With the Super Tuesday primaries set for this week, the race for the Democratic presidential nomination is shifting into high gear. As the field of potential candidates tightens, the focus on key energy issues grows sharper, particularly in states with high delegate counts holding March 3 primaries.
Voters in states such as Colorado, Massachusetts, North Carolina and Virginia will be parsing the candidates' positions on hydraulic fracturing, offshore drilling, crude oil exports, power generation mix, climate change and energy infrastructure. The accompanying infographic takes a deep dive into the abundant energy dynamics of the two most delegate-rich states at play on March 3: California and Texas.
What follows is a breakdown and analysis of key issues, candidate positions and implications for some of the larger Super Tuesday states.
Production and exports
A ban on all U.S. hydraulic fracturing has been called for by Democratic primary hopefuls Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., though Warren has indicated there could be exceptions. Fellow candidates Sen. Amy Klobuchar, D-Minn., and former New York Mayor Michael Bloomberg have depicted fracking as necessary to produce natural gas, which they see as a bridge fuel needed for the transition to renewable energy and, like former Vice President Joe Biden, have backed ending new oil and gas leases on federal lands.
* About 23% of total U.S. oil output and 18% of total gas production took place on federal acreage in 2019, according to the U.S. Department of the Interior, and any federal anti-fracking action would likely impact federal lands on the New Mexico side of the Permian Basin's Delaware sub-basin, according to Kayrros, a data analytics firm. Wells in federal leases in the Delaware Basin accounted for about 350,000 barrels per day of new oil production since the start of 2018, about 14% of U.S. production growth over that time.
* S&P Global Platts Analytics believes that a number of policies that Democratic presidential candidates are pushing, including federal permitting prohibitions and emissions regulations, would deter 1.6 million bbl/d of oil and 2.4 Bcf/d of gas growth through 2024.
Super Tuesday states in play
* In November 2019, California Gov. Gavin Newsom imposed new limits for fracking statewide and in December 2019, the federal Bureau of Land Management announced plans to open more than 1 million acres in California to fracking, ending a five-year moratorium on federal oil and gas leasing in the state. California is challenging the plan in federal court. California's oil output has fallen more than 25% and its gas output has dropped more than 20% over the past five years, according to the U.S. Energy Information Administration.
* In November 2018, Colorado voters rejected Proposition 112 which would have set new strict limits on oil and gas development. Colorado Rising, an anti-fracking group, is attempting to get similar initiatives on November's ballot. Oil output in the state has nearly doubled and gas output has increased 21% over the past five years, according to the EIA.
* Oklahoma imposed new fracking rules in 2018 after the process was linked to an increase in earthquakes. Oklahoma's oil and gas output has climbed roughly 25% over the past five years, according to the EIA.
* Texas produced a record 5.33 million bbl/d of crude oil in November 2019, about 42% of the total amount produced in the U.S., and the state produced about 29.3 Bcf/d of gas, about 25% of the U.S. total. Analysts believe that this output will remain largely unaffected by federal regulations on fracking since almost all of the state's production is on state and private lands.
A pledge to stop offshore development of oil and gas has been made by all Democrats in the race, though there have been no specifics about existing production in the Gulf of Mexico. Numerous projects in the Gulf are sanctioned through starts into 2026. The EIA forecasts about 2 million bbl/d of crude and 2.68 Bcf/d of gas will be produced in the U.S. Gulf this year, up by 110,000 bbl/d and down by 0.02 Bcf/d, respectively, from 2019.
* In 2018, the Trump administration proposed opening nearly all federal waters to oil and gas drilling, and expected to open more areas offshore Alaska and, potentially, new acreage in the Atlantic and eastern Gulf, but that plan has been on indefinite hold following opposition from states and legal challenges.
States in play
* State lawmakers from California, Maine, Massachusetts, North Carolina and Virginia are opposed to the Trump administration's offshore plan. Democrats are attempting to make offshore drilling an issue in the 2020 election, which is why then-Interior Secretary Ryan Zinke said he would not include waters offshore Florida in the plan just days after it was proposed.
Reimposing crude export limits has been pledged by Sanders and Warren, while Biden has spoken in favor of phasing in such limits. Bloomberg has said he would not support reimposing limits and Klobuchar has not commented.
* President Barack Obama formally lifted the 40-year-old limits on U.S. crude exports in December 2015. Since then U.S. crude exports have climbed from 392,000 bbl/d to a monthly high of over 3.38 million bbl/d. Platts Analytics forecasts U.S. crude exports to average 3.6 million bbl/d in 2020 and 4.1 million bbl/d in 2021.
