Global energy crisis proves that after COP26, new US policy is due

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With President Joe Biden’s approval rating slipping to a gloomy 38 percent, his administration desperately needs victories and successes. The U.S. government deployment to COP26 — six cabinet ministers and a massive entourage — was supposed to boost Biden’s support, especially among the Democratic base. Instead, amidst a global energy crunch, the president found himself calling on OPEC+ to increase its oil production — only days after recommitting the United States to climate leadership. The Biden administration now has to reconcile the Democrats’ green agenda with the stark reality that lies ahead.

At the beginning of the pandemic, oil production understandably declined. However, now that demand has surged, supply is lagging, causing gasoline and natural gas prices to shoot up. Despite Europe and U.S. entreaties, OPEC and its partners rebuffed Biden’s call for increased production, retorting instead that if the United States believes the world’s economy needs more oil, then it should pump it itself.

The OPEC+ alliance, made of OPEC members led by Saudi Arabia and non-members guided by Russia, opted for a gradual increase in production by 400,000 barrels per day for the month of December. OPEC+ is reluctant to increase supply and thereby lower prices, as their government coffers were hit hard last year.

Supply restraint has propelled Brent crude to a three year high of $86.70 this past month. This restraint has exacerbated an already global energy crisis, which is mostly demand increase- and supply chain problems-driven. We have seen power rationing in most of China’s provinces and highly polluting gas-to-coal switching across Europe. Biden demonstrated that he has a limited power sway over OPEC. With U.S. oil production dropping to a two-year low, the Biden administration’s ability to push back against the cartel’s pricing power is being tested. 

When faced with energy shortages, pragmatism should triumph over ideology.

By calling for more hydrocarbon production, Biden sent a message to environmental activists that the energy transition requires realism, dictated by what is, not what’s desirable.

If the U.S. continues to cede its influence and refuse to increase production output when it is necessary, we place ourselves and our allies at great risk. Declining oil and gas production in the U.S. places our European allies, which are heavily dependent on large-scale oil and gas pipelines from Russia, at increasing risk amidst tensions mounting over the migration crisis on the Poland-Belarus border. European lawmakers have already suggested that Russia has deliberately reduced gas flows to the EU, during an on-going energy crisis, to ensure certification for Nord Stream 2 gas pipeline.

The Biden administration must recognize the need for a dependable and affordable energy baseload to keep America running. Unfortunately, renewables are simply incapable of supplying that yet. The issues of intermittency and storage remain unresolved and are at least two decades away from workable solutions. Those aspirations, while they should be pursued, cannot rule out the need to give the U.S. and Europe affordable and reliable energy today. Relying too heavily on countries like Russia, Iran, and Venezuela for oil and gas would be counter for the U.S. interests and those of its allies.

The infrastructure to meet the moment does exist, but it is threatened by ideology that disregards science, data, and reality. During the Obama administration, cheap natural gas rapidly displaced coal, leading the U.S. to have one of the fastest declining emissions in the world. The fracking revolution made the U.S. the world’s top natural gas and oil producer and a leading exporter. Although natural gas is not emissions free, the transition towards renewables cannot happen overnight.

Skyrocketing heating bills threaten to cripple American families this winter. Existing infrastructure for natural gas should not be abandoned, but instead utilized to maintain our energy supply while we decrease emissions and invest in renewables. Nor should the thousands of workers who work in the gas industry risk a fate similar to coal miners across West Virginia. The continual use of natural gas today will ensure that we have the economic growth and stability to support the ongoing energy transition. 

Biden should also take this opportunity to resurrect another reliable and massive energy source: nuclear power. Since Jimmy Carter, the failure of both parties to revive nuclear energy is myopic. Nuclear plants produce minimal emissions and generate far more power on less land than any other clean energy source. A typical 1,000 megawatt facility needs little more than one square mile to operate, while wind farms for example require 360 times more space to produce the same amount of electricity. Workers in nuclear facilities also earn higher wages on average than those in renewable energy like wind and solar.

Despite this, nuclear energy’s share of U.S. electricity generation could fall from 19 percent in 2020 to just 11 percent by 2050 given existing trends. The recently passed Infrastructure Bill provides almost $2.5 billion for nuclear reactors and includes $6 billion to subsidize currently operating plants facing economic difficulties. This is a great start, but it not enough. For a president who pledged to lead a pro-science administration, addressing nuclear regulatory roadblocks, long build times, and stiff competition from other countries should be paramount.

COP26 had two major achievements: commitments to stop deforestation and cut methane emissions. However, today the necessary climate leadership may be very different than the green dreams many expect. Following the climate summit, the Biden administration should take a page out of the previous administrations’ book. Climate policy should be pragmatic, aiming to move our economy towards greater decarbonization sector by sector and technology by technology, while boosting the current baseload through natural gas and nuclear power.

If recent elections in Virginia can tell us anything, it is that political parties are not always accurate when it comes to gauging popular opinion. Real leaders should prioritize what all Americans want: access to ample, affordable, reliable energy and a vibrant economy. Only that will ensure America can lead on climate — and in the world — for years to come.

Ariel Cohen, Ph.D., is a non-resident Senior Fellow at the Atlantic Council, and director of the Energy, Growth and Security Program at the International Tax and Investment Center.

Tags Climate change policy COP26 Emissions reduction Energy Energy crisis Energy development Energy economics Energy policy Energy transition green economy Green New Deal green policy Jimmy Carter Joe Biden OPEC Presidency of Joe Biden

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