President Joe Biden wasted no time this week in beginning to make good on one of his key campaign promises — eliminate power generation from fossil fuels by 2035.
Just hours after his inauguration Wednesday, the 46th president signed an executive order for the United States to re-enter the 2015 Paris Agreement. Less than 24 hours later, he placed a 60-day moratorium on new federal oil and natural gas leases and permits.
The Paris Agreement has been signed by more than 180 nations with a goal of reducing the world’s carbon dioxide emissions from coal-fired power plants by 32% from 2005 levels by 2030. Becoming part of the agreement was one of the final high-profile commitments made by President Barack Obama’s administration.
It also was one of the first targets of President Donald Trump’s administration. He didn’t waste much time pulling the U.S. out in 2017 and defended the move throughout the rest of his term.
While Biden’s executive order made a splash as one of his first moves as president, putting the United States back into the climate change agreement doesn’t mean a huge shift for America’s energy industry in practical terms, said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming College of Business.
That’s because even without being in the Paris Agreement, the competitive marketplace and energy industries are adjusting on their own to reduce CO2 emissions, he said. The result is that even without being in the agreement, the United States already is close to some of the emissions benchmarks outlined in it.
“We’re certainly closer to those than we would’ve thought we’d be five years ago,” Godby said.
As power producers continue to retire coal-fired power plants ahead of schedule and take that generation out of the picture, renewables are gaining a larger piece of the pie to the point of now making up the majority source of U.S. electricity. That’s resulted in an accelerated reduction in CO2 emissions from coal plants.
It also means that while coal is often targeted as the greatest CO2 offender, natural gas may start gaining more attention. The underlying impact of the agreement could be more regulation of and pressure on natural gas-fired generation.
“If we’re going to try and meet the Paris accord, right now gas might be where coal was,” Godby said. “You can argue indirectly that renewable energy subsidies have accelerated their advantage, but could we have a more holistic energy policy that considers all of the above with the driving aspect of control of emissions rather than source of energy?”
What does it mean for the Cowboy State?
For Wyoming, renewing the commitment to the Paris Agreement and the 60-day moratorium signals another paradigm shift in U.S. energy policy that’s toyed with the Powder River Basin and the thousands of workers reliant on it like an emotional yo-yo.
Anticipating Biden’s policy shift, many companies worked to secure leases and permits before Trump left office, said Paul Hladky, vice president of Gillette-based Cyclone Drilling.
Hladky questions the legality of halting energy exploration on federal lands because agencies are legally tasked with maximizing the value of the public’s resources.
“The responsibility is show profits for stockholders and provide a domestic energy source. They’re obligated to do that,” he said. “Don’t begrudge an oil and gas company, or the government, for trying to maximize for its investors, which is the people of the United States.”
He also said that while policy plays a key role in shaping the direction of the nation’s focus on energy, the marketplace has more actual impact. That many people outside energy-producing communities like Campbell County don’t know much about where their energy comes from is another challenge.
“There’s a real disconnect in where our energy comes from and how it’s produced,” Hladky said, likening it to people thinking their food comes from grocery stores and not farmers and ranchers. “It’s really market driven, but policy does play into that.”
While the overall goal of the agreement is a 32% CO2 reduction, individual states have different benchmarks within that. For Wyoming, it’s 44%.
It also puts the United States at a competitive disadvantage, said U.S. Sen. John Barrasso, R-Wyo.
Barrasso responded quickly to Biden’s Paris Agreement order.
“A return to the Paris climate agreement will raise Americans’ energy costs and won’t solve climate change,” he said in a prepared statement. “Under the agreement, the Biden administration will set unworkable targets for the United States while China and Russia can continue with business as usual.
“It will result in spiking electricity bills and higher prices at the pump. These are additional burdens during a particularly tough time for Americans and for every small business. It hurts America’s competitiveness and gives a free pass to our adversaries.”
Barrasso also said Biden and the accord itself are misleading in perpetuating that the United States is the world’s leading driver of climate change. In fact, China is by far the largest CO2 offender, accounting for more than 40% of the world’s carbon dioxide emissions.
“It hurts America’s competitiveness and gives a free pass to our adversaries,” Barrasso continued. “The Paris climate agreement is based on the backward idea that the United States is a culprit here, when in reality the United States is the leading driver of climate solutions.”
The Petroleum Association of Wyoming is concerned that the Paris Agreement will be just the tip of the iceberg of the new administration’s attempts to curb oil, gas and coal development in the U.S. That may look good on paper in Washington, D.C., but impacts real people and families in communities that rely on those industries, according to a statement responding to Biden’s executive order.
