500,000 b/pd of lower oil demand by 2025.

Biden has also proposed rebates and incentives to encourage purchases of electric vehicles.

Caveats: The course of recovery from the pandemic could overshadow any policy change and be the biggest predictor of oil demand. And, “the energy transition will likely plow ahead in the medium and long-term under either a Republican or Democratic administration.”

REPUBLICANS PRESS MACRON ON BLOCKED LNG DEAL: House Republicans are making a case directly to France’s President Emmanuel Macron that his government is wrong to block a $7 billion deal to import U.S. LNG because of concerns about climate change.

Reps. Garret Graves of Louisiana and Dan Crenshaw of Texas said U.S. LNG is much cleaner than gas delivered by pipeline from Russia and other competitors in the Middle East in a letter sent to Macron yesterday that was obtained by Josh. Republican Sen. Kevin Cramer of North Dakota sent a similar letter to Macron.

The House Republicans who signed the letter, who also include leader Kevin McCarthy and Minority Whip Steve Scalise, said U.S. LNG shipments to the European Union result in fewer greenhouse gas emissions over time than some of the largest exporters to France, including Russia and Algeria.

Scrutiny of U.S. gas exports could be here to stay: The incident with France highlights a growing concern among natural gas exporters and analysts that the Trump administration’s rollbacks of methane regulations from oil and gas operations could make U.S. LNG less competitive globally.

That’s especially true if Europe imposes methane emissions standards on imports as part of its climate agenda.

ENVIRONMENTALISTS SUE OVER COAL PLANT WASTEWATER ROLLBACK: A coalition of nine environmental groups is bringing the Trump EPA to court over its revisions to Obama-era regulations limiting toxic wastewater discharges from coal-fired power plants.

The EPA has argued its revisions to the limitations will actually reduce the amount of pollution discharged by coal plants by nearly 1 million pounds, compared to the Obama-era rule, but at a lower cost.

Environmentalists, however, say the cheaper treatment methods to remove toxic chemicals, including arsenic and selenium, from coal plants’ wastewater are less effective and will ultimately lead to more pollution in rivers and lakes. The lawsuit was filed yesterday by groups including the Center for Biological Diversity, Natural Resources Defense Council, Sierra Club, and Environmental Integrity Project.

BIOFUELS GROUP SEEKS PLACE IN COLORADO CLIMATE PLANS: The Renewable Fuels Association is calling on Colorado to include a clean fuels standard as part of its plans to slash greenhouse gas emissions in half by 2030 and by 90% by 2050, in an effort to secure a role for ethanol and other biofuels in the state’s low-carbon future.

“The internal combustion engine (ICE) is far from dead – the fuel just needs to be changed,” the RFA wrote in a comment letter to Colorado regulators. Citing data from federal, California, and Oregon regulators, the group says ethanol already reduces greenhouse gases by 35% to 50% compared to petroleum fuels “and is on a technological curve to be carbon neutral or even carbon negative.”

Currently, Colorado’s proposed climate roadmap, released in late September, doesn’t include a clean fuels standard. The state instead suggests regulators continue to evaluate a clean fuels standard. In the near-term, the plan recommends a number of policies to incentivize greater adoption of electric cars and other zero-emissions vehicles.

The Rundown

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