The lack of 'red wave' in the US midterm election means Biden energy policies are safe for now

Even with votes still being counted and runoffs yet to come to determine the US Senate majority, the midterm election didn't bring the red wave that was expected, which means there won't likely be a course correction of Biden administration energy policies, experts said Nov. 9 during the Reuters Events: Energy Transition in Houston.

A lot of historical policy has been passed in recent years, including the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, said Robin Millican, director of US policy and advocacy with Breakthrough Energy, an energy company Bill Gates founded in 2015 to accelerate innovation in sustainable energy to reduce greenhouse gas emissions.

"The US has really vaulted into a leadership position in recent years," Millican said, but the impact from the midterm elections is not yet fully known, she added.

Midterm elections

There will be a runoff for some races, while votes are still being counted in others.

The House of Representatives has a narrower Republican majority than many expected, while the Senate majority is still not known. There will be a runoff in Georgia, while votes are still being counted in Nevada and Arizona. That gives Democrats a slight edge in the Senate, Millican said.

The midterms did not bring the red wave that was expected.

"There aren't going to be successful legislative clawbacks," Millican said. "In the next couple of years, we're not likely to see course correction."

More oversight is expected, however, Millican said.

US energy policy

The US has taken a giant leap forward in energy policy, creating a stable investment climate, said Gretchen Watkins, president of Shell USA.

"I think we can invest now with more confidence than we could before," Watkins said.

The energy industry is at a great moment with "a lot of really great technology, Millican said. While the technology and policy are there, funding is needed.

"Now, we have to be sure we're building it and getting it to the market," Millican said. "Technology is ready. Policy is coming along. Now, we need to build stuff and get capital flowing."

Challenges

While the IRA addressed nearly all major emissions sources and provides a degree of a loan guarantee, it takes several years to get fuel resources developed and built to scale, Michael Short, a partner with the management consulting firm Bain and Co., said during a separate presentation at the conference. It took coal 35 years, crude oil 40 years, and natural gas 55 years, while that time frame is not yet known for wind and solar.

"Even with a tailwind, it takes decades, not years, to run that kind of transition," Short said.

When polled, the audience at the conference session said permitting and government were the top items that could slow down the energy transition to most, followed by a lack of investible projects and transmission.

"We'll have to do other things to land the plane that we launched with the IRA," Millican said.