“We must remember that we are Americans first and participate in the debate with civility,” the statement says. “Over the next four years, the Petroleum Association of Wyoming will vehemently challenge the administration when its policies seek to impede the natural gas and oil industry.”
It goes on to say the challenge now is to “educate officials on the positive impacts industry has on Wyoming from the halls of the Legislature down to the individual classroom and work with the president when our goals align.”
At the Wyoming Mining Association, officials are expecting the next four years “is going to be a tough time for us,” said executive director Travis Deti.
“When President Biden campaigned, he was very clear about his aversion to coal and fossil fuels,” he said. “We fully expect him to make good on those (promises).”
Deti described the eight years of Obama’s presidency, when Biden was vice president, as “challenging” for coal and other extraction industries. Biden seems more inclined to go farther than that, he said.
“We expect the Biden administration to do even more. Candidate Biden said very frankly that coal and oil and gas didn’t have a place at the table in his energy plan going forward and we fully expect him to act on that,” Deti said.
That action began with Biden’s first raft of executive orders. In addition to committing again to the Paris Agreement, he also terminated a federal permit allowing for construction of the Keystone XL pipeline, a multi-billion dollar project in Canada and United States.
Then on Thursday, the new president doubled down on his pledge to curtail new oil and gas exploration on federal lands and eliminate the practice of leading public-owned energy reserves. In a move that went into effect immediately, Biden put a 60-day suspension on new oil and gas leasing and drilling permits on federal lands and waters.
To kill the pipeline project now after a decade of work and billions of dollars spent is a misguided mistake, said U.S. Rep. Liz Cheney, R-Wyo.
“The executive orders President Biden signed (Wednesday) unfortunately don’t move us in that direction” of national healing, she said in a prepared statement. “Rejoining the deeply flawed Paris climate accord and blocking the Keystone XL pipeline will eliminate jobs, increase the cost of energy and embolden our adversaries.”
She also had harsh criticism for the drilling and permit moratorium.
“This order from the Biden/Harris administration is deeply misguided and would have severe ramifications in Wyoming,” she said in a statement reacting to the move. “At a time when we need to be doing everything possible to support our energy producers and our economy, prohibiting BLM offices from leasing and permitting will negatively impact so many hard-working families who rely on the national treasures in our state to make a living.”
Deti said it’s difficult for people in Wyoming to not take the policies personally.
“There seems to be no regard for jobs, for families, for affordable energy in America,” he said. “It’s going to be tough, but we’re going to fight. We’re going to fight for the coal jobs and do whatever we can.”
After decisions to rejoin the Paris Agreement and halt drilling, Barrasso was blunt in saying that “the Biden administration is off to a divisive and disastrous start.”
The president’s moves are in line with promises he made to roll back many of the energy-friendly policy changes made under Trump’s direction. But to penalize people and companies who have already followed the legal process for those leases and permits seems punitive and wrong, Barrasso said.
“Wyoming and other western states have oil and gas lease sales scheduled,” he said. “Several of these lease sales will be held in the next 60 days. Slowing these projects down will kill jobs for hardworking Americans and reduce a critical source of revenue to states like Wyoming.”
As much as Biden has maintained that COVID-19 pandemic relief and action is a top priority, his aggressive energy moves now seem counter to that goal, he said.
“As the nation recovers from the COVID-19 pandemic, President Biden is handing out pink slips on Day One,” Barrasso said. “The decision to try to halt these projects without process is not just ill-advised, it’s illegal. The Department of the Interior has a legal obligation to act on drilling permit applications after 10 days. Staff memos cannot override the law.”
If President Biden wants to cross political boundaries and unite a deeply divided nation as he said in his inauguration address, he’s going about it the wrong way, said Sen. Cynthia Lummis, Wyoming’s new junior congressional member.
“A mere 24 hours ago, President Biden stood before America promising to unify our nation,” she said in a press release responding to the energy orders. “Yet on Day One, he took divisive actions to devastate Wyoming’s economy. Make no mistake about it, the ‘Biden Ban’ is a strike on the heart of Wyoming jobs, families and communities. His actions to appease the radical left will be borne disproportionately on the shoulders of states like Wyoming with high amounts of federal lands.”
Lummis also said she plans to introduce legislation soon aiming to stop Biden’s orders.
“This unilateral action will kill jobs, raise gas and energy prices and further harm our ability to fund our schools, roads, hospitals and other critical infrastructure,” she said. “The price of this ban is simply one the people of Wyoming cannot afford.”
How Biden and his administration sell his policies to energy communities is only the first step, Godby said. And it’s not getting off to a smooth start. It’s not enough to just be anti-fossil fuels. Any plans also must include how to transition those workforces when their jobs are targeted.
