What Could Drive Biden’s Energy Policy—Agunbiade

Joe Biden

By Ahmed Rahma

An expert in subsea engineering and director at the National Oilwell Varco based in Houston, Texas, USA, Dr Babajide Agunbiade, has highlighted three-point agenda that could drive the US president-elect, Mr Joe Biden’s energy policy.

Mr Agunbiade, while responding to the question of what will be the future of US oil and gas industry with Mr Biden at the helm of affairs, stated that clean energy innovation and the pursuit of zero-emission are expected to form the pivot of the incoming US government’s energy policy.

He listed the three key focus of the incoming president as an irreversible path to achieve economy-wide net-zero emissions by 2050, a drive towards a historic investment in clean energy and innovation, and aggressive methane pollution limits for new and existing oil and gas operations.

“While Trump had sought to maximize domestic oil and gas production within the United States, Biden will ban the issuance of new drilling permits on federal lands and waters to fight global climate change,” he said.

He argued that part of the broad agenda will include developing rigorous new fuel economy standards aimed at ensuring 100 per cent of new sales for vehicles which will be zero-emissions; protecting America’s natural treasures by permanently protecting the Arctic National Wildlife Refuge and other areas impacted by President Trump’s policy on federal lands and waters including also the banning of new oil and gas leasing on public lands and waters.

According to data from the Interior Department, the US produced nearly 3 million barrels of crude oil per day from federal lands and waters in 2019, along with 13.2 billion cubic feet per day of natural gas, saying “that amounts is about a quarter of total domestic oil output and more than an eighth of total US production of gas. A federal ban on new permits would mean those numbers trend toward zero over a matter of years.”

“I foresee that without the political sheltering by Trump’s leadership in Washington, the US majors like ExxonMobil and Chevron that have remained focused mainly on the traditional energy business will begin implementing strategies for a global energy transition more like European oil and gas companies like BP and Royal Dutch Shell.

“The implication for Sub-Saharan Oil and Gas production is that with renewable energy taking the more central stage during the Biden administration, fossil fuel demand will continue to decline, leading to reduced drilling, production, and exploratory activities,” he added.

Mr Agunbiade emphasised that there would be an impact on global and the US public revenues as oil and gas production generated about $12 billion in public revenue in 2019, divided between the US Treasury, states and counties, tribes, and clean up funds.

Citing Wood Mackenzie, 2020, Mr Agunbiade posited that there are potential legal implications as upstream producers have already invested billions of dollars into exploration and development projects.

The expert mentioned that, “In US GoM alone, companies have invested over $180 billion since 2005 in drilling and exploratory activities on the land the Biden government is looking to ban. There would be removing subsidies for fossil fuels, which, some environmentalists say, inject roughly $20 billion into the industry annually.”

He also noted that there would be an emphasis on low or zero-carbon energy production, green industry manufacturing, and more climate-friendly regulations with an optimistic view on the future of renewable energy and there will also be generous government research grants to renewable energy start-ups.

“The solar and wind producers will enjoy munificent tariffs, and, hopefully, the nuclear industry and fusion pioneers. Potential job loss may occur in areas that traditionally rely on oil and gas employment.  However, this could be balanced out by Biden’s plan that would create millions of new jobs.

“There is a further decrease in global demand for hydrocarbons due to renewable energy options coming to play, which will impact the already volatile oil prices,” he said.

Concluding, Mr Agunbiade stressed that it will be imperative for the incoming federal government to maintain a balanced curve in passing relevant energy legislation.

He proposed that the oil and gas industry still maintains a reliable place in annual revenue generated and that Mr Biden’s proposals could bring about some of the most substantial deviations that the US offshore industry has ever seen.

“After all, not every President has fully stuck with their pre-election promises. The fact that Biden mentioned that he wouldn’t end fracking could be a good omen and some light at the end of the tunnel for the USA oil and gas industry,” Mr Agunbiade said.

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