Future US climate proposals depend on makeup of Senate in 2021, but compromises possible

Former Vice President Joe Biden has prioritized climate policy in his platform for the upcoming US Presidential Election, but the future composition of the Senate would have a big influence on how a potential Biden administration pursues energy and emissions goals.

As discussed in the recent S&P Global Platts Analytics US CO2 Pricing Monitor, Biden is now targeting a carbon-free US power sector by 2035, as well as net-zero greenhouse gas (GHG) emissions by 2050.

In the event that Biden wins the election in November, his future administration can be expected to make considerable use of its executive and regulatory authority for energy and climate policymaking.

The Trump and Obama Administrations have previously done the same, and there are a number of key issues where Biden would be likely to act, including vehicle efficiency standards and methane limits for the oil and gas sector.

However, this would limit future policy efforts to the application of existing law, while more substantive policymaking would inevitably need to occur through legislation passed by Congress.

Go deeper: Request information about Platts Analytics Future Energy Outlooks

While the Democrats recaptured the US House of Representatives in 2018 and are expected to maintain control this year, the Senate has historically been the key hurdle for comprehensive climate policy. The Senate's structure, which weights each state equally with two seats, favors more rural states that are also more carbon-intense and have typically opposed carbon prices.

Since the 1990s, party affiliation has become increasingly correlated with attitudes and voting on environmental and climate policy. This was the case in the 2018 Senate election, with Senate seats in carbon-intensive states like North Dakota, Indiana, and Missouri flipping Republican – the Republican victory in Florida was an exception. Likewise, Senate seats in less carbon-intense Arizona and Nevada flipped to the Democrats.

The Republicans currently hold a 53-45 majority in the Senate (two independent senators caucus with the Democrats as well). A total of 35 Senate seats are up for election in November. However, Republicans must defend 23 seats while the Democrats are defending only 12 – which offers Democrats a greater opportunity to pick up seats.

The chart below indicates, for each state, the carbon intensity of its economy as well as the party affiliation of its Senators and those seats up for election in 2020.

Democrats need to pick up a net four seats in order to gain a majority. Races in Arizona, Colorado, Maine, and North Carolina are considered to be some of the most competitive for Democrats – and these are all states in the lower half of the overall carbon intensity rankings. However, other Democratic targets are in states with a relatively higher carbon intensity – such as those in Iowa and Montana.

Platts Analytics would also note that Democratic control of Congress is by no means a guarantee that climate legislation can be successfully passed – as the recent experience in the states of Oregon and Washington has shown. The Oregon legislature saw two consecutive GOP walkouts when it was faced with a vote on cap and trade legislation, denying quorum to the Democratic majority.

Washington, a strongly Democratic state with a climate-focused governor, Jay Inslee, has had trouble implementing carbon pricing and low carbon fuel standard policies for several years. In fact, a carbon pricing voter initiative has appeared on ballots twice in the state, in 2016 and 2018. Both ballot measures failed to pass.

This has also been the experience at the federal level. The passage of the Waxman-Markey "American Clean Energy and Security” cap and trade bill by the US House of Representatives in June 2009 constituted a major achievement for environmentalists.

However, even with a Democratic President and between 58 and 60 Democratic seats in the US Senate from July 2009 to November 2010 (with variations due to deaths, resignations, and special elections), the Senate version of the bill was never brought to the floor for debate or a vote.

A similar outcome in any future Democrat-controlled Senate is a real possibility, particularly in the event that Democrats win a majority by picking up seats in more carbon-intense states that may be less willing to support a comprehensive climate bill.

Looking for low-hanging fruit

Outside of comprehensive climate legislation, there may be other opportunities for a potential Biden Administration to work with Congress on clean energy.

For example, the wind production tax credit and the solar investment tax credit have historically been major drivers of renewable energy penetration in the US. While both credits are currently winding down and set to expire, they have also enjoyed considerable bipartisan support in the past.

In the event that Biden captures the Presidency but Republicans maintain control of the Senate, Biden could potentially work with Senate Republicans to extend the tax credits longer-term. This could be an easier lift for Biden given that so much of US wind capacity is focused on the Republican-dominated plains states.

Given ongoing Republican opposition to stronger climate ambition, Biden would need to find additional low-hanging fruit – or else also rely more heavily on regulatory and executive action to advance his climate agenda.