WHITE HOUSE

How Biden's orders hit EVs, oil and clean energy

The Biden administration released a sweeping set of climate and energy actions yesterday that aim to block oil leasing on federal lands, create thousands of new clean energy jobs and give nearly every federal agency a role in tackling emissions.

The executive order outlines new policies on electric vehicles, clean electricity and renewable power, and calls for slashing oil methane emissions.

It also maps out multiple changes at the Department of Energy, including requesting the Energy secretary to help convene an interagency working group that will look at ways to assist fossil fuel communities, and work with the secretary of State, Treasury secretary and the U.S. Export-Import Bank to identify steps the U.S. can take to promote ending the international financing of fossil fuel-based energy.

A second executive order reestablished the President's Council of Advisors on Science and Technology (PCAST), which went dormant under former President Trump but contributed to setting energy and climate agendas under President Obama, producing reports on topics including advanced manufacturing and the private sector's adaptation to climate change.

At the White House, President Biden said the United States has waited too long to tackle the "existential threat" of climate change and warned that Americans are already feeling its effects.

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The executive orders are meant to "supercharge" the administration's efforts and position the United States once again as a world leader on climate change, Biden said.

"A key flank of our Build Back Better recovery plan is building a modern, resilient climate infrastructure and clean energy future that will create millions of good-paying, union jobs," Biden said before signing the orders.

"When we think of renewable energy, we see American manufacturing, American workers racing to lead the global market," he said.

Biden sought to rebuff critics' concerns that communities reliant on fossil fuel jobs will be left behind. Capping abandoned oil and gas wells, reclaiming mines and turning "old brownfield sites into new hubs of economic growth" will create jobs, Biden said.

Pledging to "do right" by fossil fuel workers, Biden said his administration would make sure they have the "opportunities to keep building the nation in their own communities and getting paid well for it."

At a separate press briefing yesterday, Biden's climate envoy, John Kerry, pushed back on criticism from Republicans and the oil and gas industry that Biden's policies would kill thousands of jobs, saying those workers have "been fed a false narrative" over the last few years.

"They've been fed the notion that somehow dealing with climate is coming at their expense," Kerry said. "No, it's not. What's happening to them is happening because of other market forces already taking place."

Still, Biden's actions drew immediate fire from many Republican lawmakers and industry trade associations who said the moves would have devastating impacts on the economy.

The Western Energy Alliance — which has a website that states, "American oil and natural gas are an overwhelming force for good" — filed a lawsuit yesterday in the U.S. District Court for the District of Wyoming over the order (E&E News PM, Jan. 27). In a statement, the group argued that Biden is overstepping his presidential authority and violating federal law by ordering a pause of new oil and gas leasing on public lands and waters.

"All Americans own the oil and natural gas beneath public lands, and Congress has directed them to be responsibly developed on their behalf," WEA President Kathleen Sgamma said. "Drying up new leasing puts future development as well as existing projects at risk. President Biden cannot simply ignore laws in effect for over half a century."

Environmental groups, however, embraced the move. Jamie Williams, president of the Wilderness Society, called the leasing pause "a first step in transitioning public lands to be part of the solution to the climate crisis."

Emilie Mazzacurati, global head of climate solutions at Moody's Corp., said Biden's actions "signal a clear commitment to lower [greenhouse gas] emissions, protect the environment, and to tackle climate risk in the financial system," according to a statement.

Here's a look at how Biden's plan would impact the U.S. energy sector:

Oil and gas freeze

The Biden administration tried to dampen preemptive outrage from the oil and gas industry as it rolled out the first of its climate executive orders, which included provisions aimed at curbing greenhouse gas emissions on federal land.

Meanwhile, industry and its allies stressed the potential economic loss from a federal slowdown in the oil patch.

The order requires the Interior secretary to pause oil and gas leasing — the regular auction of drilling rights to fossil fuel companies — while it undertakes a comprehensive review of the federal oil and gas program.

