By Andrew Busch and Leah Hamilton
Given the COVID-19 outbreak and the recent protests over the killing of George Floyd, it’s not surprising the headlines about energy and the environment have been almost non-existent. Yet, these topics are critical for the economy and people’s wellbeing. With the price of crude oil recovering from incredible lows, the interest in these topics will recover in a similar manner.
In this research, we bring you up to date on the latest policy proposals from the presidential candidates and their potential impact on the country for energy and the environment. Again, these are not meant to be exhaustive, but to provide a clear picture of the direction the policies will take. As we state frequently in our articles and in the media, this election could generate the largest shift in public policy in our lifetime. Energy and the environment are where the largest policy shift would occur.
Setting the Stage
One of the big pre-COVID discussions for the Democratic party leading up to the nomination was the topic of the Green New Deal (GND). As we noted in our previous report on energy and environment, the GND is “one of the broadest and most aspirational proposals put forward by Democrats to change both the energy sector and the economy. It has “the aim of reducing greenhouse gases and fossil fuel use. It is also the costliest ever proposed in the history of the country.” (Andrew Busch)
Biden’s nomination was a shift away from the environmentally-progressive wing of the pro-GND Democratic party. While Biden is not against the GND, he stops short of endorsing it. However, his policies are influenced by the principles set out in it. One of the issues for the Biden campaign is polling from Data for Progress, which found that “among the Sanders voters most likely to be skeptical of Biden … climate change is a top concern.” (Vox) While these voters are unlikely to switch to voting for Trump, they instead may simply “stay home or vote for a third party.” (Vox)
Before the virus outbreak, Trump’s “America First Energy Plan” assumed American workers could gain jobs and prosperity due to “untapped domestic energy reserves right here in America.” The goal was to shift towards domestic energy production, to remove “burdensome regulations.” Part of this would mean eliminating “harmful and unnecessary policies” that could hold the industry back. (Labor Network for Sustainability)
President Trump also made reducing regulatory costs a top goal of his presidency. During the Obama administration, there were 3,012 new regulations finalized, generating 583 million hours of paperwork and a total finalized cost of $871.6b. (AAF) Under Trump, there have been 1,046 regulations finalized, generating 55 million hours of paperwork and a total finalized cost of -142.3b. The implementation of EPA’s 2015 Waters of the US rule and the Clean Power Plan could have cost US businesses and farms over $1 trillion. (AAF) Measuring the impacts is difficult: regulatory costs are in money and time, while the cost of not regulating is environmental damage and climate change impacts, which are harder to measure and predict.
The Big Transition
Countries are also shifting away from global supply chains as a result of the COVID-19 pandemic. Instead, they are moving towards “quasi-independent regional supply chains,” including with regard to energy. (CNBC) A report published in the Energy Policy journal in March 2020 noted: “the global energy system is in transition to a new energy order characterized by the emergence of the United States as a net oil exporter, the shale revolution and the gradual shift towards low-carbon sources and renewables.” (Energy Policy)
This transition will accelerate in the context of the pandemic, as anti-globalization fears stoke both an increased focus on energy generation and power at home. In addition, as “energy transitions to low-carbon and renewable energy sources advance, more countries are expected to become energy self-sufficient in the long run.” (Energy Policy) Oddly, the largest obstacle to these trends is the dramatic fall in crude oil and gasoline prices due to the global economic shut-down. Cheaper fossil fuels make it difficult for green energy to compete at the moment.
- Biden and Trump have radically different platforms and policies when it comes to handling energy and the environment. They are approaching the issue from two different sides of the regulatory coin.
- Both Trump and Biden are attempting to frame their policies in the broader context of the economy. They believe energy and environmental policy can help (Biden) or hinder (Trump) economic growth.
- Biden’s main approach is towards renewable energy and increased regulations. On the other hand, Trump’s policies and ongoing proposals are targeted at domestic fossil fuel energy production and reducing regulations.
Biden has a plan to specifically address energy and environmental policy in the context of climate change, called the Plan for a Clean Energy Revolution and Environmental Justice. (JoeBiden) This plan describes climate change as a “climate emergency”, and covers numerous policies to “revitalize the U.S. energy sector and boost growth economy-wide.” In the wake of protests over the death of George Floyd, the intertwining of social justice and environmental justice issues is growing. (InsideClimate)
The Biden Plan sets out five primary goals, including:
- Ensure the U.S. achieves a 100% clean energy economy and reaches net-zero emissions no later than 2050.
