Biden’s Progressive Energy, Environmental Policies Face Barriers In U.S. Senate

While President Trump’s legal challenges to the election results remain ongoing, EMA fully expects that on Inauguration Day – January 20, 2021 – President-elect Joe Biden will take the oath of office.

Broadly speaking, with Republicans expected to maintain a slim US Senate majority and a reduced Democratic House majority, President-elect Biden’s policy agenda will face many obstacles.

That said, the final Senate makeup will not be determined until January 5, 2021, when Georgia holds two Senate run-off elections for seats currently held by Republican incumbents.

Neither party will have a 60-vote super-majority in the Senate no matter the outcomes in Georgia, meaning bipartisan support will be necessary to advance legislation in Congress.

As such, the Biden campaign’s bold climate and energy agenda will need to morph into modest proposals that can garner Republican support.

Similarly, to secure the 51 Senate votes necessary to confirm cabinet positions, President-elect Biden may look to more moderate cabinet nominees.

On Wednesday, Senator John Barrasso (R-WY) announced his decision to serve as Chairman of the Senate Energy and Natural Resources (ENR) Committee.

With Senator Joe Manchin (D-WV) as ENR Ranking Member, lawmakers from the two largest coal-producing states will lead the powerful committee.

Combined with Senator Shelly Moore Capito’s (R-WV) anticipated role atop the Senate Environment and Public Works Committee, a Republican-controlled Senate will present major barriers to President-elect Biden’s more progressive energy and environmental policies.

Regardless of Senate control, President-elect Biden is expected to use his executive authority to rejoin the Paris climate agreement; attempt to significantly limit leasing of federal lands; and reverse many of the Trump Administration’s regulatory rollbacks.

As EMA looks to 2021, it will be important to keep a close eye on the role states, and likely the US Judicial system, play in defining the future of energy policy.

California Governor Gavin Newsom’s recent executive order sets a goal to ban the sale of new gasoline powered vehicles by 2035, and a goal of requiring medium- and heavy-duty trucks to be zero emission by 2045 “where feasible.”

To enact such stringent policies, California would need approval from the EPA. Even if the EPA grants approval via a Clean Air Act waiver or the like, the California approach will face legal challenges by automakers.

Opponents will challenge the California restrictions on various legal grounds, which could include: the federal government’s authority under the US Energy Policy and Conservation Act, the US Constitution’s Commerce Clause, and additional federal pre-eminence arguments.

Enforceability of the order will be decided in the courts and may merit review by the US Supreme Court’s 6-3 conservative majority.

Meanwhile, President-elect Biden is on record in support of CAFE standards and the Biden Administration will likely seek an increase.

The Trump Administration finalized a rollback of the standards to require a 1.5 percent annual increase in fuel efficiency through 2026, far below the Obama Administration’s 5 percent requirement.

California secured agreements with Ford, Honda, and Volkswagen for the companies to pursue a balance of the standards offered by Presidents Obama and Trump.

The California approach could serve as a model for the Biden Administration.

On the RFS front, President-elect Biden strongly supports it and often criticized the Trump Administration’s handling of the program.

Biden is likely to grant less small refinery exemptions (SREs) compared to President Trump.

Granting less SREs will likely keep the corn ethanol mandate intact which results in higher RIN values and an unlevel playing field in the motor fuels market.

Biden is likely to pursue efforts to help the US achieve a 100% clean energy economy and net-zero emissions no later than 2050 including markets for GHG allowances, renewable energy certificates (RECs), and potentially (though unlikely) low-carbon fuel standard (LCFS) credits.

Attempts to deploy a cap-and-trade like or a carbon-tax system is likely to face stiff GOP opposition.

An argument can be made that GOP lawmakers in the Midwest could possibly try and cut a deal with Biden to protect corn-based ethanol interests in a LCFS world but that would likely cause an uproar with the environmental lobby who view ethanol as environmentally inferior.

If Congress cannot agree on an RFS replacement, then EPA will take over, with authority to set RFS volumes at their own discretion starting in 2023 and future years.

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