Trump vs. Biden: What Could Be Next for the Energy Transition?

The plan is intimately connected with the Biden campaign’s Build Back Better plan and a pro-labor agenda, promising millions of U.S. jobs in domestic manufacturing and the automotive industry. Even as the Biden campaign has steered clear of some progressive priorities, addressing climate change and promoting environmental justice are values essential to Democratic energy policy.

A key priority is the creation of a technology-neutral federal Energy Efficiency and Clean Electricity Standard (EECES) intended to incentivize energy producers to decarbonize. While expressing support for existing non-renewable energy sources such as hydroelectric power and nuclear energy, the plan envisions government investment to promote the installation of millions of solar panels and thousands of wind turbines, providing a boon for renewable technologies.

In a break with progressive Democrats, the Biden plan also proposes significant research and development spending on emerging technologies, including advanced nuclear energy, hydrogen, geothermal and carbon capture. By incentivizing Americans to use and produce more sustainable cars, homes, infrastructure and commercial buildings, there is a clear political benefit to this plan, as well. It promises to create millions of jobs in the automotive and manufacturing sector with “Made in America” requirements and pro-labor policies, which may garner support in key Midwestern states. Seemingly for much the same reason, the plan is careful to not call for a stop to fossil fuel production, including on hydraulic fracturing, or GHG-emitting energy utilities, which would likely alienate voters in key swing states and moderate Democrats in Congress alike.

This is not to say that a Biden presidency would preserve status quo for the oil or liquefied natural gas (LNG) industries. He has publicly committed to a comprehensive reintroduction of regulation on issues ranging from methane emission standards and new oil or gas exploration on public land to taking account of GHG emissions in permitting decisions. Current producers would experience increased royalties and expanded responsibilities for restoring local environments impacted by mining and oil and gas exploration. But the state of the economy by January 2021 could be a determining factor for how far a Biden administration would be willing to go in increasing regulation on the fossil fuel industry.

Below is a short list of key Biden spending initiatives

• Upgrading or weatherizing of six million commercial buildings and homes over four years
• Tens of billions in financial incentives to households and property owners to upgrade appliances and energy-saving retrofitting
• Legislation to enforce a net-zero standard for all new commercial buildings by 2030
• A promise of $400 billion of additional government procurement from renewable technology supply chains, including building 500,000 charging stations
• Installation of 500 million solar panel units and 60,000 wind turbines within five years
• Creation of a cross-departmental Advanced Research Projects Agency on Climate (ARPA-C) to boost research for next generation technologies in energy generation, storage and use
• Upgrading existing energy transmission infrastructure and invest in energy storage capacity
• Replacing 500,000 school buses with zero-emission equivalents and electrify government vehicle fleets

The Trump Plan
While Biden’s plan pledges historical investments to accelerate energy transition to decrease the use of GHG-emitting energy sources and the return of Obama-era environmental legislation, a second term President Trump would, to quote the 50-point “Working for you!” agenda, “Continue Deregulation Agenda for Energy Independence.”

The overarching policy ambition has been to lower energy costs in a bid to boost economic growth and create jobs in the energy sector, predominantly within existing non-renewable sectors. To that end, his administration’s signature approach has been to undo perceived regulatory obstacles to traditional energy production, including policy and standards put in place by the Obama administration through executive action, making them subject to reform without administrative process or legislative action. The rollback of over 100 environmental regulations such as the replacement of the Clean Power Plan with the weaker Affordable Clean Energy Rule created new opportunities for fossil fuel exploration and slashed permitting processes.

Against other economic and social imperatives, this approach, however, has so far yielded mixed results, as the now stalled Keystone XL pipeline project and continued closings of coal plants underscore. Championing U.S. energy independence by backing established industries and de-emphasizing climate change generally resonates with the President’s base and a majority of Congressional Republicans, but others have expressed worry that ceding the issue of climate change to Democrats may alienate younger voters. This could prove a vulnerability in the weeks leading up to November 3, against the backdrop of fires on the West Coast and extreme weather events across the country.

Outlook for Fossil Fuels
The use of federal land and permitting for new fossil fuel infrastructure is a major point of contention between the candidates. As part of the Trump Administration’s regulatory rollback, recent rules limiting federal agencies’ scope of review under the National Environmental Policy Act (NEPA) are intended to expedite permitting for new projects. However, a Biden Administration could quickly undo these actions, as well as reversing other executive actions by, among other things, restoring protections for National Monuments, instituting heightened standards for oil and gas infrastructure and requiring greater agency consideration of climate impacts in permitting procedures. In particular, the election outcome is likely to be significant for fossil fuel producers looking to access the considerable resources located on federally protected lands or construct new infrastructure such as pipelines.

