The US election and energy

In a special podcast looking at the US election, we discuss what a Biden administration will mean for global efforts to tackle climate change and transition towards cleaner energy. 

With the prospect of a divided government, how far can the US move away from fossil fuels and will a new Congress pursue further sanctions to stop Russia’s Nord Stream 2 gas pipeline? 

Host: 

• Richard Sverrisson, Editor-in-Chief Europe, Montel. 

Guest: 

• Ketil Raknes, Assistant Professor, Hoyskolen Kristiania, 
• Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects. 

Transcript

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:04

Hello and welcome to this Special Montel podcast on the US election and the impact on climate change policy and energy markets. I spoke to Ketil Raknes on Saturday. Ketil is an expert on US politics and a former Norwegian state secretary. I also spoke to Trevor Sikorski. Who's head of natural gas and energy transition at energy aspects. I hope you enjoy the show. Joining me in my living room today is Ketil Raknes, A USA expert, but also a chief organizer of 17th of May parties. A warm welcome to you, Ketel.

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 0:42

Thank you so much.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:43

We're not here to talk about 17th of May, but more about what's happening. Across the pond in the United States. You've been covering, you've been observing American politics for many years, kil. What has surprised you about this election? Or what's different this time?

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 0:56

I think I wasn't that surprised, but many people were surprised that it was so competitive. A lot of people thought it was gonna be like a blue wave. It gonna be like a total wipe up for the Democrats. Then it ended up like being the flip of 2016, the same states being in play towards the end with very thin margins, particularly in the Midwest. And then we see now that it all comes down to the final count. Biden is winning. Like it's not a discussion, it's just that the American television are hesitant because of the Republicans. So he is gonna win this, but again, they're not gonna, probably not gonna win the Senate and then they're gonna lose some seats in the house. Absolutely. So the US comes across. As a center right country once again. And a very different country from most European countries.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:43

Absolutely. We'll come into that a bit later, talking about yeah. The Democrat White House and the Republican Congress. But yeah, the outcome's quite clear. It is gonna be Biden, but what, what happens in the coming weeks? When will we see the final confirmation here?

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 1:55

I think the states have until December 10th to do their final revisions on the ballots and so on. And then the electoral college is gonna meet, and then the Congress has to decide on this, and then within January 20th, a new president is going to be sworn in. But this process is usually not contested in the way we see now. So we're in undefined terrain. Maybe when the final count is given. Now in next week, maybe if the leaders of the Congress concedes Trump will concede as well, or he might not. I think the thing that is different now from former election is that the Republican party has moved Rightward since the 2000 and is more doing more so no than ever before. Meaning that they are challenging democratic norms and they're also challenging the rights of minorities. So if we're gonna compare to Europe, they're quite similar to the law I Justice party in Poland or fetish in Hungary. A lot of political scientists that we've been pointing at this at some time, that this party is moving in a very authoritarian direction, and the speech we saw last night from Trump was like from some kind of dictatorship. But not the us, so this is new terrain, even in American democracy.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:06

That's what I'm gonna say. From the outside it looks as though it's some kind of tinot dictator. Yeah. It's something that you'd see in maybe, in, in Latin America, in Africa, parts of Asia, rather than. The United States. Yes. The home of democracy. Yes. And so I think, by the reactions from Trump lawsuits or the, his speech on, on, on Thursday, is this democracy under threat?

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 3:26

I think it is. And a lot of people it's not in mainstream media debate, but among political scientists, this has been debated for a long time. Whether there is like what we call democratic deconsolidation in the us, which is obviously is. And then you could say the question from Trump from the beginning is, how strong are the American institutions? How strong is the justice system? How strong is Congress? How strong are other in institutions? And of course, the institutions withhold in the sense that I think that he cannot prevent Biden from becoming the president. But the question for the US is, if 40% of the US population thinks the election is stolen by an illegitimate precedent, which they cannot trust. And Donald Trump is still there to fire them up. And maybe he's running again in 2024. I think the scenario for US democracy is that the Republican party is broken and if one of the major parties and we could draw the same lines to Britain. What's happened to the conservative party in Britain? Is that a well-functioning political party? No, it's not anymore. So this is something new. We see that these old. Very stable conservative parties who were often, like the leaders of their countries are now disappearing and something else is coming instead.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:39

So that, how will Biden govern here? How will the country, you have a Democrat in the White House and a Republican Congress. That sounds, that sort of screams deadlock really to me. Yeah.