- Build a stronger, more resilient nation (to climate issues).
- Rally the rest of the world to meet the threat of climate change.
- Stand up to the abuse of power by polluters who disproportionately harm communities of color and low-income communities.
- Fulfill our obligation to workers and communities who powered our industrial revolution and subsequent decades of economic growth.
The total cost of his plan is estimated to be $1.7 trillion in federal investment, combining this with private sector and state and local investments to total $5 trillion. You can view more detailed discussion on this specific plan on our previous report on energy and environment (Andrew Busch).
While Biden has supported the Democrat-backed GND, he has not explicitly endorsed it. His plan states GND is “a crucial framework for meeting the climate challenges we face,” and agrees “the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge.” He also believes “our environment and our economy are completely and totally connected.” (JoeBiden) In May 2020, Biden also gained the support of Representative Alexandria Ocasio-Cortez, who was one of the initial champions of the GND. (EcoWatch)
This collaboration was part of a larger task force Biden entered into, with numerous staff from the Bernie Sanders campaign. The task force will have six smaller groups, for climate change, criminal justice reform, the economy, education, health care and immigration. The task force on climate change will be chaired by Rep. (D, NY) Ocasio-Cortez. (NPR) Part of this task force on climate includes the Sunrise Movement. They aim to take “Biden’s climate agenda and [making] it a climate justice plan: a plan that really speaks to young people, working people, and people of color.” (The Verge)
In response to ongoing back-and-forth over the establishment of various oil and gas pipelines in the US, Biden has also stated he would “shut [the Keystone XL pipeline] down again if he’s elected president in November.” (The Conversation)
$16 Trillion Add-on?
The DNC Environment and Climate Crisis Council has also put out a set of Environmental and Climate Policy Recommendations for the 2020 Democratic Party Platform. These are likely to influence Biden’s policy positions going forward. (DNC) They set out three core areas of recommendations:
- Develop and implement a science-based national climate action plan that employs the full palette of policy tools, including aggressive use of executive actions, establishment of new structures and practices, and bold legislation.
- Put communities and working families above fossil fuel corporations by ensuring a just transition and building a green economy with millions of new, family-sustaining jobs.
- Support the growth of healthy, just, sustainable green communities and address the disproportionate environmental and climate harms to frontline and vulnerable communities. (DNC)
The recommendations also suggest a number of actions to meet these goals. This includes committing to “near-zero emissions by 2040; 100% clean renewable energy by 2030 in electricity generation, buildings, and transportation; and 100% zero-carbon new building infrastructure by 2025.” They also suggest up to $10-$16 trillion will need to be spent over the next decade to address the climate emergency. (DNC)
Furthermore, they suggest the establishment of a “Just Transition Task Force.” This is to help communities and families transition to a renewable energy economy. Large investments in renewable energy would take place, with the aim of creating jobs in the industry. All subsidies and incentives for the fossil fuel industry would end, and some subsidies would shift to support “sustainable, regenerative agriculture powered by 100% clean energy.” (DNC)
Finally, the recommendations suggest making the EPA a federal department, and making the EPA Office of Environmental Justice permanent. They would also suggest using health impact assessments and climate equity screenings for major federal government actions. With regard to equity policies, the recommendations suggest directing at least 40% of climate and environment investments to frontline and vulnerable communities. All Trump-era rollbacks on environmental protections would be rescinded, and the recommendations also suggest measures to protect 30% of all U.S. lands and oceans by 2030 and 50% by 2050. (DNC)
The DNC recommendations also list a number of principles they recommend following, including:
- Take Urgent Action on Climate and the Environment
- Commit to Inclusive, Science-Based Climate Policy Frameworks
- Prioritize People Over Polluter Profits
- Achieve 100% Clean Renewable Energy, Zero Emissions, and an End to Fossil Fuel Production
- Ensure Environmental Justice
- Invest in Good Jobs, Worker Empowerment, and Green Infrastructure
- Ensure Healthy People, Places, and Planet
- Lead the World on Climate Science Research
- Engage Globally and Commit to America’s Fair Share of Emissions Cuts (DNC)
While it is uncertain how many of these proposals will be adopted by Biden, the DNC Environment and Climate Crisis Council was created to be, “a permanent entity of the DNC, [and] was established to push the Democratic Party to take bold and urgent action addressing the climate crisis and other environmental issues.” (DNC)
Before COVID-19, Trump’s energy and environment plan was called the America First Energy Plan. This plan promoted “energy policies that lower costs for hard working Americans” to “maximize the use of American resources.” The policy also stated that the Trump administration is “committed to clean coal technology, and to reviving America’s coal industry, which has been hurting for too long.” In addition, it stated that the administration cares about “protecting clean air and clean water, conserving our natural habitats, and preserving our natural reserves and resources.” (Heartland copy) A full copy of the plan no longer appears to be available on the Whitehouse website, with no replacement policy in place. Given the collapse in energy prices and domestic production, a refocus is likely to emerge.
