As part of ongoing U.S. elections coverage, this is the third of a four-part feature series taking a deep dive into key energy segments: oil, LNG, natural gas and the energy transition.

The U.S. presidential election coincides with an inflection point in public sentiment on natural gas, and the outcome could have substantial impacts on gas consumption, infrastructure permitting and production.

President Donald Trump has pledged to continue his pro-fossil fuel, deregulation "energy dominance" agenda. While analysts see Democratic presidential nominee Joe Biden preserving a role for gas, his climate plan would invest $2 trillion in renewable power, electric grid upgrades, green building initiatives and other clean energy initiatives that would displace fossil fuels.

The winner will face an environment that has changed much since the 2016 election.

"I would say there really has been a shift between a view that really saw gas as the cleanest possible fuel that was a really good bridge and a backup to renewables, to a question of just how much of an advantage is there when you factor in methane emissions," said Erin Blanton, senior research scholar at Columbia University's Center on Global Energy Policy.

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Industry watchers say the rise of the progressive left ahead of an election with key gas-producing states in play explains why Biden has said little about gas. Yet Trump's allegations that Biden would prohibit hydraulic fracturing has forced Biden to reiterate and clarify his opposition to a fracking ban.

S&P Global Platts Head of Analytics Chris Midgley suggested a Biden presidency would bring considerable uncertainty, though it is clear Biden will take a more aggressive stance toward fossil fuel companies. "That said, I don't believe for a moment that his first year will be marked by him taking on the gas sector at a time when they're all struggling," Midgley said.

Power generation

Forecasters widely see renewable energy growing its share of U.S. power generation, while gas's piece of the pie remains roughly flat following years of growth. Under Biden's plan, that shift could come sooner.

Trump has sought to bolster the coal industry, but gas-fired power generation continued to grow at coal's expense on his watch. S&P Global Market Intelligence analysts expect power sector gas demand growth to average roughly 2.7% per year through 2024.

Currently, gas-fired generation is steady or growing around Appalachian shale gas fields, southeastern integrated markets and parts of Texas and Great Plains states, according to Market Intelligence. California's aggressive renewable power goals are pressuring gas-fired generation, with some Western states and the Northeast following suit.

To make U.S. power generation carbon neutral by 2035, Biden would invest in solar and wind projects, battery storage, advanced nuclear reactors, renewable hydrogen and carbon capture technology. Under that plan, and assuming Congress mandates national clean energy standards, more of the U.S. would look like California, Market Intelligence analysts expect.

Biden's proposal to upgrade the U.S. electric transmission grid could also galvanize renewable energy growth, according to Market Intelligence analyst Alex Cook. A 2008 program to connect Texas' wind-rich west with central and eastern demand centers via transmission lines yielded an "explosion" of wind energy development, even without aggressive renewable portfolio standards, Cook said.

Direct use

Biden would also leverage grid investments in a bid to electrify the economy, potentially cutting gas use among industrial, residential and commercial customers.

His plan calls for incentives to switch from gas to electric home appliances but also include proposals that reflect the national building electrification and gas ban movement. Changes to local building and energy codes underpin those ordinances. Biden has pledged to fund efforts to amend building codes and would support nationwide building performance standards.

Blanton said it is difficult to see the policies creating a quick and meaningful decline in gas demand because direct gas use is ingrained throughout the economy and the path to decarbonizing heavy industry remains unclear.

The policies would establish an overarching U.S. low-carbon policy, said Randy Bell, director of the Atlantic Council's global energy security program. While the Trump administration lacks a cohesive policy, its Energy Department would likely continue to support gas alternatives such as advanced nuclear reactors, renewable hydrogen and battery storage, Bell said.

Infrastructure permitting

One area that could get noticeably more challenging for the natural gas sector is federal infrastructure permitting. Momentum from anti-fossil-fuel campaigners has been building for years, taking down some high-profile projects.

If Biden wins and Democrats have a majority at the Federal Energy Regulatory Commission, most analysts foresee an increased focus on environmental considerations, including climate change, although it remains unclear how often that would lead to outright rejections. Regulators are also likely to more deeply scrutinize whether a pipeline is needed.

Under a second Trump administration, litigation and market forces are expected to keep development in check. Gas pipeline infrastructure already appears to be at the end of a roughly nine-year build-out, particularly in the Northeast.

Northeast pipeline capacity entering service peaked in 2018 at 8.1 Bcf/d, while just 490 MMcf/d is targeted to enter service in 2022, according to a tally of significant projects tracked by S&P Global Platts. While stronger activity continues in the Gulf Coast region, a wave of new capacity out of the Haynesville Shale, tied largely to LNG demand, is mostly already permitted and seen coming online by 2024.

LNG

Liquefied natural gas project reviews could face similar permitting hurdles, though a large number — 14 projects totaling 23.8 Bcf/d in export capacity — have already received major permits since mid-2017. As the election approaches, active developers of roughly a dozen projects have yet to make final investment decisions due to demand headwinds.

But policies backing LNG exports are unlikely to be upended.

Biden's campaign has said little about LNG, but Biden has historically taken a holistic view of gas's role in U.S. policy, including its potential to displace coal in foreign markets and its role in diplomacy, according to Bell.

Biden is "deeply concerned" with European energy security and Russia's influence on the gas market, particularly in Eastern Europe, he said. The Obama administration permitted all six currently operating U.S. LNG export terminals.

The Trump administration has actively promoted U.S. LNG and permitted additional terminals, but only two new LNG terminals have reached a final investment decision under the Trump administration. One of those was approved for construction by Trump's predecessor. While market forces played a major role, Trump's trade war with China also inhibited long-term contracts.

"I would say they have set back the second wave of U.S. LNG export projects," Columbia University's Blanton said. "What had an impact on the future of U.S. gas is, they really diminished what our export volumes could have been over the next few years."

Upstream

Biden's most impactful upstream policy would be a moratorium on new oil and gas leases on federal lands and waters, analysts said. Most of that production yields associated gas plumbed during oil production, so the policy would have less effects on gas supply than it would on oil output, according to Wood Mackenzie.

The firm projected the moratorium would reduce Gulf of Mexico oil and gas production by 30% through 2035. That pencils out to a roughly 300-Bcf/d decline in gross gas withdrawals from federal Gulf waters, or just under 1% of total U.S. gas output.

Wood Mackenzie expects the policy to cut U.S. onshore gas output by as much as 1.1 Bcf/d in 2021 and up to 1.5 Bcf/d by 2032, reducing gas supply forecasts by about 2%. New Mexico's prolific Delaware Basin would be most impacted.

S&P Global Platts analytics estimated that Biden's approach could lower U.S. gas production by 4.2 Bcf/d by 2025, a roughly 4% decrease from its base case.

Since the U.S. government is a significant landowner in the Rockies and pipeline takeaway capacity is limited in the Northeast, incremental output from Louisiana and Texas is more likely to replace lost supply, according to Platts analysts.

Gas production growth surged during the Obama administration even as the administration sought to regulate fracking. Those gains have accelerated under Trump, who has slashed oil and gas regulations and vows to continue cutting red tape.

Analysts said the rollbacks do not have a meaningful effect on supply fundamentals, though increased regulation could crowd out smaller producers. Some say deregulation could make U.S. gas supplies less attractive in the European Union because of a possible carbon tax on imports.

Biden has vowed to restore methane emissions rules, and the Atlantic Council's Bell believes that Biden could work with European partners on complementary border adjustment mechanisms.

Maya Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.