The energy industry is literally Biden it’s time with a transfer of power expected from the Trump administration to President-elect Joe Biden in the coming weeks, many American industries wonder what effect this could have on their businesses. The energy industry is no different, especially with some of the big campaign promises Biden made.
Restoring relations with Iran
One campaign promise likely to impact the energy market fairly quickly is Biden’s commitment to re-establish relations with Iran. This relationship could bring an extra one million barrels of oil (1MMBO) per day to an energy market already oversupplied, lowering global energy costs and impacting US producers already struggling with low prices. Normalizing relations with Iran is not the only campaign promise made by Biden, however.
Reentering the Paris Climate Agreement
Biden also claimed that he would re-enter the Paris Climate Agreement (PCA) on his first day as president. The PCA was a global initiative to reduce the increase in global temperatures by committing to lowering greenhouse gas production. With Biden’s commitment to green energy, the market will need to prepare for some massive shifts as it stands.
Green energy options currently available include solar, wind, and hydroelectric energy options. Two significant hurdles of switching to carbon-neutral energy sources include the amount of money it would take to invest in projects and the inconsistency associated with relying on nature for energy. Biden’s commitment for the federal government to support a carbon-neutral transition will mean billions of dollars in financing for the energy market, so at least one hurdle is slightly lowered. Still, the government has little control over the wind, rain, and clouds!
How Green Energy Can Become Viable
The energy market is working furiously on solutions to maintain a consistent power supply. Energy storage has recently become a hot market. Companies are investing heavily into lithium-ion battery storage, which seems like the immediate answer, holding power in times of boom and distributing in lull times. Researchers like Jack Brouwer with the University of California, Irvine, foresaw this bottleneck and thought of his solution.
For 12 years, Brouwer has been working on finding a way to utilize hydrogen as a storage material from renewable energy sources. By using excess energy to create hydrogen, energy can be stored for as long as needed. Brouwer also proposes using the existing natural gas infrastructure to mobilize the energy stored.
With energy technologies like that being developed by Jack Brouwer, Dan Finn-Foley, head of energy storage at Wood Mackenzie, predicts that stored renewable energy can potentially begin competing with older technologies and eventually out-compete it. Improvements in storage could mean better prices for buyers and cleaner energy production.
However, many of these developments are years and decades away from being fully operational on a national scale. The Biden administration has only been given four years to do what it can to deliver on campaign promises. It seems unlikely that any major changes to the energy industry will happen in the short term. The President-elect’s choices now could set us on a trajectory to a carbon-neutral future, but it must also find ways to mitigate the growing pains that are bound to happen. All said the energy market can only wait and see what happens next with industry players just Biden their time for the new wave of legislation to hit.