Like many presidents before him, one of Trump’s policy goals was to reduce reliance on foreign oil and foreign energy. Trump aimed to promote “a boom in energy production and manufacturing”, to advance energy independence, and to establish” American energy dominance.” The goal was to revitalize “local economies and [create] jobs for American workers,” as well as to ensure “domestic energy prices remain low.” The policy also set out to improve quality of life for all Americans. (Whitehouse)
Early in the Trump administration’s term, Trump pulled out of the Paris Climate Accord. In addition, Trump opened the Alaska Wildlife Refuge, “for American energy companies to explore and develop.” He also “approved permits for nationally important infrastructure such as the Dakota Access and Keystone XL pipelines.” (Whitehouse)
Another major Obama administration environmental policy rolled-back and replaced was the “Clean Power Plan.” (Federal Register) This was an EPA rule designed to lower carbon dioxide emissions from power generators. The new plan was called the “Affordable Clean Energy Rule.” A fact sheet from the EPA can be read here. Consistent with the Trump administration’s focus on regulatory reform, the new plan is significantly different from the Clean Power Plan. It lifts many rules and environmental regulations applying to industry and federal development.
The Trump administration also issued several executive orders on energy and environmental policy. The first was on Promoting Energy Independence and Economic Growth. The primary aspect of this policy was to “promote clean and safe development of our Nation’s vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.” (Whitehouse)
This executive order notes energy production in the US should be “affordable, reliable, safe, secure, and clean, and that it can be produced from coal, natural gas, nuclear material, flowing water, and other domestic sources, including renewable sources.” The pathway to achieving these goals is to “review existing regulations that potentially burden the development.” In addition, all environmental regulations should be “of greater benefit than cost, when permissible, [and] achieve environmental improvements for the American people.” (Whitehouse)
Finally, the policy required an immediate review of all agency actions to ensure they were aligned with the new policy, and rescinded three Obama-Era Executive orders:
- Preparing the United States for the Impacts of Climate Change;
- Power Sector Carbon Pollution Standards; and
- Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment. (Whitehouse)
Trump also issued an executive order on a “Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals”. The goal was to increase “private-sector domestic exploration, production, recycling, and reprocessing of critical minerals” to reduce US “dependence on imports, preserve our leadership in technological innovation, support job creation” and improve national security. (Whitehouse)
Another executive order tackled “Promoting Active Management of America’s Forests, Rangelands, and other Federal Lands”. This covered a desire to “protect people, communities, and watersheds, and to promote healthy and resilient forests, rangelands.” (Whitehouse)
Another executive order was issued in early 2019 on “Promoting Energy Infrastructure and Economic Growth.” (Whitehouse) The executive order aims to grow the “economic potential” of the United States. The executive order pushes the idea of the US promoting “efficient permitting processes [to] reduce regulatory uncertainties that currently make energy infrastructure projects expensive and that discourage new investment.” The executive order sets out six approaches to meet this goal:
- Efficient permitting processes and procedures that employ a single point of accountability, avoid duplicative and redundant studies and reviews, and establish clear and reasonable timetables;
- Regulations that reflect best practices and best-available technologies;
- Timely action on infrastructure projects that advance America’s interests and ability to participate in global energy markets;
- Increased regulatory certainty regarding the development of new energy infrastructure;
- Effective stewardship of America’s natural resources; and
- Support for American ingenuity, the free market, and capitalism. (Whitehouse).
