Commentary: Clear choices ahead for US energy policy in upcoming election
Adam Ferrari * CEO – Phoenix Capital Group Holdings, LLC
Energy policies in the US shape the entire nation’s economic future and global climate impact. The stark contrast between Donald Trump’s and Joe Biden’s approaches to this critical issue reflects broader political divides.
Under President Trump, the oil and gas sector thrived through expansion and deregulation. His “America First” energy strategy focused on boosting domestic production and reducing regulatory barriers, benefiting the industry with streamlined permitting processes and relaxed safety regulations.
Conversely, President Biden’s energy policies introduced uncertainties for the oil and gas sector, emphasizing environmental sustainability and climate change mitigation. Stricter regulatory frameworks, including a temporary pause on new federal oil and gas leases and strengthened regulations on emissions and offshore drilling, have raised concerns about potential constraints on future exploration and production.
In contrast to Trump’s limited federal support for renewable energy, Biden has prioritized substantial investments in renewable infrastructure, particularly offshore wind, aiming to accelerate renewable energy deployment, stimulate job creation, and foster technological innovation. The administration’s goal of achieving 25 gigawatts of offshore wind energy by 2025 highlights its commitment to expanding renewable energy capacities and diversifying the nation’s energy portfolio.
However, with Biden pulling out of the race, the continuity of these policies remains uncertain, although it is likely they will persist under a new Democratic administration.
The IRA and offshore energy
The Inflation Reduction Act (IRA) has made some contributions to offshore energy, particularly in the offshore wind sector, but the benefits primarily favor companies receiving subsidies rather than consumers. While the IRA has facilitated the establishment of domestic manufacturing for key components, its long-term economic sustainability and efficiency remain questionable.
A second Trump presidency
Under a new Trump presidency, we could expect a robust focus on reliable and cost-efficient energies. Trump has campaigned on American energy independence and economic growth along with deregulation to create a more business-friendly environment. A second Trump administration would likely streamline regulatory processes, reducing bureaucratic obstacles that hinder energy projects.
By promoting private investment and reducing dependence on government subsidies, another Trump presidency could lead to more efficient energy production and potentially lower costs for consumers. This balance would ensure that both fossil fuels and renewable energy sources contribute to a stable energy grid.
A new Democratic administration
If a new Democratic administration were to take office, it would likely continue and expand the policies initiated by the IRA, with a strong emphasis on renewable energy. However, this could lead to increased reliance on government subsidies and stringent regulations, which may stifle innovation and burden taxpayers.
The Democratic approach might prioritize the rapid expansion of renewables at the expense of a balanced energy policy, potentially leading to energy shortages and higher costs for consumers. Moreover, the focus on stringent environmental regulations could slow down project approvals and increase operational costs, making it challenging for the industry to remain competitive.
Five-year plans
The Biden administration’s new five-year oil and gas leasing plan for the Bureau of Ocean Energy Management (BOEM) has left many industry analysts disappointed due to its minimal offerings. Consequentially, the industry sees this plan as restrictive and one likely to undergo significant revisions under a second Trump administration.
A second Trump administration would likely increase the number of lease offerings, as he has historically supported expanding oil and gas production to boost US energy independence and economic growth. This would involve making more areas available for leasing, including previously restricted or underutilized regions, with a focus on reducing bureaucratic red tape that currently delays lease approvals and project commencements. Streamlined regulatory processes would make it easier for companies to obtain leases and begin exploration and production activities more quickly.
A new Trump administration would likely introduce incentives to encourage private investment in the oil and gas sector, such as tax breaks, subsidies for infrastructure development, and reduced fees for leaseholders. Such incentives would aim to stimulate economic activity and job creation within the industry.
While promoting fossil fuels, Trump would likely maintain a balanced energy policy that includes support for renewables, but not at the expense of traditional energy sources. This would ensure a stable and diverse energy supply, reducing the risk of energy shortages and keeping consumer costs in check. To combat delays caused by potential lawsuits, his second administration would likely implement legal reforms to limit frivolous litigation, speed up project approvals, and reduce the uncertainties faced by energy companies.
Balancing energy, the environment
The future of US energy policy remains a critical factor in shaping the nation’s economic trajectory and its impact on global climate initiatives. The stark contrast between Trump’s fossil fuel-driven approach and Biden’s clean energy focus reflects broader political divisions, influencing everything from job creation and regulatory landscapes to investment in traditional and renewable energy sectors.
As the US navigates these complex issues, the balance between energy security, economic growth, and environmental responsibility will be paramount. The policies enacted under different administrations will continue to shape the energy industry, driving the nation’s efforts to meet both domestic and global energy challenges. The ultimate direction of US energy policy will significantly impact not just the industry but also the broader goals of sustainability and climate resilience.