That review is to give particular consideration to the climate impacts of the federal oil and gas program and consider adjusting the royalties producers pay to federal coffers to account for climate costs. Federal royalties onshore were set more than a century ago, and public land advocates have clamored to have industry pay a higher price.

The order appears to echo the yearslong push from environmental advocates that the federal government must consider the carbon dioxide and methane emissions that result from the leasing of federal minerals and the permitting of oil and gas wells.

Kerry and Gina McCarthy, the White House national climate adviser, stressed yesterday that the pause on oil and gas leasing was temporary and would be bound by the law and not inhibit existing production.

But oil and gas advocates launched a messaging campaign of their own to gird their industry against federal actions that many believe are first steps toward a more aggressive crackdown on the federal fossil fuel program in the months to come.

"There is not a parish in our state that doesn't benefit in some way from the energy industry," Tyler Gray, president of the Louisiana Mid-Continent Oil and Gas Association, said in a call with industry advocacy groups from Texas, New Mexico and Wyoming.

Lawmakers have also responded sharply to the temporary halt on leasing.

Sen. Cynthia Lummis (R-Wyo.) plans to release a bill today that would bar the president from instituting leasing and permitting moratoriums without express permission from Congress. Her state is the largest natural gas producer from federal minerals and second only to New Mexico in onshore oil production.

She said in a call yesterday that the Biden leasing pause was "inappropriate and surely catastrophic."

The temporary pause on leasing falls far short of Biden's campaign pledges, which included shuttering leasing and blocking new drilling on public lands and waters. The Biden campaign also floated a ban on hydraulic fracturing that would apply to federal lands, though the president yesterday promised not to ban fracking.

Still, both environmental advocates and oil loyalists agreed there was likely more to come from Biden, and their enthusiasm — or ire — matched those expectations rather than the conservative rollout of a temporary ban.

"The President's decision to order a pause on new oil and gas leasing on federal public lands is a common sense and desperately needed step to right the ship and chart a more thoughtful, climate conscious path forward as our nation Builds Back Better," the Southern Utah Wilderness Alliance's legal director, Steve Bloch, said in a statement.

Mike Sommers, the president of the American Petroleum Institute, said oil observers were "relieved" that Biden's more aggressive permitting and fracking ban policies haven't been acted upon, but he said he believed the administration aimed to take more aggressive steps.

Kip Hunter, a shareholder and director at the law firm Hall Estill, said the immediate impact of the leasing pause on a national scale is minor.

"The anticipated freeze on federal leasing will directly impact less than 10% of likely near-term national production opportunities," he said in a statement prior to the order's release.

But Hunter acknowledged that some states, like Wyoming and New Mexico, could be "deeply affected" by the eventual slowdown in revenues from a federal land oil freeze.

Jarand Rystad, CEO of Rystad Energy, said the impact of the near-term leasing moratorium would be mixed.

"This ban will not influence short-term oil prices or even economics of oil [exploration and production companies] in the U.S., but it will be very dramatic for suppliers such as seismic companies, rigs and other exploration-driven oil service segments," he said in a note, adding that a slowdown in the Gulf of Mexico could give an edge to offshore oil and gas regions elsewhere in the globe.

If a ban were to extend over two full presidential terms, Gulf of Mexico production would decline at up to 15% a year until reserves currently leased were sapped, according to the group.

The leasing ban approach could have chain effects across the world, Rystad said.

"Such a groundbreaking policy change by the U.S., a world leader country could have a 'contamination' effect on other countries' exploration agenda," he said. "It remains to be seen if there will be chain-reaction policy changes elsewhere in the world."

Coal and oil workers

The order creates a federal interagency working group that aims to help communities dependent on coal, oil and gas jobs leverage new economic opportunities while cleaning up former fossil fuel sites.

Chaired by McCarthy and National Economic Council Director Brian Deese, the working group is aimed at coordinating with leaders in regions that stand to lose jobs and tax revenue during the energy transition. Members are set to include the secretaries of the Treasury, Labor and Energy, among others, as well as the federal co-chair of the Appalachian Regional Commission, an economic development partnership among Appalachian states and the federal government.