It also set out several other rules relating to:
- Water Quality Certifications for federal permitting and licensing processes;
- Safety regulations applying to LPG;
- Reviewing the definition of “material” information for the purposes of investment disclosures; and
- A master agreement for energy infrastructure rights-of-way renewals or reauthorizations.
In addition, it required the production of a report on the status of the energy market. (Whitehouse).
During the COVID-19 pandemic, the Trump administration made it “easier for renewable energy projects to take advantage of certain tax credits.” The IRS released a statement that “COVID-19 has caused industry-wide delays in the supply chain for components needed to complete renewable energy projects otherwise eligible for important tax credits.” (The Hill)
Under the Paycheck Protection Plan (PPP) to help support small businesses impacted by the economic shutdown, twelve US energy companies applied and received this emergency government aid. The US Treasury offered amnesty to any firms that took PPP money if they returned it. In April, Trump did state his administration would plan to help the oil and gas industry, but no specific aid was announced. (Reuters) In June, Trump signed an executive order to speed the construction of energy projects. (Whitehouse) The EPA also proposed a new rule changing the way the agency uses cost-benefit analyses to enact Clean Air Act regulations. This effectively limited the strength of future air pollution controls. (NYT)
Summary and Evaluation
While the short-term economic impacts of the Trump administration’s energy policies and regulatory reform may be positive, the long-term and more-complex economic and environmental consequences could be negative. This is because they do not address the fossil fuel impacts on climate change and health. Biden’s policies may have a more stable, longer-term impact, but may not show a significant economic impact in the short term. This is because the policies are already in line with current market forces towards renewables. The biggest Biden energy and environment question is the cost or how to pay for all his proposals.
Regulation During COVID Response
COVID-19 has dramatically impacted US economic policy, including environment and energy policy. Trump released his newest executive order in the middle of the COVID-19 pandemic with no fanfare This allowed “major infrastructure projects and energy projects to move forward without rigorous environmental review.” This alleviates regulatory pressure on projects that may be necessary to get the economy in the US back up and running, but at the potential cost of environmental damage. (The Verge) Yet in a crisis, it is typical for the US government to ease regulatory rules to aid the smoother functioning of key industries and to provide relief for industry and commerce. As an example, many of the CDC and HHS rules were also eased to allow for medical supplies to be moved throughout the country. In addition, medical research has been streamlined to allow for faster reviews and approvals. The question is whether the removal of environmental regulation during this period longer-term impacts will have outweighing the short-term benefits.
Trump’s previous policy goal was to keep domestic energy prices low to assist businesses and consumers. This did occur, but mainly due to the COVID-19 economic shut-down. (World Bank) This makes it difficult to assess how successful Trump’s domestic energy policies have been to date or if they would be necessary in the future to maintain the low domestic energy prices.
Like many US businesses, energy production companies were also severely impacted by the shutdown and received necessary government support as a result. A functioning domestic energy market is critical to buffer any supply shocks stemming from foreign producers or OPEC. As well, US energy exports were growing prior to the COVID-19 pandemic, and there are approximately 6.7 million people employed in the sector.
In terms of policy action moving forward, Biden is now working as a part of the larger climate change task force with Ocasio-Cortez and the Sunrise Movement. This means there is a possibility his energy and environment plans shift towards stronger actions to prevent climate change. Higher regulatory costs for companies in the energy sector could result. Given the continued warming of the planet, many environmentalists are saying this is a great opportunity to further shift energy production away from fossil fuels towards renewables. (NewYorker) However, the high costs of the GND and the recommendations of the DNC Environment and Climate Crisis Council will likely cause lawmakers to pause and consider the impacts on the US government’s finances. In addition, paying for these policies by raising taxes could also carry the potential to slow the economy during a time of weakness.
For Biden’s election hopes, environmental policies will be critical for generating Democratic voter momentum, as “most young people feel like he’s falling pretty short of where he needs to be to earn their vote.” (The Verge) With this potential shift on the cards, it is difficult to predict the pathway Biden’s energy and environment plans may take, and the overall impact they may have. It is safe to say if his plans shift in any direction, it will be towards more comprehensive and restrictive fossil fuel restrictions and regulations.
