𝗥𝗲𝗽𝗲𝗮𝗹𝗶𝗻𝗴 𝘁𝗵𝗲 𝗜𝗥𝗔 𝗧𝗮𝘅 𝗖𝗿𝗲𝗱𝗶𝘁𝘀: 𝗪𝗶𝗹𝗹 𝗧𝗵𝗲𝘆 𝗼𝗿 𝗪𝗼𝗻’𝘁 𝗧𝗵𝗲𝘆? 𝗣𝗮𝗿𝘁 𝟮

𝗔𝗻𝗱 𝗱𝗼𝗲𝘀 𝗶𝘁 𝗿𝗲𝗮𝗹𝗹𝘆 𝗺𝗮𝘁𝘁𝗲𝗿?

A🧡475-word💛under💚3-minute💙read

Yesterday we discussed the obvious actions taken by the new administration. Although no doubt upsetting to climate advocates, in the scheme of things they’re meaningless.

I’ll explain why.

Trump exited the Paris Agreement in his first term. Solar set records. Battery storage emerged. And wind, well, wind treaded water, but that had nothing to do with existing Paris.

I liken the Paris exit to whether a tree falling in the woods makes a sound if no one is there to hear it. If you walk away from an agreement that mandates nothing, does it have an impact?

Opening federal lands and expediting permitting is analogous to giving someone the sleeves from your vest.

It takes almost 20 years to stand up a mine. Trump’s term ends in less than four. Oil and gas timelines are shorter but the issue is the same.

It’s about profits not politics. Justifying a new mine requires a much greater level of certainty in terms of cashflow and rules of engagement than exists today.

As for oil and gas, they seek locations where extraction is the least expensive. That doesn’t describe most federal lands, including Alaska.

The oil industry manipulates price by regulating supply. It has no interest in flooding the market. The industry’s primary financial objective is to maximize the value of its known reserves, and that doesn’t jive with “drill, baby, drill.”

The result: there will be no appreciable increase in the level of activity in any of these industries during Trump’s tenure.

If the goal is truly to lower emissions and not eliminate fossil fuels, then I warned readers in January that what matters more are changes that have garnered much less attention: the radical shift in mindset on key Congressional committees and in climate-related government agencies.

It’s a political magic trick – keep the focus on the IRA while making the really significant changes using the mundane mechanisms of government.

For example: the Senate Committee on Energy and Natural Resources oversees the Federal Energy Regulatory Commission (FERC). The new chair is Sen. Mike Lee who has described the Green New Deal as “ridiculous.”

FERC hasn’t exactly set the world on fire in moving the utility industry forward, but it’s the only mechanism available to do so. Don’t expect anything climate positive to occur with FERC in the next four years.

The changes that have already occurred at the EPA - which are too numerous to mention - are more problematic. Just the potential change to power plant emission standards could have a greater impact on emissions than any potential change to the IRA’s tax credits.

Tomorrow I promise to discuss the likely fate of the IRA tax credits.

Hint: It’s a battle between cuts and credits.

#inflationreductionact #oilandgas #oilandgasindustry #ferc #epa