The group will advance initiatives that reduce pollution from former mines and abandoned oil and gas wells, and in the process create well-paying jobs "that provide a choice to join a union," the order said. The group will also look for opportunities to turn degraded lands into new local economic development opportunities, the order said.

Within 60 days, members will submit a report to the president recommending next steps and outlining technical assistance programs, grants and other initiatives that could benefit struggling fossil fuel communities, according to the plan.

Sen. Joe Manchin (D-W.Va.), whose state has lost thousands of coal mining jobs over the past several decades, said he was "ready to work" with the administration to ensure West Virginians benefited from the initiative.

"I intend to hold the Administration to this while ensuring that the burden of any acceleration in already changing markets is not unduly placed on these communities that powered our nation to greatness," Manchin said in a statement.

While the working group should help spearhead economic diversification, the initial focus on environmental remediation could bring significant job potential, said Heidi Binko, executive director and co-founder of the Appalachia-based Just Transition Fund. There are at least several hundred thousand abandoned oil and gas wells that could be plugged to reduce pollution, according to estimates from the nonprofit Resources for the Future.

The administration and the working group should consider how to prioritize remediation work to focus on the most polluting sites, said Daniel Raimi, a fellow at RFF.

"If there's an orphaned oil well out there that's not emitting methane and not contaminating drinking water, there's a question about how much should the federal government prioritize finding that work and plugging it up," Raimi said.

To fulfill its pledge to create well-paying jobs, the administration should also advocate for legislation that would remove barriers to labor organizing, said Phil Smith, director of communications and governmental affairs at the United Mine Workers of America.

"[If] there is to be a path forward that replaces the kind of high-quality, high-paying jobs union miners and utility workers enjoy now, there must be more than just a nod to the potential for them to be union jobs," Smith said.

EVs and renewables

Biden's orders call for new support of renewable industries and zero-emissions cars, including through provisions supporting racial justice and unions.

Under the directives, a multiagency task force will draw up a plan to prioritize purchases of clean vehicles and electricity for federal fleets and buildings, while pairing them with stiffer "Made in America" requirements.

That plan aims to preserve union jobs stemming from maintaining fleet vehicles and seeks to grow U.S.-based, unionized manufacturing, the order said. During an afternoon press briefing, Biden couched those moves within his larger aims of 1 million new auto-sector jobs and a 100% carbon-free power sector by 2035.

"When we think of renewable energy, we think of American manufacturing," he said.

Yet the move raised questions about how quickly those benefits for unionized labor and domestic production might materialize. Much of the equipment used by renewable generators, like solar panels and wind turbine towers, gets manufactured in other countries, and electric vehicle factories often use nonunionized workforces.

Pavel Molchanov, an equity analyst at investment bank Raymond James & Associates Inc. who often writes about clean energy, opined in a research note that there was "nothing game-changing" in yesterday's executive orders.

Mandating federal purchases of clean cars and renewables was a "logical step," but one limited by Congress' appropriations for each agency. "Just as an executive order cannot change existing law, it cannot spend money that has not been appropriated by Congress," wrote Molchanov.

"[W]e would put most of today's action into the category of narrow/technical or even symbolic," he added.

The federal purchases will come with a push on environmental justice: 40% of the "overall benefits" must serve disadvantaged communities under the order's directives. Within 120 days, an interagency council will publish recommendations on reaching that 40% goal, both for clean energy as well as clean transit, affordable housing and other areas.

That carve-out for disadvantaged areas mirrors what environmental justice advocates have managed to slip into climate laws enacted in California and New York — states with two of the most ambitious energy transition goals in the country.

Renae Reynolds, transportation planner at the NYC Environmental Justice Alliance, praised provisions in Biden's orders that created two councils on environmental justice. "I think the Biden administration's commitments to amplify environmental justice at the federal level is commendable and speaks to the hard work that frontline leaders ... have put in," she wrote in an email to E&E News.

Advocates for renewables and electric cars said they were pleased the plan makes clean energy a centerpiece of federal purchases.

