With less than 60 days before United States presidential election, Democratic presidential candidate Hillary Clinton and Republican presidential candidate Donald Trump propose two opposed energy policies, as well as two very different points of view concerning climate change.
It is worthwhile to point out that the candidates’ energy platforms do not seem to represent a priority; according to what has been observed in their presidential campaigns. Their global political strategies are more focused on issues such as immigration and foreign policy.
Hillary Clinton emphasizes the importance of increasing the share of renewable energy at the expense of fossil fuels and she acknowledges that climate change is a real issue; whereas, Donald Trump insists that he is “not a believer on climate change”, claiming that the extreme weather patterns that scientists attribute to man-made actions are simply “weather”. Trump also said "It's called weather changes and you have storm and you have rain and you have beautiful days". Tweets from Trump suggests he believes the concept of global warming is a Chinese creation designed to make U.S. manufacturing non-competitive.
On September 3rd 2016, the United States and China announced that they had ratified the Paris climate accord. A deal which Donald Trump has vowed to cancel if he is elected U.S. president. Doing so would be difficult and certainly unprecedented. Due to the fact that Article 28 of this accord states that once the agreement enters into force, any country that has ratified will have to wait at least three years before it can formally start the process of withdrawing, which would require a further year to be effective. In practical terms, it will take a presidential term.
Hillary Clinton emphasizes the importance of enlarging the share of renewable energy, eying a target of 25 percent of the total U.S. energy mix by 2025 while proposing to cut subsidies for oil and gas producers and toughen fracking regulations. Hillary’s proposal seems to be a comprehensive and detailed extension of current Obama’s energy and climate policies. Her motto published on her website is “taking on the threat of climate change and making America the world’s clean energy superpower.” Clinton plans to do so by cutting one third of U.S. oil consumption, and installing 500 million solar panels by the end of a hypothetical eight-year presidency. Perhaps the most prominent part of Hillary’s policy is a $60 billion Clean Energy Challenge aimed at expanding the role of renewables; including transitioning communities that have relied on traditional energy production for jobs, such as coal.
On May 26th of this year, Donald Trump gave a speech at the heart of America’s oil and gas boom in North Dakota, in which he pledged to make the United States fully energy-independent by reducing U.S. dependence on foreign oil and rolling back environmental regulations, restricting oil and natural gas exploration. Trump has vowed in his campaign to save the U.S. coal industry after years of bankruptcies and worsening job prospects for coal miners. On Wednesday August 10th, Trump declared that miners have one “last shot” in this presidential election, insisting that the coal industry will be nonexistent if Hillary Clinton wins the election. The speech addressed U.S. miners who held up banners that said “Trump digs coal.” The coal market, however, is competing directly with natural gas and renewable energy sources, even as federal regulations push the U.S. away from fossil fuels. The reality is that this shift is driven by market forces, with the natural gas boom leading power companies to purchase cheaper gas rather than coal. In any case, it would appear that saving the coal industry and putting oil and gas workers back to work will be hard to achieve while natural gas continues to take market share from coal. U.S. mines for example produced around 900 million tons of coal last year, indicating a steep decline of nearly 25 percent since 2008. Coal production in the U.S. is now at its lowest level since 1986 according to data from the Energy Information Administration. Related: Oil And Gas Creditors Recover $1 Of Every $5 On Defaulted Debt
Donald Trump also promised to approve TransCanada’s Keystone XL pipeline expansion, but said he’d also ask for a “big piece of profits.” This project has divided the two political parties; Republicans who generally support it and Democrats, who typically oppose it. Despite lower oil prices, TransCanada stated on its website “TransCanada continues to review its options and remains committed to building the Keystone XL Pipeline.” While President Barack Obama has denied the permit for the project, the company continues to challenge that decision, using NAFTA regulations as an argument.
Fracking is the one issue where the two candidate’s policies overlap. Donald Trump is a long-time supporter of fracking, saying on twitter on May 3rd 2012 “Fracking will lead to American energy independence. With price of natural gas continuing to drop, we can be at a tremendous advantage”. On July 29th 2016 he spoke out in support of local autonomy on the issue, saying that while the country needs fracking, “if a municipality or state wants to ban fracking, I can understand that.”
Despite some of her recent statements, Hillary Clinton can also be seen as long-time supporter of fracking. During her tenure as Secretary of State, her special envoy for international affairs launched the Global Shale Gas Initiative. Since leaving office, she has continued to support fracking while calling for “smart regulations” in speeches and her book Hard Choices. Her position has become somewhat more nuanced on the campaign trail. Clinton detailed her position during the March 6th debate in Flint, Michigan, stating: "I don’t support it when any locality or any state is against it’’, ‘’I don’t support it when the release of methane or contamination of water is present” and she doesn’t support it ‘’unless we can require that anybody who fracks has to tell us exactly what chemicals they are using.” Related: Game May Not Be Over For Barnett Shale
When it comes raising money, the oil and gas sector regularly donated more to the Republicans than Democrats, but this time around, we’ve seen some interesting developments. Hillary Clinton has raised double what Donald Trump managed to raise from U.S. oil and gas according to the Wall Street Journal. At the end of July 2016, employees in the U.S. oil and gas sector had donated $525,000 to Hillary Clinton’s campaign, compared with $149,000 to Donald Trump’s team. Whereas oil and gas companies donated $470,000 to Donald Trump compared to $650,000 for Hillary Clinton; landing at a total of $619,000 for Republicans and $1.175 million for Democrats. This latest fundraising cycle at the end of July highlighted two important points. Firstly, voters will donate to the candidate who they believe has a higher chance of winning the elections. Secondly, Hillary Clinton’s energy policy is more predictable than Donald Trump’s and therefore seems to be more appealing to many key players in the energy industry.
To be energy-independent does not mean to be isolated from the global energy market. Therefore, it’s important for the U.S. to continue to grow its share of oil and gas markets to counterbalance OPEC strategies and, by doing so, become less dependent on the international political and market fluctuations.
The United States can become energy-independent in in the near future with the right energy policies. In order to achieve this energy-independence, it is necessary to develop a combined energy program, meaning that the focus on just one type of energy, being fuels or renewable, at least in the near future is not a solution. In order to achieve a coherent U.S. energy policy for the next years, the future administration requires a balance in the use and development of fossil fuels and renewable energy and job creation within both of these sectors.
No matter who wins the U.S. presidential election in November, they will be compelled to consider the rest of the world’s energy policies.
By Luis Colasante for Oilprice.com
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