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Natural Gas Is Core To The New Energy Economy — The One Created By Joe Biden

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Joe Biden loyally served President Obama, fully supporting his energy and environmental agenda that included limits on greenhouse gases. By extension, those policies pushed green energy and natural gas.

Those positions shrunk the level of heat-trapping emissions while they also lifted the United States USM out of the Great Recession — results that came at coal’s expense. But they unquestionably raised the profile of natural gas and made it the “fuel of choice,” all facilitated by cheap prices and abundant resources.

But natural gas producers, under Obama-Biden, had to ensure the integrity of drinking water supplies and the capture of potent methane releases — all designed to keep the natural gas industry from spoiling its potential. Fracking, or the drilling process that used sand, water and chemicals to retrieve the shale gas from deep underground, had federal monitors in addition to those at the states.

Biden has never wavered from his commitment to natural gas. After all, the fuel makes up the biggest share of the electricity portfolio, or at least 35%. He has emphasized that he has no intention of shutting down fracking. What he did say is that he would oppose new leases to drill on federal lands, emphasizing that the states are free to pursue the policies that they choose while noting that 90% of all such drilling leases are on private land.

“I am not banning fracking, no matter how many times Donald Trump lies about me,” Biden said during a speech this week in Pittsburgh.

Under Biden’s energy plan, he would eliminate CO2 emissions by 2035. He would do this by creating policies that favor green energy — growth that would eventually displace more carbon-heavy fuels such as natural gas. And therein is where the former Vice President must perform a balancing act: about 155,000 people are now employed by oil and gas extraction companies, says the Bureau of Labor Statistics — businesses that are now reeling financially because of the coronavirus. Dozens of producers have gone bankrupt, including Chesapeake Energy CHK , Whiting Petroleum and Echo Energy Partners.

Rich Revenue Stream

This dynamic is starting to play out in key the battleground states of Pennsylvania and Texas, both of which rely on energy production. The western portion of Pennsylvania, for example, incorporates the Marcellus Shale basin, where shale gas supports thousands of jobs and where it creates prosperity and generates tax income. Biden’s speech this week was intended to reassure those folks that his policies would not block that rich revenue stream.

Trump’s political strategy is to muddy the waters. But more broadly, Trump calls climate change a “hoax” and he, therefore, thinks that policies favoring renewables are a waste. He is now trying to reverse the Obama-Biden administration’s policies on CO2 and methane reductions — goals intended to promote fossil fuel production. To that end, the United States has become a net exporter of petroleum and natural gas under his watch.

But despite Trump’s promises to coal country, that industry has continued to lose jobs. In 2012, about 90,000 coal mining jobs existed, says the Bureau of Labor Statistics, adding that it is about 46,000 now. As more and more coal plants retire, that number is bound to fall further. That is because natural gas is cleaner to burn and cheaper to produce while green energy usage is proliferating among corporate buyers.

The trend globally is toward sustainability. Bloomberg BNEF released a study yesterday that says rooftop solar production is increasing at exponential rates — from Australia to India to Italy to Namibia to the United States. In 2019, 118,000 megawatts were added. Between 2010 and 2020, solar power climbed from about 44,000 megawatts to 651,000 megawatts.

“Sharp declines in solar equipment costs, namely the modules that go on rooftops and in fields, have made this technology widely available for homes and businesses and grids,” says Luisa Demoro, a BNEF analyst. Rooftop solar “is now truly ubiquitous and a worldwide phenomenon.”

Even oil companies recognize those trends, which is why they are investing in green technologies. Europe’s Equinor, Total, Shell and Eni are taking the lead when it comes to making low-carbon investments in ventures such as offshore wind energy and solar power — a trend that is destined to grow as the oil giants seek to diversify their holdings.

Jockey for Position

Yes, the existing fuels are jockeying for a position to feed the electricity market. But for decades to come, the country will need both natural gas and renewables. According to the National Bureau of Economic Research, a one percent increase in “fast-reacting” fossil fuel technologies leads to a .88 percent increase in green energy over the long run; natural gas plants automatically kick on if the sun stops shining or the wind stops blowing.

Biden’s energy plan is thus more forward-looking than that of Trump’s vision. About 500,000 people are now employed in the United States by clean energy companies, says Environmental Entrepreneurs, or E2 — a trend that the former Vice President thinks can take root in all 50 states.

With that, Biden’s energy proposals would cost $2 trillion over four years — paid, in part, by reversing some of Trump’s tax cuts. About 40% of that money would go to disadvantaged communities, such as those impacted by the loss of coal jobs.

“We won’t just build things back the way they were before, we’re going to build them back better with good-paying jobs, building our nation’s roads, bridges, solar arrays, windmills,” Biden says.

Trump may call it a wild-eyed plan. But consider that America’s most conservative electric utilities are on board: Xcel Energy XEL has said it will deliver carbon-free electricity by 2050 while Southern Co. SCCO has set similar goals. NRG Energy NRG , meanwhile, has vowed to cut its CO2 emissions by 50% by 2025 and net-zero by 2050. 

Biden is not an ideologue. He is a consensus builder. He would accelerate the pace of the New Energy Economy, which he created and which has relied not just on green energy but also on natural gas. It’s the same pathway that led the country out of the Great Recession and the one best positioned to remedy its current economic pain.

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