Washington — Successfully navigating a winding, bumpy and chaotic electoral journey, Democrat Joe Biden has been declared winner of the 2020 race to the White House. But the rough going is far from over.
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Stakes are high not just for Biden, but for US energy and commodities sectors as a new president would bring a decidedly different approach to shaping energy, climate and trade policy. Among other things, Biden has vowed to make a swift pivot to clean energy.
But before he can do any of that, he'll have to withstand what is shaping up as a withering series of legal and administrative challenges raised by President Donald Trump, which could drag out a final resolution for days or weeks.
The Trump campaign filed lawsuits in Pennsylvania and Michigan on Nov. 4 seeking more access to campaign observers, and is seeking to intervene in a case related to Pennsylvania's voting at the Supreme Court. The campaign also was demanding a recount in Wisconsin. Georgia is expected to conduct a recount as well.
After natural gas-rich Pennsylvania fell his way in ballot counting on Nov. 7, Biden was unofficially declared the winner and president-elect of the US.
While The Associated Press called the state-by-state results that culminated in Biden surpassing the 270 Electoral College votes needed to win, ballot results are not official until certified by each state.
JOE BIDEN DEFEATS PRESIDENT DONALD TRUMP
The Associated Press declares Joe Biden the winner of a grueling campaign for the American presidency. He will lead a polarized nation through a historic collision of health, economic and social crises. #APracecallpic.twitter.com/lInwqjX3PB— The Associated Press (@AP) November 7, 2020
Also key to Biden's pursuit of any significant elements of his energy policy is the makeup of the next US Senate. While a shift to Democratic control of the senior legislative body would grease the skids for new initiatives, the chances of that happening were narrowing after the party lost tight races in Alabama, Iowa and South Carolina. Democrats will retain control of the House of Representatives, but with a smaller majority.
"Historically, the US Senate has been the key obstacle for comprehensive climate legislation, and the results from [the Nov. 3] elections suggest that this dynamic may not change," said Jeff Berman, S&P Global Platts Analytics' director of emissions and clean energy analytics.
"At the same time, Platts Analytics expects that a potential Biden administration would use existing executive and regulatory authority to implement more ambitious climate policies than what we've seen under the Trump Administration," Berman said.
According to Berman, that could include initiatives like implementing more stringent fuel economy standards for vehicles.
"However, it would also include a return to using higher Social Cost of Carbon values that ultimately justify federal action, as well as considering climate action in future [National Environmental Policy Act] reviews," he said.
ClearView Energy Partners in a research note said a bitter battle over the outcome could wipe out Washington's shrinking political center and leave less room for energy policy compromises.
"This result could spur sub-national and international players to accelerate their pursuits of energy transition policies," the policy analysts said.
The US appears headed for a clean energy future regardless of who sits in the White House next year. But the pace of the energy transition – and presumably the severity of ensuing climate change impacts – could look dramatically different under Biden.
While analysts see Biden preserving a role for natural gas, his climate plan would invest $2 trillion in renewable power, electric grid upgrades, green building initiatives and other clean energy initiatives that would displace fossil fuels.
Biden would be expected to "pursue Obama-era policies with tighter regulation on pipelines, flaring and fracking," while the renewables sector would see a more favorable regulatory and business environment, said Chris Midgley, global director of analytics for Platts.
The near-term impact on US oil and gas supply would be "largely limited regardless of election results, as significant permits and DUCs provide a cushion in the event of a ban on new federal drilling permits," he said.
Biden's policy initiatives also would be expected to "increase the underlying cost of US natural gas (and therefore raising the cost of US LNG) through a number of likely executive orders, which would be aimed at lowering methane emissions and banning new oil and gas leasing on public lands," Midgley added.
Other Biden energy policy implications:
** Biden has said he would create an Advanced Research Projects Agency on Climate within the US Department of Energy to facilitate rapid commercialization of technologies such as advanced nuclear energy to attain net-zero electricity generation by 2035.
** He has vowed to halt new drilling permits on federal lands and waters, which puts 1.1 million b/d of oil output and 3.7 Bcf/d of gas output at risk by 2025 if existing permits and drilled-but-uncompleted wells are allowed to continue, according to Platts Analytics. A total federal drilling ban would cut oil output by 1.6 million b/d.
** Biden has said a new coal plant would not be built under his administration, but a large coal plant has not been built since 2013, and there currently are no plans for any new ones.
** A higher bar is likely for permitting of oil and gas infrastructure, with greater weight given to environmental impacts, including climate change.
** During Trump's first term, US sanctions on Iran and Venezuela cut oil supply by 3 million b/d. Trump is expected to keep enforcement tight, although Iran may try to test the waters for direct talks.
** Biden would be expected to seek a quick return to the Iran nuclear deal, which could return 1.5 million b/d of Iranian exports within a year. He also is seen as more likely to grant Venezuela sanctions relief on humanitarian grounds.
** Biden has said little about LNG, but he has historically taken a holistic view of gas' role in US policy, including its potential to displace coal in foreign markets and its role in diplomacy. A key question is whether Biden would begin unwinding the 25% tariffs chilling those contracts with buyers in China, a major growing market for LNG.
** Tighter methane regulation under Biden could add to production costs but help burnish gas' image as a clean resource, particularly as the US seeks to market LNG in Europe and Asia.