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 4:49

This is the classical divided government scheme that they have in the us. So Biden is an old school, Washington politicians. He know a lot of these Republicans. He's been working with them for ages. So his idea is that he's trying to get some of them across, and he's a moderator himself. So that is his hope that he could reach out to Mitch McConnell and Lindsey Grham and some of his old colleagues and say, Hey guys we need to fix this. We need to save our country. We have an economic crisis. We have COVID-19, so we have to do something. The problem is that the structures doesn't give Republican much incentives to operate. So why should they cooperate? So like Mitch McConnell the problem with Mitch McConnell is not that he's evil, but he's, that he's highly rational in everything he does. So he, like Supreme Court is six three, and it was hypocritical of him, but he did it because he could. And it's the same thing with the Senate. Now, if they have a majority in the Senate. They, I think the Republicans, I'm sorry to say this, but I think they will just block anything. And it will be very hard for Biden to get things done. And if you saw the speech Biden had the other night, it was Obama all over again. It's, if it's exactly the same speech, we have to come together. We have to, bridge out divides and so on. But what happened to Obama, he was crushed in the Senate for and in the Congress for eight years. So I don't think like policy wise. This is not moving very quickly.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:15

It's a very polarized country. Yes. As it's been seen as a, as you've mentioned as well before and your comments and yeah. In the Norwegian media. But if we can talk about foreign policy Ketil, what are the implications here? For example, Biden's made it very clear that he will rejoin the Paris Agreement. What does it mean for climate policy, for example?

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 6:33

So an American president has limited powers. Internally in the US because of the divided government. But the good news is really foreign policy because like American president has enormous powers in foreign policy. So I think there you would see the biggest change. And Biden is gonna lead the US back to his arm. Of course, he is gonna talk to nato, he's gonna talk to the EU in, in a like totally different way than Trump. And he's gonna try to mend these old alliances that are important for the us. So that's good news from a European perspective. And the second thing is, if you look at the environmental cause and so on. He's probably gonna bring the US back to the table with regard to international climate agreements and so on.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:15

You sense there is, there will be a ment with the eu. Yeah. He will start maybe talking more to Germany again. Are those your expectations here?

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 7:22

Obviously, And I think another thing that's important is that the Ministry of Foreign Affairs has been drained from competent people. One of the worst effects of the Trump era is actually that. Intelligent people don't want to work for the US government. Hopefully a lot of those people are gonna come back. And so you could see a rapid change also in the US that the people who really know how, like the experienced diplomats and so on, hopefully they will come back. Because they can work with Biden because they respect him and so on. So that, that's also good news for the US that the competent part of the US state will come back to work. Absolutely. And how about relations with China? China is not any. Easier for Biden than it was for Trump. Just, Trump was criticized a lot for his take on China, but this was problematic for any US president because Obama also struggled with China. Are we gonna contain them? Are we going to question their, on them on human rights and so on? And how are we going to, to deal with the rise of China? So that's the, one of the unknowns I really think is how is beating Biden gonna deal with China? He's obviously not gonna go to these massive trade wars. But the US foreign policy, establ establishment agrees that they have to contain China. So like the Democrats are not very eager to make China superpower. They want the US to be the superpower. So it's more a change of tactics and maybe change of strategy, but not a change of ultimate aims. Yeah.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 8:47

Maybe a softer tone.

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 8:48

A softer tone. So Iran would be the same thing. How, it's not that the Democrats think Iran is a better regime than Republican thinks, but they think they believe more in international governments and they believe more in diplomacy in general to, to resolve international disputes.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 9:03

So maybe talking rather than bluster. Yeah. Yeah. But finally, Ketil how do you see, do you think we will. Cleaner greener us. That has a, has more of a role in the climate policy globally?

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 9:16

I think so, and of course I've worked a lot with environmental politics in Norway and so on. What we see now is that this, there's been a big debate inside the Biden campaign because like green issues have been moving very rapidly, like the Green New Deal and so on, and there are rumors that he's going to name John Kerry to be his, like his climate czar. And we know this is an important thing for Democrats and also that locally in the US this. Issue is moving very quickly. So even though Trump was not doing much, states in the US are doing a lot and cities in the US is losing a lot. So I think Biden is just gonna catch up with those communities in the US who are already doing these things and will make that much more proud of. Of US national policy and also like when it comes to technology development and so on, restrictions for coal, restrictions for energy in the us That's so for some us in like the, for the oil industry in the us this was a worst case scenario I think because Trump is just given the polluters whatever they wanted so now it's the Environmental Protection Agency is gonna be back in business.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 10:19

Yeah. So it's more through the EPA and the state level rather than the federal level.

