Photo: Saul Loeb - Pool/Getty Images
Joseph Majkut
Director
Energy Security and Climate Change Program
President Biden made only passing mentions of climate and energy in the State of the Union address. Climate went almost unmentioned. On energy policy, he focused on reducing consumer costs and fighting inflation. At a moment when energy markets are reeling from the aftershocks of the Russian invasion of Ukraine, this was a missed opportunity.
In the week after the invasion began, energy security had a moment. Europe looks set to upturn decades of energy policy, aiming to diversify its gas supply and accelerate efforts toward decarbonization. On this side of the pond, members of both parties have emphasized that revenue from Russia’s energy exports have emboldened Putin’s brazenness. For Democrats this is reason to accelerate the United States’ own decarbonization and for Republicans it is a reason to ease restrictions on domestic oil and gas production and promote exports. The president could have said that we need an effort to do a bit of both, building bipartisan support for a clean and abundant energy agenda that would promote energy security and decarbonization.
On the supply side, U.S. production can help to enhance global energy security. U.S. liquefied natural gas (LNG) exports have been essential to Europe this winter and could be essential to shifting away from Russian supply. Raising production from the United States can help soften markets and reduce oil revenues for Russia in the long term. U.S. shale production can cycle up quickly, but after a sustained period of capital discipline in the shale sector, something needs to precipitate action. The White House can amplify the market’s call. Public messaging could encourage investors and producers or convince their bankers. Interim measures, like accelerating drilling permit approvals or a potential royalty holiday, may help increase output without sacrificing long-term climate goals. New production will need to meet the highest standards for methane emissions, in line with new standards the U.S. Environmental Protection Agency (EPA) proposed last November.
Demand-side policies to reduce petroleum use fit more neatly with the Biden administration’s long-term climate goals and provide a new selling point for reducing emissions. Take the transportation sector. According to Rhodium Group analysis, Biden’s goal of reducing emissions by 50 percent by 2030, will require transportation sector emissions to fall by 250 million metric tons of CO 2 equivalent per year. Policy support could come from the electric vehicle tax credits in the Build Back Better plan and strong efficiency standards set through the EPA. Pursuing those emissions reductions is the equivalent of removing 1.5 million barrels per day from demand. That is not enough to completely restructure global oil markets away from Russia in the next 10 years, but it would be a meaningful change that would portend further reductions in the 2030s.
It is unrealistic to expect anyone to fundamentally change the politics of climate and energy here in the United States. However, the ground may be softened for a conciliatory approach that would capture the benefits of U.S. production at the same time as it builds agreement toward long-term goals.
Michael Catanzaro
Senior Associate (Non-Resident)
Energy Security and Climate Change Program
It’s unsurprising that President Biden is adhering to his climate and energy agenda—a fact made clear in his State of the Union address. One may quibble with the substance and tone of his speech. But one can’t begrudge a president who, having campaigned on an ambitious climate policy platform, believes that, with time and the bully pulpit, he can bring the country along to support it, even during times of crisis.
These are fraught times, to be sure. The geopolitical unrest sparked by Russia’s unprovoked war of aggression against Ukraine has inspired freedom-loving partisans the world over. But it has also intensified discussions about the content and pace of the energy transition, not only in Europe, but across the globe, and especially here in the United States.
For policymakers here, the preeminent question of the day is: What role can and should the United States play in helping Europe disconnect from Russian energy? At the risk of oversimplifying, Republicans and Democrats have fallen into predictable grooves: the former, advocating for increasing LNG exports to the continent; the latter, arguing for accelerating decarbonization efforts and promoting renewable energy, here and in Europe.
Is there any hope for middle ground? President Biden suggested no such prospect for compromise in his speech. However, that should not mean all hope is lost. LNG exports are a critical step toward decarbonization efforts, and they are not hostile to, by any means, helping Europe continue its preferred path toward greater renewable energy penetration.
Russia’s war against Ukraine means that it is decision time for policy antagonists to find common ground on energy. The stakes should never have been ideological. But no matter: they are now about freedom and democracy itself. Could that fact be enough to spur Congress to act? One can only hope.
Kyle Danish
Senior Associate (Non-resident)
Energy Security and Climate Change Program
President Biden’s references to climate policy during the State of the Union were fairly constrained. After he campaigned so vigorously on the subject, and in the wake of the terrifying new report from the IPCC, one might have expected bolder fare than electric vehicle charging stations and funding for weatherization.
One cause for constraint could be Russia’s invasion of Ukraine. The White House is likely still sorting out what the invasion means for its climate policy initiatives. On the one hand, it presents a case for building up domestic fossil fuel production. On the other hand, it presents a case for getting off fossil fuels altogether. These two imperatives play out at different timescales and with different distribution of costs.
Even before Putin’s invasion, however, Biden was finding his climate policy agenda hemmed in by the other two branches. In the legislative branch, the Build Back Better Act is dead, and Democrats have not yet found a way to work with Senator Joe Manchin (D-WV) to reanimate its climate policy components—including hundreds of billions of tax credits and other funds for carbon-free energy, transmission lines, electric vehicles, and industrial decarbonization.
At the same time, the judicial branch appears poised to clip the wings of the EPA. The day before the State of the Union, the Supreme Court heard oral arguments in a case involving the extent of the EPA’s authority to regulate power plants, which account for a third of U.S. greenhouse gas emissions. The six conservative justices evinced clear discomfort with the extent of the EPA’s asserted powers but seemed unsure of what legal theory they should use to limit them. Regardless, it seems likely that the court will limit them in some way, further complicating the Biden administration’s efforts to decarbonize the economy.