One of the complicating factors in post-COVID outbreak is the rise of the Black Lives Matter protests in late May and early June 2020. Politico explains that “for large environmental groups that are largely white addressing the unrest from the death of Floyd … has underscored the challenges facing the green movement as it broadens its core mission to include racial justice and equality.” (Politico) This means Biden’s energy and environment policies may need to be even broader to appease this collection of intertwined issues, and environmental policies on the left will need to be seen to be more inclusive, more equitable, and consider how the “climate movement should “show up” for protesters.” (Politico)
The Brookings Institution notes “if Joe Biden wins the election in November, he will likely be sworn in — perhaps virtually — under the most challenging circumstances since Harry Truman became president in 1945. The country will probably be in the end stages of a brutal pandemic and faced with the worst economy since the Great Depression.” In these circumstances, they note it will be a “herculean task” to resurrect the economy, made “more difficult by empty coffers, a frayed social safety net, [and] an uncertain economic environment.” (Brookings) Trying to implement environmental policies for the cost of $10-$16 trillion recommended by the DNC may be politically unpopular, or not viewed as economically responsible.
An alternative view is put forward by Vox: maybe in the post-COVID political economy, “there is more appetite than ever for something big, a vision of a better post-virus economy and society. And such a vision is taking shape on the left” with regard to climate policy. (Vox) However, this kind of policy (while favorable for his left-leaning constituents) would be harmful for those in energy-producing states, such as Pennsylvania. Fred Keller (R-PA.) points out if Biden went forward with a “plan to completely eliminate fossil fuels [it] would set my district—and the rest of energy-producing America—back decades” (The Hill).
Nonetheless, Biden also has a chance to swing more moderate voters towards his campaign, with the support of a new political group called the BlueGreen Alliance. This group is trying to work “around a policy agenda that frames climate action as industrial policy geared toward rebuilding America’s infrastructure and manufacturing base, with justice and equity baked in rather than an optional ingredient.” (Vox) Increasing framing of energy and environmental issues as economic and industry issues may mean voters look towards Biden’s ideas on how to “solve today’s environmental challenges in ways that create and maintain quality jobs and build a stronger, fairer economy.” (BlueGreen Alliance)
It is important to note Trump’s policies have been framed this way all along, with the approach that the US economy is “held back by burdensome regulations on our energy industry.” His America First Energy Plan was premised on the assumption that “American energy policy must balance environmental protection with economic growth in order to encourage innovation, discovery, and prosperity.” (Whitehouse)
For many of these issues, including energy and environmental policy, both candidates are of the opinion that economic growth driven by energy-focused industrial policy is the way to go but they differ significantly in how to achieve it. Essentially, there is “broad agreement among Democratic and Republican politicians that government should endorse industrial policies … Where they differ is on whether this support should be directed more toward traditional (more carbon-intensive) manufacturing or to cleaner, greener manufacturing industries.” (Brookings)
As noted, the shift away from globalization will have impacts on the energy market. It will affect how American energy and environmental policy is perceived, its impacts, and the direction it heads. This is because even before COVID-19 “the global energy system [was] undergoing major changes, and the rise of the US as an energy superpower is reconfiguring the global energy order in ways that will have far-reaching implications for energy markets across the globe.” (Energy Policy)
One of the issues with moving towards Net Zero economies is how to deliver environmental targets in a contracting economy without making the contraction worse? Overhauling the energy sector to shift from fossil fuels towards renewables has the potential to create short-term production dislocations and job losses at a time when energy production is already falling, and the economy is underperforming.
One of the major long-term questions over Trump’s environmental and energy policies is while they may increase the domestic energy outputs of America now, they are not built on sustainable approaches to energy production or focused on new technology for the future. As an example, “renewable energy consumption in the U.S. topped coal consumption in 2019, the first time this has occurred in more than 130 years,” indicating a significant shift away from coal production in the US in general. (The Hill)
Alongside this, the development of better battery technology to store sunlight creates a problem for traditional energy policy. Should more money be spent on fracking or rather on ARPA-E to create cheap energy?
An important factor to note “the energy sector will play a vital part in meeting the economic imperative of getting locked-down Americans back to work,” and an energy shift is coming whether politicians are ready or not. “When it comes to oil, gas and coal … the immediate objective for energy policy should be alleviating the hardship on laid-off workers.” (Bloomberg) Trump’s policies for “energy dominance” may be protective and useful in a temporary state of declining globalization, but may face major issues in the long-term.