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 10:23

Yeah, and I don't think people who don't know the technicalities of politics don't often appreciate that, but actually that's how things happen. True directorates and true regulations and so on. I don't think people realize how much Trump did to take away all kinds of regulations. I guess a lot of those are now coming back, but like I said, when it comes to doing stuff beyond some minor stuff, you need the Senate and you need, of course they have the house, so it's complicated to change laws,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 10:54

but I think it maybe will help the climate not to have a. Climate change denier in the White House.

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 10:58

Yeah. Obviously Biden is gonna play a very different role so if you look at from a foreign policy perspective, it's more like back to normal. It's gonna be more like it was before Trump came. And I think he's also gonna use a lot of time. To mend stuff. So I think it's gonna be very interesting. Where is Biden doing his first foreign travel? Okay. I don't think he's going to Saudi Arabia, exactly. I think he's going, maybe I would guess that he's actually going to Europe or to Asia for his first foreign travel.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:25

We should hope so. Ketel, thank you very much for joining this Montel special podcast.

Ketil Raknes, Assistant Professor, Hoyskolen Kristiania: 11:29

Was an honor to be here.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:35

Joining us to talk about the energy market implications of the Joe Biden win is Trevor Sikorsky, who's head of natural gas and energy transition at ng. Aspects. A warm welcome to you, Trevor.

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 11:46

Thank you Richard. Always a pleasure to join you on these podcasts.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:49

We're here to talk about the US election and what it means for climate policy. What does the Biden victory mean for. Climate policy globally really?'cause I, obviously it must make a big difference now that we don't have a climate change deni in the White House or will Oiler house.

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 12:05

No, absolutely. And I mean there is some complications there as there always is with US politics and really Biden campaigned on a very kind of aggressive, I would say, climate platform. Probably the most aggressive of what he was doing was the pledge to decarbonize US power by 2035. So very. Aggressive looking target. They're very difficult, of course, to achieve. Now, his ability to get that through in some ways will depend upon being able to get those bills, of course paid through the house of Rep and through the Senate, and that Senate piece still remains a bit unclear. Certainly if it's 50 50, then you probably could get it through. If it's 51 49 for the Republicans, then it becomes a little bit more difficult and indeed. Most of the things that he's gonna do probably would then need a degree of cross party support. Last time we had a Democrat in the White House, you didn't see very much of that cross party support coming through. That was very difficult to get. It will be a very narrow senate and often you do get senators on both sides, supporting bills that play well wherever they're the senator for. So you do have to look at that as well. It's not always easy to keep your caucus together. So there's a lot of complications there. In terms of will Joe Biden be able on a domestic front to be able to push through his very aggressive let's say energy transition platform? I would say internationally what it probably means, and he is, he has pledged to take the. Back into Paris, and obviously that's very good for the international, the International Forum makes that, far more robust having the US inside. They had just come outta the Paris agreement, I think it was last week or something in terms of. The end of the period they needed to give him kind of notification of withdrawal. So he will take them back in very quickly. So that's good. So then for next conference of parties, which is scheduled for next November, you would have the US playing a much bigger role in climate.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 14:07

So it's possibly too soon to talk about a green deal or a green wave then in the us

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 14:12

Yeah, I think you would've needed kind of a, the blue wave if you would like of democratic victories. To probably be more convincing or certainly more landslide type ish for that to really be the case. The Senate was always gonna be the key, right? Because you need to control both houses to really push through an aggressive set of policies. Otherwise, there are checks on what you can do as the president. And I think it will be, everyone will be watching those kind of senate runoffs in Georgia. So this could take a while to sort out exactly what that senate's gonna fully look like for Biden's presidency. If the Democrats do control that, then look for far more aggressive, I would say, domestic policies on climate. Then otherwise then if they don't control the Senate, I think, things will be reigned in and it will be harder to do the more aggressive. And ambitious types of policies.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 15:06

How about internationally? What can you see happening with US EU relations, for example, and specifically with an Angela Merkel?

