Joe Biden made it clear on the campaign trail that he planned to take strong action to fight global warming. But his ambitious, $2 trillion climate plan will take time and resources. In the meantime, here are some of the smaller, immediate steps he can take – and a few that are probably much harder than they look.
Biden’s been adamant that he won’t ban fracking, but there’s another way he can curb fossil fuel production and emissions: by jamming up the process for federal oil and gas leasing.
The president-elect can call for a comprehensive review of the Bureau of Land Management’s leasing program, a process that could potentially take years, said Katie Bays, an analyst for FiscalNote Markets. While it’s happening, the agency isn’t allowed to issue new leases, and the industry can’t appeal or block the move until the review is complete.
President Barack Obama did the same thing with coal mining in 2016. It would be easier than an outright ban on new federal leases, which would likely draw legal challenges from fossil fuel companies that could slow the rollout of new regulations. The move would affect most new wells in the New Mexico Permian Basin, one of the most prolific shale fields in the U.S., with some of the lowest breakeven costs in the country.
A backdoor carbon price
Getting a carbon tax passed through a divided Congress would be tough, but there is one agency that can set the stage for regional carbon prices: The Federal Energy Regulatory Commission, which oversees U.S. electricity markets.
Biden can immediately appoint a new chairman to the commission and, within months, flip control of the five-seat panel to Democrats. The agency is already looking at carbon pricing in regional power markets and could finalize its position next year, according to Timothy Fox, a vice president at Clearview Energy Partners.
The president-elect can also appoint a new chairman to the Securities and Exchange Commission, setting the stage for financial markets to better evaluate and price climate risk. The new chair could require companies to disclose climate-related threats facing their assets, said David Victor, a professor of international relations at the University of California at San Diego.
Investors could then use the data to predict the long-term value of companies across almost every industry and identify which ones face the biggest potential losses. “Guidance from the SEC and central banks about market risks will be significant,” said Victor.
Plug air-pollution loopholes
Obama’s signature climate policy, the Clean Power Plan, had one big problem: Regulating carbon emissions under the Clean Air Act turned out to be legally contentious. While Biden will likely seek to revive the carbon rules — this time with an emphasis on natural gas emissions — the effort could run into legal delays.
In the meantime, Biden can quickly announce new limits on power-plant pollutants other than carbon, such as particulate matter, sulfur dioxide or nitrogen oxide, said John Coequyt, the climate policy director at the Sierra Club. About three-fourths of all U.S. power plants, excluding those that are already scheduled to be retired, are lacking some major components for limiting emissions of those toxins. “It would put a very strong thumb on the scale for renewables,” he said.
Harness the wind
There’s enough energy in the winds off U.S. coastlines to power the entire country, and developers seeking to tap it have announced plans for more than 29 gigawatts of offshore turbines – the equivalent of one-third of the American nuclear fleet. But the none of the major projects have been approved by the government.
Biden could speed that process by allocating more money to the Bureau of Ocean Energy Management, which evaluates the applications. More employees could work through the 11 projects that have already submitted proposals, as well as the four expected in the near future by the American Wind Energy Association. “To conduct the full-on environmental review process, it just takes staff capacity,” said Laura Morton, the trade group’s senior director for offshore wind.
Not so easy: national targets
Biden wants a fully green electric grid by 2035, but his plan doesn’t specify how he’s going to make that happen. The obvious path – national renewable energy targets – would be a huge political challenge, said Clearview’s Fox.
For starters, it would need to get through Congress. Even if Democrats controlled both chambers, it would be tough to come up with a single policy supported by every state. And, some states, like California and New York, already have their own targets. “He would probably get unanimous opposition from Republicans, and wouldn’t get unanimous support from Democrats,” Fox said.
Don’t bother: killing the pipeline
Biden has faced repeated calls to cancel the controversial Dakota Access oil pipeline, a move that would be a big victory for climate activists. But pulling the plug on an operating asset would pose a threat to the bankers who financed the $3.8 billion project. And it would raise questions about whether future energy projects could also be undone with the stroke of a presidential pen.
“It would be a big mess,” said Bays. “People don’t appreciate what that does for project-finance writ large.”
© 2020 Bloomberg L.P.