Sarah Emerson
Senior Associate (Non-resident)
Energy Security and Climate Change Program
The annual State of the Union speech is an opportunity for the president to address today’s realities and lay out objectives for the future. President Biden was at his best addressing today’s gravest reality, the Russian invasion of Ukraine. After that, his long list of policy initiatives made him sound more like a legislator than an executive. Within both his strategy toward Russia and his legislative agenda, however, there were themes that have implications for energy.
Most pointedly, the president announced the successful agreement among 30 countries to release 60 million barrels of strategic oil reserves. This volume was expected and, although the United States will provide the lion’s share of the oil, the effort to recruit as many as 29 other countries reflects the president’s commitment to multilateral solutions, a distinct departure from his predecessor. The strategic stocks will soften the blow that financial markets have leveled at the oil market. But more importantly, countries get used to multilateral collaboration, and perhaps the united efforts of so many countries in sanctioning Russia will encourage collaboration on other difficult global issues like climate. Time will tell, but success breeds imitation.
Another theme in the president’s speech was making goods in the United States, whether they are steel, semiconductors, or clean energy technologies. For the energy sector, it was hard not to note the omission of U.S. oil and gas exports, which are U.S. goods that are playing a critical (and possibly larger) role in addressing the market impact of the Russian invasion of Ukraine, including surging gasoline prices and rising inflation.
Energy is a great example of the sometimes-awkward handshake between addressing today’s realities and tomorrow’s aspirations. Why not acknowledge and commend both the rise in U.S. LNG exports to Europe and the successful $4 billion auction of wind leases in the waters off the shore of New York?
President Biden neglected to articulate a path forward that openly leverages the resources of today while preparing the economy for the resources of tomorrow, missing the opportunity to provide some clarity that would encourage appropriate levels of investment in all energies.
Jane Nakano
Senior Fellow
Energy Security and Climate Change Program
Climate and clean energy were not a main focus of the State of the Union address, but President Biden’s climate-related comments underscored how climate action can be a catalyst for stronger economic and energy security. What the White House wants and the nation needs from the Congress is well known: means to secure our clean energy supply chains. Just last week, the administration released key strategies to “secure America’s position as a clean energy superpower,” along with deep-dive assessments of supply chains for a host of technologies. These ranged from more familiar clean power generation technologies, such as solar photovoltaic (PV) and wind, to those that are lesser known but could shape the future of our energy system, such as carbon capture materials, energy storage, and high-voltage direct current. The administration’s recommendations to Congress include enacting legislation to provide tax incentives that support domestic clean energy manufacturing and deployment, appropriating funding to strengthen domestic critical material supply through the Defense Production Act, and broadening the innovation requirement under Title XVII of the Energy Policy Act 2005 to include supply chain investments that support innovative clean technologies.
The prevailing energy security crisis in Europe and the Intergovernmental Panel on Climate Change (IPCC) climate impact report released a few days ago have only magnified the dual importance of securing clean energy supply chains and expanding clean energy technology use. The Biden administration is well on track to redefining the notion of energy security to include having secure clean energy supply chains and refurbishing federal institutional capabilities to put the nation in a position to not only survive but succeed. It is time for Congress to act. Inaction would have dire consequences for the nation’s energy security and climate resilience as well as economic competitiveness for generations to come.
Ethan Zindler
Senior Associate (Non-resident)
Energy Security and Climate Change Program
When it came to energy issues, President Joe Biden’s State of the Union address left both environmentalists and energy security hawks wanting more.
The president’s 62-minute address included only two very glancing references to climate change. Why climate took a back seat was obvious—the first land war in Europe since World War II represents an unprecedented threat to global peace and stability. And the United States is experiencing the worst bout of inflation in decades. Both are no doubt more top of mind for more voters in this fall’s midterm U.S. elections.
On Monday, Biden uttered “climate” just twice. With the passage of last year’s infrastructure law, he said, “We’re done talking about infrastructure weeks. We’re now talking about an infrastructure decade.”
That will mean billions in federal spending, highways, roads, and bridges fixed. “And we’ll do it to withstand the devastating effects of the climate crisis and promote environmental justice,” he said, according to text released by the White House.
Later, the president sought to revive components of the now-failed Build Back Better legislation, which contained a slew of proposed tax credits for clean energy.
“I call it building a better America,” he said. Among his goals: “Cut energy costs for families an average of $500 a year by combating climate change.” He went on to state the goal of doubling the renewable power build in the United States—something unlikely to be achieved without new legislation to extend existing tax credits.
The president began his speech just as both West Texas Intermediate (WTI) and Brent oil prices were approaching $110 per barrel for the first time in eight years. That development, plus the war in Ukraine, left the door wide open to a discussion of how to improve energy security, even how to bolster it through further deployment of renewables, energy efficiency measures and—most directly related to oil consumption—higher electric vehicle sales.
For decades, presidents have used the State of the Union addresses to call for greater energy security, or even the ever-elusive “energy independence.” But Biden did not take the bait. Rather, he mentioned that the United States would release 30 million barrels from its strategic petroleum reserve and had convinced 30 other nations to release 60 million barrels from their reserves.
There was no talk of accelerating the switch to cleaner, domestic sources of power that are more energy secure because their fuel sources—the wind and sun—are always available domestically; no talk of accelerating electric vehicle adoption since the cars run exclusively on locally produced power; and no mention of asking Americans to show solidarity with Ukraine by using just a little less energy of all kinds to help ease prices.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2022 by the Center for Strategic and International Studies. All rights reserved.