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 15:12

I think, certainly, the EU has already gone out and welcomed Joe Biden as president the United States this morning. So I think it's, it was very soon and the election per se hasn't been fully called. And I think that was just a measure of how much. Relief there probably is in European capitals that you don't have four more years of the unpredictability of Donald Trump's foreign policy to deal with. I think Biden will look to improve, and repair relationships with a lot of the European capitals, particularly in Germany. Now, I think there is a question, one of the outstanding saw points between the countries is the Nord Stream two pipeline. And the sanctions that we're going through there, that bill is the next round of sanctions is in a bill. At the moment it has gone through both of the houses in Congress. So both Bill, both the Senate and the House have provided bills and passed bills that have a measure of renewed sanctions on Nord Stream two in it. The president hadn't signed it off yet, which was, a very Trump type thing in the sense that it contained provisions to rename, any federal and defense installations named after Confederate. Confederate figures to be renamed, and Trump didn't like that, so he refused to sign it off before the election. This is always called the kind of must pass bills. I, it's defense spending. It has to be done every year. So the expectation is it will be. Done in that lame duck period, which basically is from now until the inauguration in January of Joe Biden. So that probably will be passed. Now the big question is, would Joe Biden then, it seems unlikely that one of the first things he will do as president is. Go in and be seen to be easy on Russia. He probably will live with it. He probably doesn't like it. Maybe in time he'll soften that. Maybe it'll be a question of saying that the United States will not seek to enforce those sanctions, but I'm not sure if he's gonna remove them from that bill. Even as he seeks to repair what damage was caused by the Trump administration in the European capitals.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 17:22

So those companies involved in building nor Stream two can expect to see sanctions happen within the next sort of three to six months.

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 17:31

I would say the sanctions that I mean there's already sanctions in place, but those further round of sanctions, which are a bit more aggressive. We'll be signed off probably before the end of this year. It would've to be, you would have to put that as the expectation of what's gonna happen. Of course, it seems that Gas Prom is trying to arrange a pure Russian way of completing that pipeline. IEA Russian pipe layer. It's got their, probably trying to get a flotilla of Russian flag ships that can supply it with pipe and get that started. But it's been a very slow. Process of getting pipeline restarted since it was basically abandoned in December of last year.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 18:10

What about US Gas? Trevor, can we expect. Growing LG exports under Biden or will that slow down? What are your expectations here?

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 18:18

I think, in terms of the policies that we expect to see, we would expect to see better EPA regulation, probably of upstream oil and gas. Certainly there will be pressure to reduce flaring reduced methane losses. Those types of things will be more heavily regulated. There will also be regulation of fracking on federal grounds. Is what we saw in the Obama administration, relaxed by the Trump administration, likely to be reimposed by the Biden administration. But that's not that big a deal. Not that much. Fracking happens on federal lands, so it's not, it doesn't really change the game on supply. I think in terms of LNG exports, I would actually think that those are probably not gonna be hindered that much. So as long as you get a clean, you get a cleaner kind of footprint on the, the US domestic part of that piece, I the upstream, as long as that gets cleaned up, I think even this the new US administration will be very relaxed about, exporting lots of gas, in some ways. It's very similar to a country very close to your heart, which of course is Norway, and very green in some ways, but also very big hydrocarbon exporter. And I would expect the US would be similar in approach, in the sense that they'll be very happy to export energy under the Biden administration.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 19:36

And finally, Trevor, what about carbon pricing? What's the outlook for that in the US under Biden administration?

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 19:42

You would say carbon pricing should be an obvious one, but it would, didn't feature in the Biden campaign at all. And I think, last time around when, Obama was was going for his first term, it almost felt like there was. McCain administration. Turned against almost anything that Obama wanted to do, and that included cap and trade, and they haven't backed away from that opposition to cap and trade. And I think without having really campaigned for it, it would be difficult to impose it as a policy at a federal level. So it, it feels like a federal cap and trade will be difficult, at least in, the next four years, just because it didn't really feature at all. In any of the campaigns and it was, it really didn't get a mention or a look and it would be considered a very big policy. Biden did say, he did put out that he supports the polluter pace type principle, and that maybe was a nod towards something like carbon pricing. But it's not our expectation to see, a big bill on federal cap and trade come in. Maybe if you had like independent senators raise it, and particularly if that was on the Republican side, he certainly wouldn't stand in its way and he'd probably be happy to see it. But I think, having the president originate that and push for the houses to develop those bills would be difficult. You'd need to see cross party support. I'm not sure. There's enough Republican support for it to get it through.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 21:16

Trevor, thank you very much for joining this special Montel podcast on the US election.

Trevor Sikorski, Head of Natural Gas and Energy Transition, Energy Aspects: 21:21

My pleasure. Thank you, Richard.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 21:25

That's about all from the Montel Special podcast. Many thanks to Keil and Trevor for their insights into this momentous election. Please remember to tune into the Monte Weekly podcast every Friday, and remember to keep up to date with all that's happening in the energy markets on Montel News. You can subscribe to the Meet Click podcast on Apple Podcasts and Spotify, and please leave a review if you can. Thank you and goodbye.