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Biden’s Challanges in Energy and Climate Issues - Gökberk Bilgin

Joe Biden has won the 2020 U.S. Presidential election and will become the 46th president of the United States in January. The incumbent president Donald Trump did not accept results and will take legal actions, yet the odds are very small that the result will be changed. Therefore, it is okay now to discuss what awaits Joe Biden in energy and climate issues.

During the Democratic primary debates, Joe Biden claimed that he is opposed oil production through fracking since it had harmful consequences for the environment. His first statement was that they would make sure it is eliminated. However, as the election time approached, the claims from the Democratic candidate began to change slightly. Instead of full elimination, he claimed that the Biden administration would not allow further fracking in the oil and gas sector.

According to the U.S. Energy and Employment Report 2019, there are 1,127,552 workers in the fuels sector, where 77% of them are in the oil and natural gas sectors, and the numbers are growing in each sector. When we add up the families and the people who provide these workers’ services, it makes millions of people who earn their livings throughout the oil and natural gas businesses.

In his victory speech, Joe Biden stated that he would restore and protect the middle class’s welfare. While doing that, his first challenge on the energy transition will be transferring these workers to renewable energy facilities. However, natural gas and oil sectors require strong know-how in any part of the operation, and lack of experience is the top difficulty on hirings. The companies in these sectors will be highly motivated to keep their workers, and renewable energy may require different expertise where the oil workers do not have.

The relaxation of environmental rules also helped to fund social services in some states such as New Mexico, where the oil companies financed state schools in the region. If Joe Biden restricts these companies to do further drillings, then the education funds will also be declined.

Therefore, the $2 trillion energy transition plan must be designed very carefully so that the societies will have the least burden during the transition.

On the political side, the only concern for Joe Biden is the possible Republican majority senate trying to slow down the transition, yet the results are still undecided.

Meanwhile, the oil and natural gas companies and traders have already become the largest renewable energy investors in 2020. Their increasing role in renewable energy can affect the developments either way. While bigger investments can help renewable technologies advance faster, it can also allow oil companies to control the energy transition pace.

The investments will help renewable facilities be built in the United States, which will impact US-China relations as well. Despite the wind turbines and solar panels, not fossil fuel-based energy systems, they contain different elements from mines. These are called rare earth minerals. Dysprosium, neodymium, terbium, europium, and yttrium consists much of renewable energy hardware components. Currently, the largest reserves of such elements are located in China.

According to the U.S. Geological Survey report, China has 36% of the total discovered reserves on rare earth material, whereas the U.S. has 0,1%. The need to import these elements may open a new chapter in US-China relations.

In that area, while Biden has an opportunity to make a deal with Chinese counterparts. However, the ongoing issues on intellectual property accusations may continue to distort the relations even further. China has the largest investor in renewable energy, and Germany has severely accused it of stealing industrial secrets about renewable energy technologies. A similar situation can also develop between China and the United States. Of course, if the clean energy transition comes to Chinese exports of rare earth minerals, they may leverage it on their terms as well. Extraction of these minerals is ongoing in very unhealthy conditions, and even the United States or European countries discover these sources, extracting efficiency would not be as high as Chinese mines since they would not implement high regulations.

In this part, Biden will use the advantage of providing LNG to China. Despite being very strict on reducing fossil fuel usage through implementing laws, Biden did not state any arguments on restricting LNG exports. I believe there are two reasons for that. The first of them is that the companies invested billions of dollars in restructuring their LNG facilities from importing to exporting, and the second reason is that having a say in the LNG market can be a profitable tool for U.S. diplomacy in various regions.

On the relations with Europeans, the situation looks brighter. Almost all leaders welcome Joe Biden happily. The restoration of the collaborations with the Europeans probably will begin with the U.S’s rejoining on the Paris Climate act. The details on that matter are available in Selin Kumbaracı’s article in this issue. What I would like to add is a statement from Bloomberg that the climate-friendly United States is expected to have more customers in Europe on the energy side, which I believe is true and increasing awareness on climate will increase new technologies such as electric cars to implement faster.

Overall, Joe Biden has taken one of the hardest jobs in the world with ambitious goals. There will be many challenges that will try to prevent the clean energy transition, yet his vision and determination will decide the outcome.


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