Elections have consequences for Energy Industry: Beltway execs portend what they might be

USEA 17th State of the Energy Industry Forum

With a somber undertone from the recent death of its long-time leader, Barry Worthington, the United States Energy Association (USEA) held its 17th State of the Energy Industry meeting virtually on Jan 28, 2021, less than a week after President Biden was inaugurated. Executives from 22 separate beltway policy and advocacy organizations offered their glimpses into the next four years under a Biden administration and a razor-thin Democratic majority in Congress.

What was most revealing, however, had nothing to do with the actual presentations. The last speaker, Heather Zichal, represents the brand new American Clean Power Assn (ACPA), an umbrella group pulling together solar, wind, storage, and transmission interests, so that the “trillion dollar renewable energy industry,” in Zichal’s words, can speak as one voice. We “need a deeper bench of Republican support for clean power and renewables,” said Zichal, a bigger “coalition of the willing,” for the transition to the clean energy economy.

By contrast, more than one-third of the organizations represented were associated with natural gas, six with gas in their name, one which qualifies if you make the largest component of natural gas (methane) into a alcohol (methanol), and one representing petroleum companies, almost all of which are also natural gas companies.

It seemed pretty clear which energy industry interests have acted to stand in “unity,” a word Biden used over and over on the campaign trail and continues to use, and which appear fragmented.

Generally, these types of events are polite affairs laced with diplomatic, optimistic language about working with the new elected officials. If there was going to be an exception, one might suspect the coal group. But no. Mike Sommers, American Petroleum Institute, declared a “posture of strong opposition” to the Biden administration, seeing no “unity” in his early actions, most notably shutting down the Keystone Pipeline.

On the other hand, Rich Nolan, National Mining Assn, lauded the US mining industry as “on the cusp of a rebirth. Mining policy is energy policy,” he said, referring to the soaring demand for metals and minerals critical to the renewable and non-carbon energy supply chain. Betsy Monseu, American Coal Council, forecasted that the natural-gas share in electricity will decline 41% in 2021 and another 8.9% in 2022 because of price increases, and that coal is essential to “balance uncertain loads with uncertain supply.”

Julia Hamm, Smart Electric Power Alliance, gave one of the more startling stats: The number of electric utilities with net-zero carbon commitments by 2050 increased from 18 last year to 39 this year. What better evidence is there that “elections have consequences?”

One issue that clearly concerns the electricity natural-gas interests is fugitive methane emissions from their infrastructure. Thomas Kuhn, Edison Electric Institute, noted his group’s initiative to monitor methane emissions, one he called “important.” Karen Harbert, American Gas Assn, also pointed to a “new framework for measuring and reporting methane emissions.” Charlie Riedl, Center for LNG, noted his members’ principles for enhanced measurement and reporting of methane, and that conversations around methane “are increasing.”

API’s Sommers pointed to earlier success reducing methane emissions by 70% “in the largest oil/gas producing regions,” as did Harbert, who claimed that methane emissions have been reduced by 73% from the country’s natural-gas distribution networks.

Not surprisingly, the most prevalent theme was the need to up federal money for more RD&D and commercial investment:

    • Kuhn, “We need lots more R&D.”
    • Sommers, “. . .need more investments in American oil and gas.”
    • Nolan, “need to advance technology for the fuels the world has to offer.”
    • Arshad Mansoor, EPRI, the nation “must make a commitment this decade to negative emissions technologies.”
    • David Carroll, Gas Technology Institute, “many of the technologies needed to get to a no-carbon 2050 don’t yet exist” and “federal energy innovation spending is 10% that of defense innovation spending.”
    • Monseu, the National Coal Council has been involved in carbon capture, utilization, and storage (CCUS) for many years. Biden included CCUS in his campaign, and robust funding for CCUS is a big part of the Energy Act of 2020 (passed during Congress’ lame-duck session).
    • Jim Matheson, National Rural Electric Cooperative Assn, “We need an infrastructure program at the federal level.”

My job is better than yours. Jobs and economic activity didn’t get the attention one might have thought, perhaps because most speakers were more consumed with getting through the COVID-induced economic fallout. Derrick Morgan, American Fuels & Petrochemical Manufacturers Assn, did make the case for why a petro job is better than a renewables job. Each job in his industry, he said, supports 32 others, 16 directly and 16 induced. His observation was a counter of sorts to the Biden administration ambition to retrain fossil-fuel workers for opportunities in the renewables sector.

Maria Korsnick, Nuclear Energy Institute, reminded everyone that nuclear power plants are the largest source of carbon-free electricity, and “uniquely reliable.” While NEI lauded the recent NRC approval of the first small-reactor design, the organization seems more focused on saving existing reactors from political threats at the state level.

Lest any in the CCJ community think small reactors are a threat to their business, the timeline from an NRC-approved design to a permit to construct (along with the commercial investment) is long and arduous, based on recent experience with the advanced light water reactors. Better to worry about the goal set by ACPA’s Zichal: 50% renewables on the electricity grid by 2030.

GTI’s Carroll acknowledged the “cycles of hype” with the “hydrogen economy,” dating back to the 1960s. But, he said, “this time it’s different,” adding “famous last words, right?” He identified several H2 projects GTI is involved with, notably a broad infrastructure integration study for Texas, in which wind power is used to produce H2 for transport and delivery through existing pipelines.

Finally, Fred Hutchinson, LNG Allies, tempered the net-zero-by-2050 enthusiasm with a reminder that there is expected to be 2-billion more people on earth by 2050, the world will need 50% more energy by then, while 850-million people still lack access to electricity.

Therein lies the conundrum for the energy industry in the aggregate: The affluent want less carbon as soon as possible; the less affluent want more energy now.

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