“Some of the things of interest for Wyoming need to be presented in a way they haven’t been before,” he said. “Coal’s kind of been seen as the dead man standing at this point. It’s seen as not very relevant now and less relevant in the future.
“The real change is not going to be in any major ideas. Those are already out there. Now it’s about changing the direction and tone of the debate to make it more open and less partisan. What is the tone this administration will strike? Are they willing to compromise and work with the communities in a way that recognizes their concerns?”
That’s the rub. While Wyoming and the Powder River Basin know coal is on the decline, the emotional toll of that has been as devastating as the economic one.
The only sure thing is that no matter which administration is deciding U.S. energy policy, coal’s decline is driven by the marketplace first, Godby said.
“The bottom line is with President Trump, if you were going to get an administration that was friendlier to coal, you’d be hard-pressed, at least by the promises that were made,” he said. “But clearly, that didn’t reverse the course of coal’s decline.”
Any work to move the United States away from coal, oil and gas also must include asking “what now?” for those communities every step of the way.
“Along with all that, what kind of climate change policies, like carbon management, are going to be enacted?” Godby said. “Biden made a big point about being inclusive and reaching across to everybody. How could that work in the energy sector?
“Probably for coal, that would mean commitment to research on how to maintain coal and commitments to support the communities with transition. It’s not like we have to give up on coal, but let’s face it, there’s been a lot of impact on that already. The thing about Wyoming is the affected communities are almost the entire state.”
The initial executive order on the Paris Agreement is expected to be just the beginning for Biden’s energy policy shift, Godby said. He expects to see more orders that could target oil and natural gas, like moratoriums on drilling and fracking permits. Recent federal energy leases also could be reviewed.
What that means for the Powder River Basin and other Wyoming communities is making some unpleasant choices about trying to work with the new policies, Godby said.
“I think we have to give this administration a chance, something people won’t want to hear in a lot of cases,” he said. “But if we’re not at the table, we could lose in the long run. If we’re just dismissive of administrations we don’t like — on either side — we’re in for more of the same.”
For local businesses like Cyclone Drilling, political administrations come and go and policy shifts with them, Hladky said. The real secret to success is being the best so that, whatever state the market is in, you’re the first choice.
“At the end of the day, I can only control what happens in the doors of my business,” he said. “I want to be the best at what I do so the market is coming to me.”
Bids to build a carbon research facility in Campbell County could go out as soon as early next month.
Phil Christopherson, executive director of Energy Capital Economic Development, said the Economic Development Administration is reviewing bid documents for the Wyoming Innovation Center, which should be complete next week. And in early February, he expects to send bids out for construction of the facility.
The Wyoming Innovation Center, formerly known as the Advanced Carbon Products Innovation Center, will be located on 9.5 acres of land at the former Fort Union mine site 4 miles north of Gillette along North Garner Lake Road.
When completed, it will give researchers a place to test the commercial viability of technologies that have been proven in a lab.
“We’re fairly confident that by the time that we open the doors, we may be full,” Christopherson said.
The University of Wyoming School of Energy Resources has committed to bring three projects to the Wyoming Innovation Center.
The project is being funded by a $1.5 million grant from the Wyoming Business Council and a $1.46 million grant from the Economic Development Administration. But there also is funding from the city and the county.
In 2019, Christopherson asked the county and city for $176,000 each to help pay for equipment.
To get the EDA grant, which ensured the project would be adequately funded, the EDA required that the city and county each commit to a local match to pay for equipment bought for the project.
While a $1.5 million Wyoming Business Council grant provided most of the matching funds for the project, the state’s rules don’t allow the grant to fund equipment, which is why there’s a need for a local match. The city set aside $176,000 for the project, but the county decided to wait.
“The commissioners at the time said, ‘When you need the funding, come back and talk to us and make that request,’” Christopherson told commissioners Tuesday. “That’s why we’re here today. We need that money now.”
The $176,000 is not in the budget for the current fiscal year.
“It was an oversight that it wasn’t put in our budget in 2019, and we missed it in 2020 also,” said Commissioner Rusty Bell.
On Tuesday, the commissioners unanimously committed to the $176,000, but they reminded Christopherson that it won’t be finalized until its fiscal year 2021-22 budget is approved this summer.
Commissioner Del Shelstad said the county has to be all-in on the Wyoming county consultant. As long as the money is available July 1, the project should be able to move along as planned.
The equipment will give the facility the ability to take coal from mines and power plants and process it for tenants at the Wyoming Innovation Center. That includes crushing, milling, screening and sorting the material.
Christopherson applauded the county for supporting the project from the beginning.
“The commissioners jumped on board immediately, saw that this is a great path forward for our county. The City Council did as well,” he said. “Without your strong support, we would have nothing.”