States in play
* Texas would likely be hit the hardest by crude export limits being reintroduced with the majority of U.S. crude being exported originating in the Permian. Deepwater terminals off Corpus Christi and Houston have filed federal applications to directly load Very Large Crude Carrier supertankers to accommodate the growth in U.S. crude exports.
Sanders wants to fully power the U.S. electricity sector with renewable sources by 2030, while more moderate Democrats such as Biden and Klobuchar aim for net-zero greenhouse gas emissions by 2050.
* The U.S. is sustaining a wave of coal-fired power plant retirements that began nearly a decade ago and could help satisfy the sweeping energy ambitions. But states, including Super Tuesday participants, have set wide-ranging clean energy goals, some of which align with the Democratic candidates' targets while others fall short.
* In 2019, U.S. power plants closed 13.7 GW of coal capacity, the highest annual level since 2015, according to data compiled Jan. 28 by S&P Global Market Intelligence. The EIA expects another 69 GW of coal-fired capacity to shut down by about 2025.
* The U.S. still derives about 60% of its power from natural gas- and coal-fired plants combined. The country is on track to add another 8,621 MW of gas capacity in 2020, with 2,874 MW in Super Tuesday states, according to recent Market Intelligence data.
* A combined 18,105 MW of new wind capacity and 12,627 MW of solar generation will be added in Super Tuesday states in 2020. That is out of a nationwide total of 40,503 MW and 23,546 MW of anticipated new wind and solar in 2020, respectively.
* Even under a low-cost renewables scenario, the EIA does not see U.S. renewable energy inching ahead of gas-fired generation until 2034.
States in play
* Sanders' call to rely on renewable energy for 100% of electric power by 2030 is far more ambitious that most state energy plans.
* California has set goals to boost its renewable energy purchases to 60% of retail electric sales by 2030 and get 100% of its retail electricity sales from carbon-free sources by 2045. In 2020 alone, generators within the California ISO are set to add 2,289 MW of solar capacity and 1,677 MW of wind capacity, along with 1,444 MW of new gas-fired generation, according to Market Intelligence data as of Jan. 21.
* Other Super Tuesday states also have long-term goals to decarbonize their power sectors. Maine is targeting 100% carbon-free retail electricity sales by 2050, while Vermont is working toward getting 75% of its retail power sales from renewables by 2032.
* Texas, a state rich in primary delegates, has already hit its goal to add 10,000 MW of renewable capacity by 2025 and now has more than double the wind capacity as the next most wind-heavy state. Altogether, the Electric Reliability Council Of Texas Inc. has 23.9 GW of installed wind capacity compared with 6.9 GW in CAISO.
* But other Super Tuesday states, such as Arkansas and Tennessee, lack clean power mandates altogether.
Ending construction of new nuclear plants has been called for by Sanders and Warren, with the former also pushing to end license renewals for existing nuclear plants. Those plans are in contrast to Biden's, which promotes research into technologies that can make nuclear power cheaper and more efficient and address waste storage concerns associated with the power source.
* Despite its own wave of retirements, the U.S. nuclear fleet still represents close to 20% of nationwide generation, making any proposals to end its use difficult in the near term.
* In the reference case for the EIA's latest long-term energy outlook, nuclear is still expected to contribute about 12% of U.S. electric output in 2050, down from about 19% in 2018.
States in play
* No Super Tuesday states are on track to close nuclear capacity in 2020, according to Market Intelligence data as of Jan. 21.
* The only planned nuclear retirements for this year are Entergy Corp.'s 1,026-MW Indian Point 2 facility in New York, which is set to shut down in April, and the 622-MW Duane Arnold Energy Center (DAEC) in Iowa, operated by an affiliate of NextEra Energy Inc. and due to shut down in October.
Regardless of their clean energy targets and timelines, candidates have vowed to take aggressive action to tackle climate change. Those actions include having the U.S. rejoin the Paris Agreement on climate change, restoring Obama-era carbon regulations including the Clean Power Plan, and in the case of Sanders, establishing a federal renewable energy standard that would drastically expand the role of federal power marketing administrations.
* The U.S. committed to cutting its economywide carbon emissions by 26%-28% from 2005 levels by 2025 under the 2015 Paris Agreement on climate change. But in January 2020, consulting firm Rhodium Group estimated that U.S. emissions in 2019 were roughly 12% below 2005 levels, well off the Paris pledge.
