Select your language: EN JP

How Incoming President Joe Biden Can Boost The U.S. Energy Transition

Arij van Berkel, Ph.D., Vice President, Research
December 17, 2020

With a new administration set to take office in the U.S. early next year following Joe Biden's election victory over Donald Trump, there's a lot of interest and excitement about what it could mean for energy policy, particularly as Biden has made climate one of his leading campaign themes and transition priorities. However, Trump had almost no effect on the energy transition in the U.S. – despite his efforts to promote coal and oil, both tanked during the Trump administration due to the broader overall economic climate.

New call-to-action

Biden's effect will be similarly subject to larger forces. Getting back into the Paris Agreement will be a morale boost for anyone supporting renewable energy in the U.S., but it won't materially change the dynamics. Reinstating environmental regulations and cutting back subsidies for the oil industry would improve the market position of renewable energy, but these measures didn't do much stop the march of renewables when they were employed in the opposite direction. Biden will reduce the headwind for renewable energy, no doubt, but that headwind wasn't bothering the energy transition much anyway.

What, then, are the big challenges that the US federal government must address in terms of energy and that will move the needle?

Here's a list: 

1.) Gas

The U.S. federal government needs to articulate a clear long-term view on natural gas. At the moment, the U.S. is outperforming the EU in the reduction of greenhouse gas (GHG) emissions, mostly through switching away from oil and coal to gas. That approach will continue to help cut emissions for the next decade or so, but after 2030, the use of gas will be too CO2-intensive to meet the goals of keeping warming under 2 °C. If the U.S. does not have a plan to replace gas usage with something else by then, it will start to fall behind. Such a plan would require national coordination, a way to deal with prematurely retiring gas assets, adding new infrastructure for alternatives like green hydrogen, and foresight around goals and paths to achieve them. For example, when inviting companies to build their factories in the U.S., should policy promote the use of gas in those factories, or should they be fully electrified? If the latter, then that will require a stimulus from the government.

2.) Markets 

The current structure of the U.S. electricity markets is the real stumbling block to accelerating the energy transition. European utilities are far more dynamic and innovative in large part because of the deregulated market structure enforced at the EU level for the past decade. The regulated markets in the U.S. make it hard for new actors to enter the market, and as a result, it's harder to attract funding for investments. Consequently, the growth rate of renewable energy assets is limited, and electricity remains relatively expensive, resulting in slow (if any) electrification. Transforming the markets while learning from the European experience and dealing with some of the downsides of a deregulated market may be one of the most influential things a Biden administration could do – though such changes have not been a major part of campaign rhetoric, and how much the new administration will push to drive them remains to be seen.

Energy Transition EBook


3.) Innovation

While 25 years ago, the U.S. had a strong leadership position in energy innovation, with formidable institutions like the National Renewable Energy Laboratory (NREL) – a recognized authority on many of the leading renewable energy technologies – today it is not leading in new energy technology development. The U.S. R&D ecosystem is no longer world-class in developing renewable energy solutions, falling behind China in particular, as well as the EU, and becoming more reliant on energy technologies from abroad. Pushing the U.S. back toward the frontier is about more than increasing basic research funding; it will require a broader focus on industrial policy to create the necessary ecosystem to scale and commercialize systems.

4.) Infrastructure 

The energy transition requires new infrastructure. Reinforcing the electricity transmission infrastructure is just one urgent need, where the Biden administration should coordinate between states to create a true interstate transmission system that's currently lacking. The availability of such infrastructure has enabled the EU to deal with the variation in the rate of the energy transition among countries. There are other infrastructure needs as well, such as a network of charging stations – Biden's goal of half a million public EV chargers being deployed under his administration is a good start – as well as hydrogen infrastructure.

What we know so far of the plans of the future Biden administration is mostly of symbolic significance to the course of the energy transition in the U.S. There are opportunities for the federal government to have a more meaningful impact, but that depends on the way that the policy is elaborated and implemented. Companies should watch the four points above to assess whether the new administration will really change the energy landscape. 

For more information about what Biden's administration will mean for innovation, check out our recent blog post here.

Why Hydrogen and Why Now?

Why Hydrogen and Why Now?

Read More
The Evolving Energy Story eBook

The Evolving Energy Story eBook

Read More
Over $5 Billion in Investments Focused on the Home Energy Management System

Over $5 Billion in Investments Focused on the Home Energy Management System

Read More
More Energy Resources
Schedule Your Demo