US Energy Transition Efforts and the Impact on the Energy Industry

no-banner
November 22, 2021

The Biden Administration successfully passed the $1.2 trillion infrastructure bill and is actively working on the $3.5 trillion, ‘Build Back Better’ budget reconciliation bill, to be voted on in the coming days. Although the bills will invest in the improvement of infrastructures like roads, bridges, and upgrades to the energy grid, each one of these bills will have direct implications for the Energy Industry, as clean energy is the consistent theme in both articles of legislation. Energy companies, both domestic and global, are taking note of the potential impact on the industry with regards to the proposals being considered and how they will impact the industry and energy supply in other parts of the world.

The Infrastructure Bill will provide $73 billion in the energy grid, of which a portion will be applied to improve resiliency against natural disasters and improve capacity for solar as well as onshore & offshore wind energy sources. In addition, $46 billion will be invested in clean energy manufacturing, which will infuse funds for solar and wind industry growth. The Budget Bill, on the other hand, will address clean energy tax credits. The bill may either extend existing tax credits, add new ones, or change the structure altogether, which will affect both renewable and traditional energy companies.

The ‘Federal Clean Energy Standard’ that forces energy companies to increase the amount of energy originating from ‘climate-friendly’ sources, could face potential opposition from both Republicans and moderate democrats and may not pass the Senate because it has no direct impact on budget or revenue. The alternative to the Federal Clean Energy Standard would be a Clean Electricity Payment Program that would incentivize utilities to produce more decarbonized power generation, which is more likely to become a reality.

The concern from international oil companies with this legislation and other mandates around the world is that though the world has agreed to accelerate the energy transition, the world is still heavily reliant on oil and gas. We need to be realistic about energy transition and the eventual phase-out of fossil fuels in the energy resource mix, so we don’t prematurely remove a critical fuel without having built or substantiated alternative energy to replace it. Oil and gas cannot simply be excluded from the energy transition. All possible energy solutions must be considered to cover global energy demand through 2050 or underdeveloped countries will be adversely affected.

Top
Download The Whitepaper TODAYHow Acclaim's Microgrid Solution Saved City of Houston $30+ Million

Discover key learnings to improve energy reliability and capture key savings at minimal cost