Robbie Diamond, president of Securing America's Future Energy, said it would give "an encouraging shot in the arm for the U.S. EV market" and help create the demand necessary for developing a U.S. battery supply chain. And Joe Britton, executive director of the Zero Emission Transportation Association, noted that electrifying the federal fleet would serve as an important way to build up the availability of EVs in the used car market — the place where most of the public buys their cars.

Heather Zichal, CEO of the American Clean Power Association (ACP), praised the "whole-of-government approach to the climate crisis" glimpsed in Biden's orders. She cited the federal procurements as well as the creation of a climate task force for cutting emissions, streamlined permitting of clean energy and transmission, and the new cross-agency requirement to consider climate in decisionmaking.

The ACP comprises the largest trade group for wind power as well as several large utility, solar, storage and transmission companies.

Liz Burdock, president of the Business Network for Offshore Wind, said she welcomed "a clear signal of support" for that resource: One clause assigned the Interior Department with identifying ways of streamlining permitting and siting processes for offshore wind, with the aim of doubling production by 2030.

Yet the language offered little clarity as to how it defined the 2030 goal, given that no utility-scale projects are in operation. But Biden's actions, said Burdock, "confirm the critical role that offshore wind energy will play in creating a clean U.S. energy grid."

Bob Keefe, executive director at Environmental Entrepreneurs (E2), said Biden's action on federal procurements would "turbocharge" clean job creation and "drive more economic growth than oil and gas could ever produce."

E2's director of federal advocacy, Sandra Purohit, also downplayed doubts around the helpfulness of "Buy American" requirements for the federal clean energy purchases.

"The sheer scale of new work created by this procurement effort and other parts of their agenda could mean more jobs across the board. Including for union workers," she wrote in an email.

Transmission and innovation

The order calls for new policies at federal agencies in two areas seen by many analysts as critical to a transition away from fossil fuels: transmission and energy innovation.

The plan, for example, directs the Council on Environmental Quality and the Office of Management and Budget to identify steps the federal government can take to build out the nation's grid in order to expedite the deployment of renewable energy.

The federal government shall "identify steps that can be taken, consistent with applicable law, to accelerate the deployment of clean energy and transmission projects in an environmental stable manner," the executive order states.

Experts say that decarbonizing the grid is going to require a massive build-out of transmission lines. A recent study from Princeton University that modeled various decarbonization scenarios found that reaching net-zero emissions through expanding renewable resources will mean tripling the nation's transmission capacity.

"There is no climate plan that is serious if it does not envision a significant interregional transmission upgrade," Pat Wood III, the Republican former chair of the Federal Energy Regulatory Commission, said during a webinar yesterday hosted by Americans for a Clean Energy Grid. "It's imperative for FERC to lead on this."

Biden's plan does not specifically mention FERC, but most energy policy analysts see the five-member panel as key to a grid build-out. FERC is charged with overseeing the nation's power markets, regional grid operators and interstate electricity commerce.

"There's little question FERC does have the authority," Norman Bay, a Democratic former FERC chair, said on the webinar.

Another part of the text calls for federal agencies to recommend ways for their funds to "spur innovation, commercialization and deployment of clean energy technologies." OMB, in turn, will build those into the core of Biden's budget requests starting in fiscal 2022.

David Hart, senior fellow at the Information Technology and Innovation Foundation, said that several provisions that aimed to foment interagency coordination on climate and clean energy — including the pairing of climate with national security — would "set the stage" for greater energy innovation. The Pentagon and other defense organizations, he noted, had "extraordinary innovation resources" at their disposal.

As for PCAST, Biden's pick for science adviser and co-chair of the newly reestablished council, Eric Lander, is a geneticist, suggesting that the advisory group may direct its attention toward resolving the coronavirus pandemic, at least in the administration's early days, wrote Hart in an email.

"It's a potentially powerful tool" for energy, Hart added.

Reporters Arianna Skibell, Carlos Anchondo, David Iaconangelo, Heather Richards, Lesley Clark and Miranda Willson contributed.

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