Home Agenda Global energy crisis complicates Biden’s climate agenda

Global energy crisis complicates Biden’s climate agenda

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The risk for Democrats is that high energy prices – and America’s biggest fear of inflation in at least a dozen years – make voters suspicious of efforts to rid the world of fuels. fossils. And that’s a problem for the White House because President Joe Biden introduced the most aggressive climate program in U.S. history and set a goal of carbon-free electricity by 2035.
Yet the path to this ambitious goal is made more difficult by the high prices of oil, natural gas, gasoline and even coal. Republicans argued going too fast will further increase costs for Americans and unnecessarily kill jobs.

“There is a real threat of backlash against the green movement,” said Greg Valliere, chief US policy strategist at AGF Investments. “Most people agree with the goals, but their good intentions tend to fade when they look for something to blame.”

Regular gasoline now hits a seven-year high of $ 3.32 per gallon nationwide, up 5 cents in one week, according to AAA. Gasoline cost an average of just $ 2.17 a gallon a year ago, at a time when fewer people were driving, flying and commuting.

Americans despise high gasoline prices and, right or wrong, tend to blame them on whoever is in the White House.

“You can argue that it’s not Biden’s fault, but it’s the president,” Valliere said. “If you’re the quarterback and the team isn’t doing well, you take a disproportionate share of the blame whether you deserve it or not.”

More than perhaps any other good or service, consumers view gasoline prices as a proxy for the cost of living.

“You stand there and watch the LED screen add up every dollar,” said Ed Mills, Washington policy analyst at Raymond James.

Gasoline at $ 3.30 only amplifies inflationary fears that are spreading in the United States. Consumer prices jumped 5.4% in September, tied for the fastest 12-month pace since 2008. The energy crisis, along with a global supply chain nightmare, threatens to keep inflation high for the coming months.

Rise in national gas prices, especially in Europe

It’s not just gasoline prices that are causing the angst at the moment.

Natural gas prices have reached levels not seen since 2008, prompting the US Energy Information Administration to warn of significantly higher home heating costs this winter.
China is also facing an electricity shortage that has resulted in power outages and factory closures.
Democrats' fundamental climate policy will likely be removed from broad economic package
In Europe, natural gas prices have skyrocketed again, setting new all-time highs. The continent is grappling with a real energy crisis, forcing some factories to suspend their operations.
The International Energy Agency recently said that the rise in natural gas in Europe had been driven by a confluence of factors, including strong demand, tighter than expected supply, cold temperatures last winter and “below normal wind energy availability”.

“Well-managed clean energy transitions are a solution to the problems we face today in the gas and electricity markets, not the cause,” IEA Executive Director Fatih Birol said in a statement. communicated at the end of last month.

“A warning sign for what could happen here”

Yet critics of the climate provisions of Biden’s broad economic package have called the overseas experience a warning for the United States.

“In Europe, there has been a rush for the energy transition. I would say it was too fast,” Mike Sommers, president and CEO of the American Petroleum Institute, told CNN. API, the oil and gas industry’s powerful trading group, is fighting tooth and nail to kill or reduce the climate provisions in the $ 3.5 trillion plan.
“US lawmakers should pay close attention to what they see in Europe as a harbinger of what could happen here,” Sommers said, adding that other factors are also at play in Europe, including the Russia being a “difficult player”. “
The key program Democrats hoped to accelerate the energy transition in the United States may now be left out of their huge economic bill after West Virginia Sen. Joe Manchin stepped back. Congressional sources told CNN late last week that the Clean Electricity Performance Program, which aimed to replace coal and gas-fired power plants with solar, wind and nuclear power, would likely be removed from legislation. .
The global supply chain nightmare is about to get worse
Mills, strategist for Raymond James, said high energy prices are also likely the “death knell” for efforts to raise the larger community’s income through a carbon tax.

Beyond that, Mills doesn’t think the global energy crisis will change many minds in the current debate.

“On the contrary, it only complicates matters,” Mills said, adding that “all parties will dig into their existing positions.”

Advocacy for clean energy

Indeed, proponents of climate action see high energy prices as proof why the world needs to say goodbye to fossil fuels.

“We depend on volatile fossil markets, but we don’t have to be,” Trevor Higgins, senior director of national climate and energy policy at the Center for American Progress, a group of liberal thinking. “Switching to clean energy is actually a way to protect yourself from rising costs. “

Higgins compared the situation to that of an investor who puts too many eggs in one basket.

“Just like how an investor will diversify their portfolio, our energy system needs to diversify its resources so that we have layoffs,” Higgins said.

For example, a key part of Biden’s climate program is to accelerate the adoption of electric vehicles through tax credits and investments in battery technology.

The logic behind supporting electric vehicles makes even more sense at a time when Americans are paying high prices for gasoline. The continued adoption of electric vehicles is expected to ease the demand for gas, preventing prices from rising.

Floods, hurricanes and heat waves

Another complicating factor in the climate debate is the role that extreme weather has played in limiting the supply of fossil fuels.

The floods wiped out coal production in China, contributing to the country’s energy shortage.

Heat waves in the United States have increased electricity use this summer, depleting natural gas reserves as this winter approaches.

Hurricane Ida shut down nearly all of the Gulf of Mexico’s oil and gas production and disrupted the region’s refinery activity in late summer.

The energy crisis is a

“Climate change is part of the reason prices are high,” Higgins said. “If we stick with dependence on oil and gas, we will worsen the climate crisis and cause more disruption from more heat and stronger hurricanes.”

Yet the question remains open whether Democrats can credibly champion this cause.

Republicans may find it much easier to present the merits of more drilling to combat high gas prices.

“For those who want climate provisions, they will have to sit there and explain the higher gas prices,” Mills said. “And in politics, when you explain, you lose.”


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