* The Trump administration repealed the Obama-era Clean Power Plan, which sought to reduce carbon emissions from existing fossil fired-power plants, and replaced the regulation with its less stringent Affordable Clean Energy, or ACE, rule. If elected, Klobuchar has proposed to reinstate the Clean Power Plan, which the U.S. Environmental Protection Agency estimated would have cut carbon dioxide emissions by 870 million tons by 2030, compared with a reduction of 11 million tons from the ACE rule.
* Sanders' call for a national renewable energy standard and a 100% renewable-powered electricity sector by 2030 would rely in part on making federal power marketing administrations build, own and operate massive amounts of new wind and solar energy. But the power marketing administrations have historically focused on marketing and transmitting power from federally owned hydropower dams rather than owning and operating power plants.
Midstream pipeline infrastructure could be challenged under a Democratic administration, under which all candidates would likely be more critical of new fossil fuel infrastructure and sympathetic to opposition from landowners and environmental activists as well as state-level efforts to delay or block new gas projects.
* Gas pipeline projects with estimated in-service years between 2021 and 2024 exceed 45 Bcf/d of capacity, according to Market Intelligence data. That includes announced projects and those under construction as well as in early or advanced development.
* Sanders and Warren have endorsed a call to turn the Federal Energy Regulatory Commission into a climate regulator with a mission of reducing greenhouse gas emissions. While such a transition is seen as legislatively unlikely, the next president will wield considerable power over the siting of pipelines and LNG terminals through their ability to nominate FERC commissioners.
* FERC signed off on 16.7 Bcf/d of new gas pipeline capacity and certificated 20.2 Bcf/d of LNG export capacity from January through November 2019.
* Existing pipeline infrastructure could also face headwinds from a Democrat in the White House as the candidates have generally agreed that reducing methane emissions is just as important, if not more so, as curbing carbon emissions. More stringent leak repair requirements and mandates for measuring and reporting methane leaks are likely under any of the candidates.
States in play
* Pipeline projects within the Super Tuesday states that are either under construction or proposed with a good chance of moving forward would add about 12 Bcf/d of capacity, according to Platts Analytics.
* Several projects facing varying degrees of local opposition would traverse Super Tuesday states including the 2 Bcf/d Mountain Valley Pipeline and the 296,000 Dth/d Southeastern Trail project, both in Virginia; and the MVP Southgate project extending into North Carolina. Projects underway in Oklahoma and Texas have seen less pushback.
* Gas-producing states could have qualms with candidates pitching some of the more stringent restrictions and all-out bans on gas. Texas, Oklahoma, Colorado, Oklahoma, Utah and California had gross gas production of 46.5 Bcf/d in November 2019, accounting for about 40% of total U.S. gross output that month, according to EIA data.
Transmission and grid modernization also are in play. With each candidate eyeing net-zero emissions by 2050 at the latest and pushing massive investment in renewables, industry observers see electric transmission as vital to making their plans work.
* Federal funding is generally not viewed as needed to facilitate transmission buildout as investor-owned utilities have expressed a willingness and ability to invest in new projects. However, industry is looking for clear direction and policy alignment from the federal government to move forward with planning and building new lines.
* In January through November 2019, transmission projects totaling 595.8 miles of new lines were completed. About 1,841.3 miles of transmission lines are planned and under construction with in-service dates targeted by the end of 2021.
* Industry has applauded House Democrats' CLEAN Future Act for proposing a national policy to build a clean energy grid and directing FERC to better engage in interregional transmission planning. The presidential candidates could adopt aspects of that legislation to supplement their own plans.
* Warren's clean energy proposal would provide incentives to expedite planning and siting of long-distance and interstate transmission of clean electricity. Her proposal calls for prioritizing areas with significant queues of clean energy generation capacity awaiting transmission. Similarly, Klobuchar has supported investment in interregional transmission lines and grid improvements to support the development of renewable energy, and the candidate proposed a grant program to help rural cooperatives develop energy storage and microgrid projects for renewable energy.
* Sanders' approach looks to direct public investment and ownership of renewable resources and grid infrastructure. His Green New Deal sets aside $526 billion to build a modern, smart electric transmission and distribution grid.
* Bloomberg has said he would work with the U.S. Congress and FERC to develop a smart power grid, and reach out to state and local governments to accelerate the construction of transmission and clean energy projects, including offshore and on federal lands previously used for fossil fuel extraction.
States in play
* Each of the Super Tuesday states, except Tennessee, have a number of planned transmission projects within their borders. Major transmission projects serving renewable energy projects that cross Texas, Oklahoma or Colorado, for instance, have the potential to deliver 23 GW of wind energy.
Brian Scheid and Jasmin Melvin are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.