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The Future Of N. American Energy Hinges On The U.S. Election

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One issue on which the two American presidential candidates are sharply divided is the nexus between the environment and energy development.

While it may not be the determining factor in an election that’s shaping up primarily to be a referendum on President Donald Trump, the consequences of either candidate’s policy stance will have an impact on Canada.

Democratic presidential nominee Joe Biden is going all-in on climate change with promises to eliminate carbon from the electricity supply by 2035 and for net-zero carbon emissions economy-wide no later than 2050.

He will have the United States rejoin the Paris Accord while urging countries like China to accept more ambitious pledges.

Biden will reinstate and strengthen most of former President Barack Obama’s environmental regulations, many of which Trump has systematically dismantled.

Stopping short of a complete ban on fracking — which could jeopardize his prospects in key energy states like Pennsylvania, Texas and Ohio — Biden is planning to block new permits for fracking on federal lands and waters. He would check new oil and gas developments in a similar manner.

These are just the highlights of his all-encompassing green platform.

While a few oil and gas industry executives see some room for common ground in Biden’s platform, most reject its key elements as unrealistic and unachievable.

To date, fossil fuel interests have donated seven times as much to the Trump campaign as they have to Biden’s.

The Democratic candidate receives heavy funding from Hollywood celebrities and climate change advocates like Michael Bloomberg, George Soros, and Tom Steyer.

Trump’s position on energy and the environment is essentially the polar opposite of Biden’s.

By nurturing the industry with deregulation and pipeline permits, Trump has transformed the U.S. into a global oil and gas powerhouse and a significant energy exporter.

He dismisses the Paris Accord as unbalanced and punitive to U.S. economic interests. Although pipeline expansions such as Dakota Access and Keystone XL were approved, they have been stymied by court injunctions.

U.S. energy development is also a key element of Trump’s foreign policy. He helped broker a deal between Saudi Arabia and Russia to end their vicious price war, thereby stabilizing the price of oil at around US$40 per barrel.

U.S. sanctions against Iran reduced that country’s production by two million barrels per day, enabling U.S. shale oil to capture a more significant share of the export market at the expense of the OPEC cartel. (Iran’s exports are now about 250,000 barrels per day.)

The tilt to Saudi Arabia and the hard-line on Iran risks being reversed should Biden adopt more of an Obama-era approach to America’s relations with both countries, as he is expected to do.

Trump can draw some strength from a growing tide of resistance, especially in rural areas, to green projects such as wind farms and solar spreads covering many square kilometers in pristine rural communities.

The backlash is powerful and spans the political and economic spectrum, including professionals, environmentalists, farmers, and concerned parents.

According to Vince Bielski, writing for Real Clear Investigations, “The resistance encountered by renewables in three states — New York, California, and Michigan — illustrates the depth and breadth of obstacles clouding dreams of a carbon-free future.”

A key problem is that, while many governors have lofty targets, such as New York Gov. Andrew Cuomo’s call for renewables to meet 70 percent of his state’s energy needs by 2030, working out the details often falls to rural counties with little or no experience managing or regulating complex industrial projects.

California’s extensive plans for solar development ran into a problem that has long thwarted fossil fuel development — threats to wildlife. Wind farms have been labeled as “California’s Cuisinarts,” due to the damage they cause to birds.

Climate change and green technologies are often favored in urban areas, but for those who bear the burden of implementation, the benefits are not substantial.

Many city dwellers will endorse the notion of a carbon-free economy until they are asked to pay or make a sacrifice for it, which is why “make the polluters pay” takes on easy resonance.

The pandemic has already wreaked havoc in the U.S. and Canadian energy sectors. Some see their resuscitation as critical to economic recovery.

Others see green initiatives as essential to the environment and as an economic replacement for fossil fuels. As the Trudeau government has learned, it is difficult to imagine a rational balance emerging from these two sharply divergent solitudes.

Some industry leaders accept the goal of zero carbon emissions by 2050 and are investing heavily in technologies that will get them there.

Yet ardent environmentalists have zero tolerance for fossil fuels or pipelines. They hold their spears close to their chests and have little appetite for compromise.

What is certain is that, for the Trudeau government, which deems climate change as the priority issue of our time, a Biden victory would be a boon.

However, for many Western Canadians who rely on a healthy oil and gas sector, a Trump victory would be cause for celebration.

Campaign promises are one thing. Implementation is quite another.

Even if Biden wins and the Democrats capture both the Senate and the House in the election, there is no guarantee the president will be able to deliver on his promises — as Obama himself learned during the first two years of his presidency when he had majorities in Congress but had little success with legislation.

An industry that has already invested tens of billions of dollars in oil and gas projects will not simply roll over quietly.

There will inevitably be court challenges and other delay tactics, especially in states where energy expansion is a significant element of the economy.

Although it has received scant publicity, American gross domestic product plunged 32.9 percent in the second quarter of this year — an all-time record — and almost 18 million Americans are still unemployed.

That is why the uppermost concern in the election will most certainly be the prospects for the U.S. economy.

The relevance of the opposing positions on energy and the environment hinges on the choice between the significant contribution of oil and gas to the economy now, and the hope that renewables will become a credible replacement in the future.

In the short term, it would be prudent for Americans (and Canadians) to opt for what they already know provides employment and economic growth.

Read more at National Post

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