latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/upcoming-midterm-elections-pose-new-challenge-to-biden-climate-agenda-70952168 content esgSubNav
In This List

Upcoming midterm elections pose new challenge to Biden climate agenda

Case Study

A Leading Renewable Energy Financing Bank Gains Important Insights on U.S.- based Opportunities

Blog

Exploring the Energy Dynamics of AI Datacenters: A Dual-Edged Sword

Blog

Despite turmoil, project finance remains keen on offshore wind

Case Study

An Energy Company Assesses Datacenter Demand for Renewable Energy


Upcoming midterm elections pose new challenge to Biden climate agenda

SNL Image

A potential Republican takeover in Congress after the November midterm elections could further complicate U.S. President Joe Biden's ambitions to decarbonize the power sector and broader economy.

Although the elections are months away, recent polling has favored Republicans to retake majorities in the U.S. House of Representatives and possibly the Senate.

GOP lawmakers have backed oil and natural gas industry calls for easier access to federal areas for production to curb soaring energy prices and replace lost supply from Russia after its invasion of Ukraine. They have also opposed Biden's efforts to enact tougher emissions rules for the power sector and establish a national clean energy standard.

Although a Republican-controlled Congress would likely lack veto-proof majorities, the shift in focus would make passage of bolder climate and clean energy legislation more difficult, policy experts say.

Republicans and Democrats "might find some areas for agreement, [but] that is not likely going to be a big national climate plan," Joseph Majkut, director of the Energy Security and Climate Change Program at the Center for Strategic and International Studies, said in an interview.

Biden has called for decarbonizing the electric power sector by 2035 and for half of new car sales to be made up of electric vehicles by 2030. The administration scored victories with the passage of the $1.2 trillion bipartisan infrastructure law in late 2021, which included funding for, among other things, EV and electric transmission infrastructure and permitting reforms for high-voltage power lines.

But Biden and Democrats in Congress have made clear that reaching the president's climate targets would require more action, including the tax credits and other clean energy components of Biden's Build Back Better agenda. Reliance on Congress for climate progress could also intensify after the U.S. Supreme Court on June 30 issued a ruling that limited the U.S. Environmental Protection Agency's ability to regulate greenhouse gas emissions from existing power plants.

If Democrats cannot enact some version of new climate legislation before the midterms, however, the chances of doing so in 2023 would shrink considerably if they lose their House and Senate majorities.

SNL Image

Fossil fuel focus

Crude oil and natural gas prices have hit multiyear highs due to sanctions and bans on Russian energy exports, as well as supply chain constraints and rebounding demand as economies recover from the coronavirus pandemic.

Republicans have also blamed Biden's efforts to limit oil and gas production in federal areas and shift the U.S. economy away from fossil fuels, policies they will try, although likely fail, to reverse if they reclaim control of Congress.

"Any tool to highlight the perceived failures of the administration is probably on the table," Majkut said. "At the same time, I would say it's very unlikely to change public policy" given Biden's veto powers, he added.

House Republicans could nevertheless promote an "energy dominance" platform focused on boosting U.S. oil and gas production, U.S. Rep. Garret Graves, R-La., head of the House Republican climate and energy task force and ranking member of the House Select Committee on the Climate Crisis, said in an interview.

Although Biden is unlikely to sign legislation that counters his policy aims, Graves said a restored House majority would help Republicans "control the agenda" and put pressure on the administration. The lawmaker recently rolled out the task force's broad energy and climate strategy.

SNL Image

In addition, Graves said the GOP could develop legislation to produce more oil and natural gas on federal lands.

The Biden administration has canceled the three remaining offshore lease sales on the U.S. Department of the Interior's calendar and has been slow to restart onshore sales after a court injunction ended a pause on new leasing on public lands and offshore waters. However, the Interior on July 1 proposed a program that would allow offshore drilling between 2023 and 2028 in certain areas of the Gulf of Mexico and off the coast of Alaska.

But boosting federal leases may not have much of a market impact. Platts Analytics sees a limited supply effect from restarting U.S. federal leasing, with the vast majority of acreage in the most promising basins already leased. About 7% of U.S. oil production and 8% of U.S. gas output comes from federal onshore lands, while federal offshore acreage accounts for about 16% of U.S. oil output and 3% of the country's gas production.

Along with fossil fuel-friendly legislation, scrutiny of Biden's regulatory agenda is another GOP priority. Graves said that the Democratic-controlled House Committee on Natural Resources, which has jurisdiction over federal areas and leasing policies, "hasn't had a single hearing" on the jump in energy prices.

"We're going to be spending some time making this administration come to the table" to explain its energy policies, Graves said. "You bet we're going to be conducting some aggressive oversight."

The U.S. Securities and Exchange Commission's climate disclosure rule could also be an oversight target. In a new 10-point policy plan, the American Petroleum Institute called the rule "overly burdensome and ineffective" and said Biden "should ensure open capital markets where access is based upon individual company merit free from artificial constraints based on government-preferred investment allocations."

But leading Democrats have promised to defend the clean energy transition, regardless of who holds the reins in Congress.

U.S. Sen. Tom Carper, D-Del., who chairs the Senate Committee on Environment and Public Works, "remains focused on advancing policies that facilitate our transition to a cleaner, more sustainable future," a Carper aide said in an email. "He will continue to do so in a way that brings stakeholders together and leaves no community behind."

Action possible on some areas of consensus

Despite downbeat polling, Democrats could retain at least one chamber of Congress. Keeping a House or Senate majority means fewer potential bills for Biden to veto. But enacting more ambitious climate measures would still be tough.

A divided Congress presents "relatively similar risks and opportunities" compared with full Republican control, Majkut said. "There is a space for a conciliatory or grand bargain on energy security and climate provisions ... [but] I don't know that I would handicap them particularly differently."

Even with their divides on oil and gas policy, Democrats and Republicans could find common ground on climate legislation. Both parties have supported boosting the domestic supply of critical minerals, making the U.S. more competitive against China on manufacturing, and enhancing tax credits for carbon capture and storage and other low-carbon technologies.

Clean energy innovation is another area of consensus. The new bipartisan infrastructure law included substantial investments in the development of low-carbon technologies, including hydrogen, battery storage, advanced nuclear energy and direct air capture.

"Administering those programs and potentially getting more support out for those new technologies to me seems something that would be like pretty inbounds," Majkut said.

Democrats and Republicans could also come together on permitting reforms, with the federal approval process for infrastructure projects a hurdle both for traditional and newer energy resources. Although the parties have clashed on how to achieve that goal, the shared priority could create space for bipartisan legislation.

"There's a lot of overlap in terms of what our needs are, whether it's permitting or getting the right staff in the agencies with the acceptable amount of resources," American Clean Power Association CEO Heather Zichal said at an event the group hosted in June. "I'm actually pretty optimistic that there's a broad recognition that more needs to be done, and there's now an open opportunity for that dialogue with both sides of the aisle."

Commodity Insights reporters Jasmin Melvin and Meghan Gordon, who write for S&P Global Platts Dimensions Pro, contributed to this article. S&P Global Commodity Insights is owned by S&P Global Inc.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.