The US path to carbon neutrality by 2050 put forth by the current administration will require an alignment of new technology, regulations and markets. Despite the energy-related executive orders signed during the first weeks of Joe Biden’s presidency, at the national level there are no substantial measures yet implemented with respect to lowering GHG emissions. Announcing an official target for lowering GHG emissions to 50-52% levels of 2005 by 2030 is an initial step on the overall strategy. However, there are still major challenges in terms of finding political agreement and drafting the necessary legislation that will support this major policy shift, says GlobalData, a leading data and analytics company.
Adrian Lara, Senior Managing Oil & Gas Analyst at GlobalData, comments: “This is great in signalling to other countries that the US is serious about these goals, however, a significant amount of direct and indirect financing is required to make this happen. All this needs is a political agreement with a legislation that is not subject to change every time there is a new administration in power. Currently, it is not obvious that the US congress will easily find common ground, particularly on how to finance the US$2.3 trillion that President Biden has outlined as the basis for investing in infrastructure and research, all connected in part to the country’s energy transition.”
Also, it is important to note that by contrast to the clear support for renewable energy investment, sectors such as oil and gas still face a potential disruption where some of its core activities such as hydraulic fracturing can be increasingly banned. Other activities can be directly taxed based on CO2 emissions. Although oil and gas operators are starting to align in committing to lowering emissions by reducing flaring volumes and using their carbon capture expertise, it seems reasonable to assume that the sector will want to smooth this transition as much as possible. Many jobs and the bulk of the industry revenue will depend on being able to produce oil and gas.
Lara continues: “What is clear is that the US needed to come back and be part of the leading nations whose policies are shaping the pace and content of energy transition. The objective is not only for creating jobs in the short term by directly investing in selected sectors, but for the US economy to become more productive and internationally competitive in the long term, as these investments support new market value chains that give the US some leading advantage. The details on whether this will be financed by corporations or potentially by consumers through, for instance, gasoline taxes, are still to be defined.”
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US GHG emissions drop could disrupt oil and gas sector: GlobalData
Lowering US GHG emissions disruptive to oil and gas sector if direct bans or taxes implemented
The US path to carbon neutrality by 2050 put forth by the current administration will require an alignment of new technology, regulations and markets. Despite the energy-related executive orders signed during the first weeks of Joe Biden’s presidency, at the national level there are no substantial measures yet implemented with respect to lowering GHG emissions. Announcing an official target for lowering GHG emissions to 50-52% levels of 2005 by 2030 is an initial step on the overall strategy. However, there are still major challenges in terms of finding political agreement and drafting the necessary legislation that will support this major policy shift, says GlobalData, a leading data and analytics company.
Adrian Lara, Senior Managing Oil & Gas Analyst at GlobalData, comments: “This is great in signalling to other countries that the US is serious about these goals, however, a significant amount of direct and indirect financing is required to make this happen. All this needs is a political agreement with a legislation that is not subject to change every time there is a new administration in power. Currently, it is not obvious that the US congress will easily find common ground, particularly on how to finance the US$2.3 trillion that President Biden has outlined as the basis for investing in infrastructure and research, all connected in part to the country’s energy transition.”
Also, it is important to note that by contrast to the clear support for renewable energy investment, sectors such as oil and gas still face a potential disruption where some of its core activities such as hydraulic fracturing can be increasingly banned. Other activities can be directly taxed based on CO2 emissions. Although oil and gas operators are starting to align in committing to lowering emissions by reducing flaring volumes and using their carbon capture expertise, it seems reasonable to assume that the sector will want to smooth this transition as much as possible. Many jobs and the bulk of the industry revenue will depend on being able to produce oil and gas.
Lara continues: “What is clear is that the US needed to come back and be part of the leading nations whose policies are shaping the pace and content of energy transition. The objective is not only for creating jobs in the short term by directly investing in selected sectors, but for the US economy to become more productive and internationally competitive in the long term, as these investments support new market value chains that give the US some leading advantage. The details on whether this will be financed by corporations or potentially by consumers through, for instance, gasoline taxes, are still to be defined.”
Staff Writer
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and... More by Staff Writer
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