PLANNING FOR THE FUTURE
As the U.S. presidential election draws closer, the candidates have begun to crystallize their positions on various major issues, one of which is energy. On that front, the plan of presumptive Democratic nominee Joe Biden, published on his campaign website, would mark a drastic change of course from that of the current admin-istration. Of course, Biden still needs to win and gain support in the new Congress. Nonetheless, companies and other energy con-sumers should be ready for all possibilities, and having thorough knowledge of his proposal is key.
Biden’s hope is to make the U.S. carbon-neutral by 2035, a goal far more ambitious than that of even the most progressive state policies currently in place. Many states and utilities already have carbon-free objectives of their own, but most shoot for 2045 or lat-er. Therefore, a President Biden could end up exerting significant political pressure directly on ISOs and utilities to realize this dream, especially if Congressional approval is hard to come by.
To be clear, carbon neutrality does not mean the complete elimi-nation of coal and natural gas; the country could achieve it by simply offsetting carbon emissions with carbon removal measures, such as reforestation and charging stations for electric cars. To finance such initiatives, Biden, just in his first term, wants to invest $2 trillion, a sum much more aggressive than his earlier call for $1.7 trillion in investment over 10 years. The spending would be spread among several industries, including clean-energy technolo-gies and building efficiencies.
With more government support for renewables and innovations in energy storage, energy prices could definitely fall in the long term. On the other hand, the rapid influx of renewables, such as wind and solar, and increasing reliance on them could also invite more price volatility—especially in peak times—as natural gas and coal facilities remain the balancing plants whenever wind and solar en-counter their customary wild fluctuations in availability. The energy industry already faces this risk as renewables have continued to take center stage in the 21st century.
Ideally, Biden’s massive investment would work its way through the entire U.S. energy industry to squeeze the greatest cost effi-ciency out of electric grids when wind and solar are lacking, but that future is not guaranteed. Although every company’s strategic goals differ, flexibility and decisiveness will be universally indispen-sable, however the winds will shift. Being fully informed of how the country’s potential future leader plans to shape its energy land-scape can only help firms in their future effort to save on energy costs.