At ‘Davos of Energy,’ waiting for more from candidates

By Nathanial Gronewold, Mike Lee, Edward Klump | 02/25/2016 07:57 AM EST

HOUSTON — The Republican presidential contenders arrive here today for another debate, raising expectations that energy will be discussed in the self-styled "energy capital of the world."

Tonight’s debate coincides with one of the world’s largest gatherings of oil and gas executives to Houston — the annual IHS CERAWeek, sometimes called the "Davos of Energy."

But while CERAWeek has featured plenty of discussion about energy policy — from the Obama administration’s Clean Power Plan to the sanctity of the tax break for intangible drill costs — the audience at the conference isn’t optimistic about hearing the same from the presidential candidates.


"They’re not talking about energy at all," Scott Sheffield, CEO of Pioneer Natural Resources, said on the sidelines of the conference. "Hopefully, they’ll start talking about some of these policies we talked about up here, about not hurting the industry, so when it’s time to take off again, we can, as an industry."

Trent Aulbaugh, an executive staffing consultant to the energy industry at Egon Zehnder, said it would be nice if both Democrats and Republicans could focus on energy policy during their exchanges.

"I think most people would say no matter what the administration has been over the last 20 to 30 years, we have not had a consolidated, agreed-to energy policy in a long time," said Aulbaugh. "So to me, the political process that we’re going through now is just a microcosm of a broader issue that’s been there for 20 or 30 years, which is we really don’t have any agreed-to energy strategy."

Up to now, the Republican presidential candidates have barely touched on energy development or climate change during their string of televised debates, and they’ve staked out only the broad outlines of their plans in previous statements.

Aulbaugh acknowledged that the industry itself is partly the cause of this. The shale gas and shale oil revolution has bestowed to the United States slowing electricity price hikes and cheap gasoline and diesel. Energy may seem like a non-issue in this climate, but the candidates vying for votes tonight shouldn’t take this for granted, he argued.

"I think the industry has done such a good job making energy so prevalent and so available that it’s fallen off the radar screen a little bit," Aulbaugh said. "The problem is down the road. Most of the people you talk to will always tell you that the $1.25 gas that people like now may not look like $1.25 if all the capex [capital expenditure] gets pulled out of the industry."

Donald Trump, the Republican front-runner, has called climate change a hoax (ClimateWire, Feb. 1).

Florida Sen. Marco Rubio rolled out an energy plan in the fall, mostly calling for reduced federal regulation, and announced Larry Nichols, co-founder of shale drilling pioneer Devon Energy Corp., as his energy adviser (E&ENews PM, Feb. 22).

Texas Sen. Ted Cruz, who hails from the biggest oil-producing state, sponsored a bill in the Senate that would promote oil and gas production and roll back federal regulations (E&E Daily, Nov. 9, 2015).

Ohio Gov. John Kasich has acknowledged the human impact on climate change, and said he wants to support conventional energy sources like oil and gas, along with renewables and other better efficiency standards.

Policy certainty wanted, to a point

The shape the Republican primary has taken so far — with its focus on immigration and social issues — has stunned observers and the party’s chiefs. Trump’s unseating of the party’s elite favorite, former Florida Gov. Jeb Bush, has Republican leaders floundering for solutions to Trump’s insurgent campaign.

But the overall positions of the oil and industry are well-known and are usually voiced in frustrated tones aimed at the Obama administration. The administration’s decision to block the Keystone XL oil pipeline is greatly disliked, as is a perceived intransigence to allow drilling on federal lands and new offshore acreage.

To be sure, Sheffield said his company doesn’t want much from the government.

"There’s not a lot of things right now they can do for the industry. We don’t want floors; we don’t want the government in our business," he said. "Just let the market — supply and demand — happen."

For renewable energy proponents, policy certainty is a central desire.

"We need to end the system where we are going back and forth and where there is visibility on the regulatory regime, the tax regime, etc.," said Jérôme Pécresse, CEO of GE Renewable Energy. "Our customers … need to be able to raise money, whether by equity or tax equity or debt … and in the U.S., like any other place in the world, they need visibility on the regulation and tax system."

Former Secretary of State Hillary Clinton is seen as possibly gaining in her neck-to-neck battle with Vermont Sen. Bernie Sanders (I) on the March 1 "Super Tuesday" round of state primaries. Energy is a topic less central to the Democratic battle, as the two main candidates are seen holding broadly similar views, including on the reality of climate change and the need for government-led efforts to address it, and support for more deployment of renewable energy sources.

Colette Honorable, who was appointed by the Obama administration to the Federal Energy Regulatory Commission, said she believes the question of energy and U.S. energy policy is receiving more of the attention it deserves from the Democrats.

"I think if you look on the Democratic side, you’ve seen some discussion about energy policy, and I expect that as the campaigns evolve that we will see more, because energy is such a hot topic," she said in an interview yesterday. "And it will be, and it should be."

For the Republicans, some here see hope that the GOP could also get behind support for renewable energy technologies. Pécresse noted the strong popularity of wind power projects in West Texas as visible proof that even renewables can cross party lines.

Throop Wilder, CEO of lithium-ion battery company 24M Technologies Inc., said candidates should also be discussing climate change more, regardless of position.

"It’s worth at least being in the conversation and letting people say, ‘Yeah, we’re ready to make a more concerted commitment,’ or maybe, ‘We’re mortgaging our future, but we don’t care,’" Wilder said. "Let’s take a more balanced approach. Why does it have to be all or nothing?"

Disbelief in climate change may not be a hindrance, either, Wilder argued.

Even if a new Republican-led administration post-2016 election takes a different or even hostile approach to action on climate change, that doesn’t mean it need be hostile to renewable energy technologies and the commercial opportunities they pose, he said. Regardless of whether the U.S. government wants to take action on climate change, dozens of other countries do.

"I don’t think this is a left or right issue at all; I think this is a common-sense issue," Wilder said. "The rest of the world thinks that clean tech is a really good idea, so even if we don’t think it’s a good idea, why wouldn’t we invest heavily because we’re going to go sell our clean-tech products to the rest of the world?

"Because they believe it, so let’s make money off it."

Reporter Jennifer Yachnin contributed.