National and global power has shifted since Joe Biden won the race for the White House in 2020. Russia’s invasion of Ukraine has upended global stability and has obviously made security of power the political priority.
Presidential candidates use energy problems to differentiate themselves. The long-term U. S. coal industryThe U. S. and Keystone pipeline have been litmus tests in past campaigns. In 2024, the debate on green policy has evolved. For some, net 0 is now a component of the culture wars, while it remains an ethical imperative for others. The power load at the pump remains high and has also been at the center of inflationary pressures affecting U. S. households. Both applicants will need to present themselves as if they were on the client’s side. .
In a crusade that presents facts and “alternative facts,” we can draw on our North American Energy Transition Outlook to shed light on the opportunities and demanding situations facing the United States.
Hydraulic fracturing is the new coal
Donald Trump used the coal industry to distance himself from Hillary Clinton in 2016, promising to “make coal wonderful again. “A clear study of coal, which is the least effective and most polluting form of electricity generation, would mean that it is not a viable long-term policy given that demand is falling and continues to decline. But the slogan was more about winning votes in key states and this year it seems that fracking, which is very important in Pennsylvania, has a key issue.
Kamala Harris has softened her stance on fracking, after having previously called for its ban, to align with Donald Trump. She can cite the renewed focus on energy security as an explanation for why to keep pumping. Similarly, Donald Trump gave some kind of electric cars after receiving them from Elon Musk.
Since the campaigns operate in binary mode, one would possibly wonder whether America’s long term lies in fossil fuels or renewable energy. What we can say is that fossil fuels are being replaced by renewable energy. According to our report on North America (which includes Canada), coal intake peaked in 2000, oil intake peaked in 2021, and the same will be true for herbal fuel in the next year or two. And although energy exports are reinforced through the geopolitical scenario in Europe, the global scenario is very similar, with the installation of renewable energies being part of the energy call until 2050.
Graph showing the number one energy consumption in North America. This shows that the demand for energy has already peaked. . . [ ] and that the influence of fossil fuels is diminishing. From DNV’s North American Energy Transition Outlook.
What is the objective of the policy?
It is clear from our research that market forces are not fast enough and that unlocking the prospect of power transition requires political intervention. The Inflation Reduction Act has accelerated industries that are critical to the transition. Following the arrival of the IRA, the percentage of solarium as a percentage of combined electricity generation increased from 5% in 2022 to 17% the following year. We also expect a significant increase in green hydrogen from renewables committed through this policy.
Graphic showing how IRA boosts hydrogen production in North America. The forecast for 2022Array. . [+] before the policy was implemented and the increase in production is obviously visual in the forecast for 2023.
What will happen to the IRA at a future time when Trump’s management is less secure. There are signs that OEMs are holding back investment until the political floor is stronger. As it involves building a U. S. industry out of Chinese dominance, a partial repeal of some policies, such as eliminating tax credits for low- and middle-income countries.
Another credible expectation is that a Trump presidency will remove enforcement force from government agencies like the Environmental Protection Agency. A weaker EPA, which sets targets for pollutants, will gain advantages for fossil fuel companies.
Any solution to prolong the sustainability of coal, oil and fuels will end up harming consumers. We expect household energy spending to be halved by 2050, but this depends on replacing more expensive fossil fuels with more efficient electricity from renewable sources.
What to do with China?
The United States has a much tougher attitude toward China and Democrats and Republicans are united on this issue. China is driving the energy transition, producing key assets such as solar panels, wind turbines and electric cars, as well as their batteries, less expensive than anywhere else. American policymakers, for example, worry that reasonable electric cars made in China will flood the market and prevent traditional automakers and startups from catching up. BYD already produces an electric car that can be purchased for less than $10,000 in China.
Policymakers are also very reluctant to jeopardize the country’s energy security in the name of a less expensive power that relies on foreign (or Chinese, to be more precise) products. Biden-era policies were designed to punish imports or to inspire domestic supply chains. The renewal on energy security means that neither side is likely to give in to China. This in itself slows the speed of the transition to some extent, as U. S. production of batteries and solar panels, at least for now, is particularly more expensive than imports. , however, bipartisan agreement on this precedence is clear.
Not the grid
The need for a functioning network is underestimated and it is to win votes in elections. But it is incredibly important. We expect that about $5 trillion will be spent on the network by mid-century, but the timing is crucial. The grid requires immediate attention, as the advancement of renewable energy is already hampered by a lack of grid capacity.
The North American grid has not seen a major expansion in the last decade, as expected given the stagnation of electricity demand and supply in the region during the same period. But with gigantic amounts of renewable energy coming online thanks to strict incentives like the U. S. IRA, that’s about to change. Often, the windiest and sunniest sites are far from population or call centers and require a connection to new or existing transmission lines to send electrical power to where it will be used. The North American network is incredibly complex and can be considered the most giant device in the world. Perhaps we can launch a crusade to “make the network wonderful again”. We invite both sides to think about it.