President Joe Biden laid out his vision for the energy transition Tuesday night, saying climate change is an “existential threat” while slamming record oil industry profits as “outrageous.”
Speaking for more than hour in a State of the Union address, Biden said oil and gas will be needed “for a while” as he framed last year’s Inflation Reduction Act as critical to helping spur clean energy investments.
Biden’s comments sparked applause from Democrats, while at times drawing jeers from Republicans. He didn’t provide new details of how the U.S. electric grid could be carbon-free by 2035, a top goal for the administration.
But the president did criticize major oil and gas companies for posting $200 billion in profits for 2022 — and he called for quadrupling the tax on corporate stock buybacks. Biden said that would help encourage long-term investments.
“We’re going to need oil for at least another decade,” Biden said, attracting laughs from some GOP lawmakers about his message to the industry. “And beyond that,” he added.
Mike Sommers, CEO of the American Petroleum Institute, pushed back against Biden’s comments using Twitter. The head of the oil and gas trade group said the president could have united the country but instead criticized “businesses that employ millions of Americans, pay taxes and provide energy for the world.”
Sommers also said U.S. oil and gas operators “need Washington to pass significant reforms to help them make, move and improve American energy.”
After two years on the job and ahead of a potential reelection announcement, Biden touted recent job growth and a massive infrastructure push underway across the federal government.
He said the Inflation Reduction Act positions the U.S. to lead the world “to a clean energy future.” His prepared remarks also included mentions of tax credits for buying electric vehicles and energy efficient appliances, as well as a plan to build 500,000 EV-charging stations.
Groups such as the American Clean Power Association applauded the talk of investments in Biden’s address.
“Landmark investments in domestic clean energy are creating jobs, while protecting consumers from volatile global energy markets,” Jason Grumet, the clean power group’s CEO, said in a statement.
Meanwhile, the president sought to build common ground on the need to address climate change.
“Let’s face reality,” he said in his prepared speech. “The climate crisis doesn’t care if your state is red or blue. It is an existential threat.”
The Biden administration is trying to move quickly to implement a number of energy programs authorized in the Inflation Reduction Act and the 2021 bipartisan infrastructure law. The Department of Energy is racing to underwrite development of new clean energy technologies that could be deployed and commercialized across the U.S. electricity grid.
At the same time, the Federal Energy Regulatory Commission is shoring up policy that could make interstate transmission lines easier to build. And the Interior Department is working to permit renewable energy projects on public lands and waters.
A ‘costly shift’
Biden’s 2035 power sector decarbonization goal hinges on that government activity. But there’s a rub. Some energy experts say it’s already impossible.
“These targets are just completely unrealistic,” said Robert McNally, author of “Crude Volatility: The History and the Future of Boom-Bust Oil Prices,” in an interview before Biden’s address. “It can be done technically. But by historical standards, it’s a massive shift and a costly shift.”
The Biden administration is undeterred by the skepticism spelled out by McNally and other global energy experts. And clean energy supporters say the 2035 decarbonization goal is reachable, based in large part on the infrastructure law and the Inflation Reduction Act, which created a sprawling menu of clean energy tax credits.
“Is the 2035 goal achievable? I think the answer is definitely yes. And the IRA really puts us in a great starting position to realize those objectives,” said José Zayas, executive vice president of policy and programs at the American Council on Renewable Energy.
The council, also known as ACORE, says clean energy investment needs to ramp up from its current level of $50-60 billion annually to $90-100 billion in order to hit the Biden administration climate goals.
Nearly 60 percent of the U.S. electricity grid operated on fossil fuels in 2022, according to the U.S. Energy Information Administration. The agency, the chief federal arm for projecting power sector trends, also says more than half of new electricity generation in 2023 will come from solar production while 98 percent of planned retirements of power generation facilities in 2023 are aging coal and natural gas plants.
EPA said the power sector contributed about a quarter of U.S. greenhouse gas emissions in 2020, second only to the transportation sector.
Some bullish estimates suggest the Inflation Reduction Act and the infrastructure law, along with the potential EPA pollution regulations, put the U.S. power sector on a path to hit 80 percent clean energy by 2030. Still, uncertainty abounds in the years to follow.
“Let’s say we get 80 percent clean by 2030,” said Robbie Orvis, senior director of modeling and analysis at the firm Energy Innovation. “There’s no guarantee about what the remaining 20 percent is going to come from.”
Last year, a DOE National Renewable Energy Laboratory report spelled out pathways to a decarbonized grid, arguing that the goal could require $330 billion to $740 billion in new power generation costs. The report found that a decarbonized grid would avoid 130,000 premature deaths and save up to $1.2 trillion in avoided natural disaster recovery costs.
The EIA, however, has no plans for modeling. Chris Namovicz, a modeler at EIA, told E&E News that the 2035 decarbonization goal is “not specific enough to model.”
Transmission plans
The myriad incentives for new clean energy projects included in the Inflation Reduction Act and infrastructure bill will need to be complemented with a rapid buildout of the power grid in order to hit Biden’s targets, experts say.
That will require action by FERC, which plays a major role in overseeing the power grid.
Last year, the commission proposed changes to the process for planning new regional power lines and divvying up their costs. The commission also last year proposed updates intended to make it easier for new generation to connect to the power grid.
“FERC’s got a few dockets on its plate that, if they move forward, should really help lay the groundwork for better planning processes and accelerated movement both on transmission and on interconnection dockets,” said Pam Kiely, associate vice president of U.S. climate at the Environmental Defense Fund.
