December 16, 2019 at 12:01 am ET
Top 5 Energy Policy Predictions for 2020
Analysts say we might (finally) see an energy package pass next year
In some ways, 2020 likely marks a holding pattern for climate and energy policy ahead of the November election. But energy analysts think Congress just might be able to cobble a package of energy bills together. And even if national environmental policy remains rather stagnant, the electric vehicle industry — and domestic gas production — are poised to have a strong year.
Comprehensive energy package?
In 2020, it’s possible an energy package of bipartisan proposals will come together between the House and Senate, especially given the productivity of the House Energy and Commerce Committee and the bipartisan work that leaders on the Senate Energy and Natural Resources Committee would like to get enacted, said Katherine Hamilton, chair of 38 North Solutions LLC, a clean energy and innovation policy consultancy.
However, even if lawmakers put one forward, it’s uncertain whether Senate Majority Leader Mitch McConnell (R-Ky.) would hold a vote on it in the chamber, said Brandon Hurlbut, a co-founder of advisory firm Boundary Stone Partners who was chief of staff to former Energy Secretary Steven Chu. Hurlbut sees a chance for such a package of smaller energy and climate bills, but Ed Crooks, vice chair of the Americas at Wood Mackenzie Ltd., agreed it is unclear what kind of climate bill would even have a chance of passage in the Senate.
Leah Stokes, an assistant professor in climate and energy politics at the University of California, Santa Barbara, said it is possible McConnell would choose to move a set of energy bills. A package out of the Republican-majority Senate energy panel “is not going to be some radical large-scale policy. It’s going to be incremental, likely research and development-focused.”
Congress is currently in the throes of negotiating clean energy tax credits, not all of which may make it in to a funding deal by the end of the year. While energy storage and efficiency credits are popular and could be included in a vehicle through 2019, others, such as the solar investment tax credit, may have a shot at extension in the lame duck of 2020, Hamilton said.
But analysts were in full agreement: No carbon tax is likely forthcoming in 2020. Getting that through Congress is “an uphill battle,” Crooks said.
Oil and gas
September marked the first full month that the United States has been a net petroleum exporter since federal recordkeeping started in 1949, and the International Energy Agency recently projected that the country could become a sustained net exporter starting late next year.
But investors have largely lost patience with the oil industry, which collectively has had trouble turning a profit and is now drilling fewer wells and cutting spending. The United States is amid “the beginning of the end” of its extreme oil boom, Crooks said. Wood Mackenzie sees U.S. oil production growth slowing in 2020 and possibly plateauing in 2024, depending on oil prices and other factors.
Consolidation in the U.S. oil exploration and production sector will continue in 2020, said Per Magnus Nysveen, senior partner and head of analysis at Rystad Energy AS, an energy research and business intelligence firm.
The picture is a little different for natural gas. Rystad expects gas production growth to climb in 2020, Nysveen said. Additional liquified natural gas projects will come online, and international gas prices — lacking a coordinating body such as the Organization of the Petroleum Exporting Countries — will remain low due to oversupply, he added.
But local pushback against natural gas is seen as likely to grow. Hurlbut expects we could see more cities in 2020 ban natural gas use in new buildings, as seen this year in Berkeley and San Jose, Calif., and more recently in Brookline, Mass.
Electric vehicle expansion
“The U.S. is still kind of slow in incentivizing electric vehicles,” Nysveen said, calling it an almost “political taboo in most states to propose” that consumers should shoulder the cost of EV adoption.
Companies plan to roll out tens of new electric vehicle models over the next few years, with General Motors Co. alone shooting for 20 new all-electric models by 2023.
Hamilton expects the electric vehicle market and consumers “to jump ahead” of federal fuel economy standards but said the standards will eventually need to be strengthened to phase out “a bunch of clunkers out there.”
Hurlbut predicted a “stretch goal” that 500,000 electric vehicles will be sold in the United States in calendar year 2020, pointing to increases in vehicle choices and charging stations and declining costs. That would be up from more than 350,000 domestic EV sales for 2018, according to InsideEVs. An extension and expansion of the EV tax credit would also benefit car sales, Hurlbut said.
All eyes on climate
Domestically, “climate change will be the defining issue of the 21st century, and this will be the first presidential election where it will play a meaningful role,” said Hurlbut, who anticipates a Democrat will take the White House and re-enter the United States into the Paris agreement.
And even on a global level, politicians will face “more and more opinion pressure” from their voters to act on climate change, Nysveen said.
The 25th United Nations Climate Change Conference wrapped up last week, but negotiators meet again in 2020 for COP26 in Glasgow, where countries are to present updates to their plans for strengthening their commitments under the Paris climate agreement.
A critical issue there will be whether a “deteriorating global economic environment is something that deters countries from making those more ambitious commitments,” Crooks said. Pressures against more stringent targets now include the United States’ intent to withdraw from the Paris accord and trade discord between the United States, Europe and China.
Hydrogen still a buzzword
2019 seemed to be the year when hydrogen broke through as a critical focal point of how one might address climate change, even though the technologies to standardize its use may be a ways off. Analysts expected attention to the fuel will continue into 2020.
Investment in hydrogen has grown, though further research and breakthroughs are still needed to make hydrogen production profitable at a commercial level, which Nysveen said is a long way away.
But wider use of hydrogen might be closer away than 10 years’ time, said Hamilton, who noted that it could be useful in places such as Texas, where excess wind can be channeled into hydrogen and where there is already abundant oil, gas and pipeline infrastructure.
“Hydrogen might be a piece of the puzzle” to help reach higher penetrations of renewable energy without the massive investments in technologies such as battery storage that would be required today to reach the 100 percent renewable target envisioned by some politicians and academics, Stokes said.