Biden’s plan to make nice with Big Oil
One of President Biden’s first executive actions was killing the Keystone XL pipeline due to carry oil from Canada to Oklahoma. Many in the energy industry reacted with alarm.
They needn’t have, says Gina McCarthy, the White House National Climate Advisor. “President Biden’s stance on Keystone is not new,” McCarthy told Yahoo Finance in a Feb. 11 interview. “It was not a signal-sender on oil and gas. We’re not in a fight against oil and gas.”
Traditional energy firms are on high alert with Biden in the White House, since he’s promising the most aggressive green-energy push in U.S. history. Biden wants to fight climate change by eliminating net carbon emissions from the energy sector by 2035, and from the entire U.S. economy by 2050. That would require a massive shift away from the burning of oil, gas and coal. Replacing those traditional energy sources would be power derived from wind, sun and water, plus possibly nuclear plants and new technologies.
That means oil, gas and coal jobs are likely to disappear, as green-energy jobs ramp up. On the whole, that could benefit the US economy. A team of Princeton University researchers found that Biden’s plan would generate more new jobs in low-carbon energy sectors than the jobs likely to be lost in fossil fuels. The catch, however, is that harming some workers to make others better off can generate intense opposition to new policies, even if the economy ends up better off overall.
McCarthy’s job as National Climate Advisor is to optimize employment while pursuing Biden’s climate goals. She seems to understand that creating jobs in one part of the country is no consolation to people losing their jobs in another. And not everybody can move hundreds of miles away just to follow the work.
“We are not going to think that sending somebody from their own community halfway across the country is going to be a welcome idea for their families,” McCarthy told Yahoo Finance. “We want them to stay with their families and we want them to have the same kind of economic opportunity that we see growing in the clean energy sector.”
Replacing lost energy jobs with green-energy jobs in the same parts of the country isn’t as easy as it sounds. Solar farms and windmills don’t work everywhere. The skills workers develop as an oil hand or coal miner don’t automatically translate to solar or wind. Local governments need to assist with retraining programs and aren’t always interested. And for-profit companies don’t like the government telling them where to locate or whom to hire.
One plan the Biden administration seems likely to push soon is a set of regulations and incentives meant to employ oil and gas workers capping as many as 3 million abandoned oil and gas wells that leak methane, which contributes to global warming. Many workers already have the skills and many of the wells are in traditional mining areas. McCarthy suggested Biden could sign an executive order on this matter in coming weeks.
The White House has also set up a task force that will assess job gains and losses and figure out the fastest ways to help workers who might lose out as carbon fades. This process is already underway, as renewable energy gets cheaper and localities demand cleaner energy. Coal has sharply declined as an energy source, for instance, as renewables have become more affordable. Many coal jobs in places such as West Virginia and Wyoming are already gone.
Biden has also ordered a “pause” on the issuance of new leases for oil and gas drilling on public land, which many in the industry consider a de facto ban that could lead to stricter rules on drilling elsewhere. Relax, McCarthy says. “It doesn’t mean that there’s stoppage in oil and gas exploration or permitting where leases are already active and in use,” she told Yahoo Finance. “This was a pause and review. It was not a stoppage. We know that this is a longer-term transition, not an opportunity right now to stop things. That’s all this was.”
Biden’s cancellation of the Keystone XL pipeline eliminated some U.S. jobs, mostly temporary construction work that would have materialized starting this year. Two other pipeline projects, Dakota Access and Line 3, are tied up in court, and it’s possible Biden could intervene to stop those projects as well. These are complex cases involving water rights for native tribes and Army Corps of Engineers permitting.
“There will be action on those,” McCarthy said, “because they’re basically in court right now. We’ll be listening to the tribes. It is clearly going to be an Army Corps decision, not a White House political decision that carries the day.” Whether the pipeline companies believe that may depend on the outcome.
Source: Yahoo Finance