Still, some FERC experts say that the independent commission could be hamstrung in the coming months given its partisan makeup.
The commission had five members and a Democratic majority last year. It now only has four members — two Democrats and two Republicans — following the departure last month of former FERC Chair Richard Glick.
The White House has not said when it will nominate someone to fill the vacant seat at FERC.
But clean energy advocates say that FERC has no time to lose in addressing renewable energy bottlenecks and grid challenges, and must move forward with a final version of the rules proposed last year.
Meanwhile, DOE is set to unveil a new draft in the coming days of a “National Transmission Needs Study” mandated by the infrastructure law. The draft aims to identify the most severe bottlenecks on the grid.
Renewables on public lands
Few of the Biden administration’s actions in the year ahead can help directly displace carbon-dense energy on the grid as much as deploying renewable energy in locations where the White House has significant influence on both the pace and permitting of projects: public lands and waters.
That means bureaus under the Interior Department turbocharging the approval of offshore wind arrays off the coast of New England and solar and wind fields in the deserts of Western states, projects that have previously proved onerous to move swiftly through federal permitting and even then, have required the sometimes equally challenging approval of transmission projects.
So far, Interior has been delivering on the White House’s directives, but it will need to keep an unrelenting pace in the final years of the president’s term to hit clean energy targets.
The Biden administration is coming out of an aggressive two-year period for advancing offshore wind projects, which can contribute an enormous scale of clean electricity once active and are particularly critical in the near term in densely populated areas of New England, where there is limited availability of land to support large wind and solar projects.
The Bureau of Ocean Energy Management is committed to holding additional offshore wind energy auctions before Biden leaves office in the Gulf of Mexico, and potentially in the Gulf of Maine, to add to three significant auctions that the Biden administration has held so far.
Yet, the key piece in meeting the White House’s decarbonization targets with the help of offshore wind energy — the approving of individual wind farms — has proved painfully time consuming. BOEM has so far greenlighted just two offshore wind farms of the 16 the Biden administration has promised to get through permitting by 2025.
Some environmental groups and anti-wind organizers have pushed to halt offshore wind development. They’ve pointed to humpback whales washed ashore as evidence that preconstruction activities can harm marine mammals, though federal scientists have disputed any relation (Energywire, Jan. 19).
Onshore solar, wind and geothermal power development on federal lands is also continuing at a brisk pace into 2023, with the Bureau of Land Management saying it is evaluating 65 renewable energy projects.
Overall, Interior is on track to approve 48 wind, solar and geothermal energy projects with the capacity to produce an estimated 31,827 megawatts of electricity — enough to power roughly 9.5 million homes — by the end of the fiscal 2025 budget cycle, according to a report to Congress last year (Greenwire, April 20, 2022).
That would exceed the national goal in the Energy Act of 2020 of permitting 25,000 MW worth of green energy on federal lands by 2025.
The big energy driver among the 48 projects listed in the report to Congress is solar, and if all on the list were built, they would have a total capacity to produce up to 29,595 MW of electricity.
But the buildup of commercial-scale green energy will require the use of tens of thousands of acres of federal lands, and there has been pushback from critics over the impacts to everything from wildlife migration corridors to the loss of recreation lands.
Among the goals has been to expand the acres of federal land deemed suitable for commercial-scale solar development and eligible for a less-rigorous permitting process (Greenwire, Dec. 6, 2022).
The gangbusters approach to renewable energy on public lands has led oil and gas interests to say the president is failing to acknowledge the importance of traditional fossil energy that takes place on those same lands and waters.
The American Petroleum Institute said in a briefing this week ahead of the president’s speech that the White House has allowed the country’s five-year offshore oil and gas program to lag for more than 200 days, after the previous plan ended last summer.
“America requires consistent policies to unleash necessary investment in energy of all forms,” API said in a statement. “Taken together, mixed signals and policy uncertainty don’t help the increased investment and production of American natural gas and oil that the president has specified as key to his plan to help families and businesses hit by high fuel prices.”
Interior is also working to finalize a key climate initiative in the months ahead, BLM’s methane waste regulation for oil and gas development on public lands, which will complement a larger suite of methane regulations under EPA.
Permitting changes
New legislation to pare down U.S. emissions is likely to be challenging in a divided Congress.
Still, Senate Majority Leader Chuck Schumer (D-N.Y.) told reporters Tuesday that notoriously elusive permitting changes would be critical to cutting carbon emissions, regardless of whether the president alluded to it specifically in the State of the Union.
“It’s something that we need. The permitting reform will actually make it a lot easier to implement much of the green energy that we have,” he said, a nod to permitting being on the Senate Democrat’s priority list for this Congress.
It may also be an area to win bipartisan support, though that’s not certain given Democratic West Virginia Sen. Joe Manchin’s failed attempt to find enough votes for his proposed overhaul of the federal rules for energy projects late last year (E&E Daily, Jan. 3).
Amy Andryszak, CEO of the Interstate Natural Gas Association of America, said in a Tuesday statement that immediate action is needed.
“From pipelines to power lines, enacting bold and meaningful permitting reform is the only way we’ll advance domestic energy infrastructure projects that will lessen consumer costs, deliver reliable energy to homes, and help meet our nation’s emissions reduction goals,” Andryszak said.
Regardless of those prospects, time is of the essence for the Biden administration.
“In energy, 2035 is tomorrow,” said McNally, the author. “You just don’t see rapid shifts like that.”
Reporter Scott Streater contributed.