A Biden win could usher in more comprehensive Bureau of Land Management (BLM) and Federal Energy Regulatory Commission (FERC) permitting processes taking account of climate impacts, as well as increased public scrutiny by a White House that may hold negative views on several high-profile projects, especially those pertaining to public or tribal lands. By banning LNG and oil drilling on public land, some of the most lucrative reserves of fossil energy would be off limits.

A change of policies and leadership at the agency level will likely lead to more extensive environmental reviews of the upstream and downstream climate impacts of new pipelines. Currently, only direct environmental impacts from new projects are considered, a policy the Trump Administration has reinforced, contributing to an overall regulatory environment during which U.S. oil and gas production reached an all-time high in 2019. The COVID-19 crisis has created significant counter-pressures in 2020, however, and the path of recovery for the industry from the COVID-19 crisis could in part depend on who is in the White House come January and the corresponding federal response strategy.

The Future for Renewables & Low-Carbon Utilities
Despite sporadic attacks by the President, the last four years have been good to renewable energy technologies. Wind and solar capacities have grown significantly, even as the sector has faced a volatile policy landscape, especially related to tariffs on technology inputs. With growing public support for renewables and the outlook for state regulations to drive additional industry growth, we do not expect that a second Trump term would materially deter investments in solar, wind, and energy storage capacity.

Overall, the outlook for renewables under the different administrations are either good or great—for the industry there are few downsides and a lot to gain from policies of a potential Biden Administration.

There are some areas of shared sentiment between the candidates. Existing non-renewable, low-carbon energy sources, particularly nuclear and hydroelectric, stand to do well regardless of the presidential election outcome in November. These sources will remain a significant part of the energy mix, for which President Trump has publicly expressed his support and expedited environmental reviews. The Biden energy policy would likely come to partially rely on retaining existing nuclear and hydroelectric power capacity because these sources provide stable production to smooth swings in production from wind and solar. It is also conceivable that, provided no party wins control of both Congress and the White House, a bipartisan infrastructure bill including grid modernization, energy efficiency, and climate resilience investments could benefit both renewables and low-carbon technologies in the long term.

The Prospect for Biofuels
Both platforms are light on details regarding nonconventional fuel alternatives, which has garnered criticism from several biofuel industry groups. The Trump Administration has, despite its otherwise full-throated support for U.S. farmers, undermined regulations promoting the use or production of biofuels. It found itself caught between ethanol and oil producers this spring after a court challenge over its ability to offer exemptions to oil refineries allowing them to avoid the fuel mix requirement under the Renewable Fuel Standard (RFS), after almost quadrupling the number of waivers granted during its first term.

Former Vice-President Biden recently challenged the Trump Administration’s ambivalence on the issue and offered a commitment to enforce the RFS, after offering only generic support for alternative fuels. It looks likely that the weeks leading up to the election will bring increased attention to these issues in farming states like Iowa.

Democrats have largely coalesced behind biofuels as a transitional technology in transportation and heating, promising expanded support for research and strengthened fuel regulations set to benefit farmers. Congressional Republicans meanwhile are divided between representatives from oil- and ethanol-producing states, as the RFS waiver issue illustrates. Under a second Trump Administration, this tug of war between the factions would likely continue, although recent actions indicate that for now the President is prepared to side with the biofuel producers.

A Return to Paris?
The energy dimension of U.S. foreign policy would also look radically different depending on the election outcome. Vice President Biden appears determined to revive diplomatic efforts during his vice presidency to lead the international effort to combat climate change, foremost by re-entering the Paris Agreement and to push for stronger commitments from Paris signatories and trade partners. To protect emerging domestic low-carbon industries, the Democratic agenda also includes a carbon adjustment mechanism on imports from countries underperforming its NDCs, but it is unclear how this would be determined or how to incentivize more, not less ambitious targets among trade partners.

President Trump made it a first-term priority to exit the Paris Agreement and has hitched his international energy policy on ensuring American energy independence while promoting oil and LNG exports. But an often-contentious trade agenda has sometimes come between the President and a competing ambition to grow energy exports.

Congress Matters
Few policy areas embody the differences between the Republican and Democratic plans for America more than their priorities for the U.S. energy infrastructure. A sweeping Biden victory would help enable Democrats to move forward on his more ambitious domestic infrastructure spending proposals.

However, without cooperation from Capitol Hill, a Biden Administration would likely resort to executive actions, perhaps enacting the EECES and undoing the Trump Administration’s rollback of NEPA protections to impose limits on emissions or protect federal land. Court challenges would likely delay or disrupt some regulatory initiatives, though an increasingly conservative federal judiciary could continue to shift the jurisprudence consistent with the Trump Administration’s deregulatory agenda.

As currently, absent Congressional support, a second Trump Administration would likely continue to advance its deregulatory agenda using executive action to drive policy, regulations and guidance coming out of federal resources agencies.

For a side-by-side comparison of President Trump and Former Vice President Biden's energy and climate change policies, click here.

(Special thanks to Oscar Theblin for his work in preparing this alert.)