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S&P podcast: What a Biden administration means for the energy transition


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S&P podcast: What a Biden administration means for the energy transition

President-elect Joe Biden is preparing to enter the White House with big plans to address climate change, a goal with substantial implications for the energy sector.

S&P Global Market Intelligence's Energy Evolution team previewed the Biden administration's potential energy transition outcomes in the podcast's latest episode. Market Intelligence's senior policy correspondent Molly Christian joined the latest episode of the podcast to summarize the key issues facing the energy sector under the next president, and offer further insights.

"Biden's climate plan essentially is an economy-wide proposal, not just looking at energy," Christian told the hosts of Energy Evolution. "It's a $2 trillion plan that looks to cut or eliminate emissions in the power sector, but also from transportation, buildings, agriculture. The plan also looks to invest heavily in modernizing U.S. infrastructure and making it more sustainable."

As far as potential early actions, Biden is expected to re-enter the United States in the Paris climate agreement. President Donald Trump withdrew the United States from that agreement in the early days of his presidency.

Legislative obstacles

While Biden could bring the country back into the climate deal on his own, some of the spending and tax measures in his energy and climate plan will require support from the U.S. Congress. With control of the U.S. Senate still unclear, Biden could face an uphill battle to implement his climate and energy plans.

Coal state lawmakers are poised to lead a key committee on energy and natural resources in the U.S. Senate and could insist that any new energy and climate policies don't impose a heavy burden on fossil fuels. Meanwhile, the chasm between U.S. citizens on energy and environmental policy priorities presents an obstacle to any major climate policy. And regardless of the new Congress's ultimate makeup, Democrats may prioritize other issues ahead of climate action, including healthcare and income inequality.

Executive action

One approach a Biden administration might take through the U.S. Environmental Protection Agency is toughening standards on particulate matter from U.S. power plants in a bid to limit overall emissions from the U.S. coal fleet. The Trump administration replaced Obama's Clean Power Plan with the less stringent Affordable Clean Energy rule. Given a conservative-dominated U.S. Supreme Court, a Biden administration is likely to tread carefully with its own replacement, Christian said.

If the Federal Energy Regulatory Commission becomes led by Democrats, it might take a closer look at accommodating carbon pricing in wholesale power markets. There have also been indications that FERC may revisit some of the significant orders approved under Trump, including reforms to capacity market rules in the PJM Interconnection.

Industry impact

Coal continued to play a dwindling role in the U.S. power system through the Trump era, and the current direction of the market indicates that trend will continue or even accelerate under Biden. If Republicans control the Senate, the natural gas and oil industry might expect to see some regulatory certainty under a Biden administration even if the new president does take executive actions on policies like methane emissions limits. On the other hand, some significant gas and oil infrastructure projects could be under threat once Biden makes new appointments at agencies overseeing those projects.

Biden's focus on climate and cleaner energy is broadly expected to boost the renewable energy sector. The president-elect is also likely to take further actions that would promote electric vehicles that could reduce emissions from the automotive sector. That could have substantial implications for auto manufacturers and mining companies that supply materials to that sector.

Many also expect the president-elect to favor policies encouraging building electrification, environmental justice, energy development on public lands and other issues that generally support a transition away from fossil use.

Episodes of Energy Evolution are available on Apple Podcasts, Spotify and other platforms.