IEEJ：August 2020©IEEJ 2020
Special Bulletin
A Japanese Perspective on the International Energy Landscape (492)

August 6, 2020

Attention-attracting U.S. Presidential Election and Future U.S. Energy andEnvironmental Policies
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn July 31, the Institute of Energy Economics, Japan, held a webinar titled “U.S. Situationahead of Presidential Election and Energy Policy Outlook.” At the webinar, an IEEJ expert made apresentation on (1) the present status of presidential election campaigns, (2) what happened in theUnited States under the COVID-19 pandemic, (3) details and assessment of energy andenvironmental policies under the Trump administration and (4) an analysis of a potentialadministration change. The presentation was followed by a question-and-answer session for all
webinar participants. In the following, I would like to summarize key points to which I pay attention,
including the importance of the United States for analyzing the international energy situation, basedon the above presentation and question-and-answer session.
Why is the U.S. situation, particularly the presidential election, important? It is simply
because the United States is the most important, influential country in the world. Who leads thecountry as its President is an issue that exerts great influence on the world. The United States is thelargest economic power in the world. Because of its largest, strongest military power in the world, itis the most important superpower in international politics. Although the superpower position of theUnited States has begun to be shaken, the country is still the center of world order. Its policies andmarket trends are matters of which everyone in the world has no choice but to be conscious.
The United States’ presence in energy and environmental fields is also outstanding.
Though ranked second after China in primary energy consumption, the United States is still theworld’s largest consumer of oil and gas, the first and second largest internationally traded energy
commodities in the world. Thanks to its shale revolution, the United States has become the world’s
largest oil and gas producer. It also has the world’s largest nuclear power generation capacity and isamong leading coal and renewable energy producers and consumers in the world. Therefore, theUnited States’ influence on and presence in the international energy market are remarkably great. Its
domestic energy and environmental policies have the potential to shake the international energy
market through their influence on the domestic market.
U.S. foreign policies and external energy and environmental policies move the world
directly and greatly. Under the Trump administration, its policy on Iran has been symbolic. So havebeen its policies on China and Russia. Regarding climate change, the administration made decisions
attracting global attention, including the one to withdraw the United States from the Paris Agreement.
How the United States would maintain its interest in and engagement with the stabilization of global
order, whether it would become even more inward-looking and what policies it would take forstrategic international competition and the maintenance of its global supremacy are the issues thatwould continue to influence the overall international situation and energy geopolitics.
Regarding these issues, an apparent matter of interest to the webinar participants might
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have been what changes would come if Democratic candidate Joe Biden wins the presidentialelection. As a matter of course, the presidential election result is unpredictable. So far, Biden hasreportedly led incumbent President Donald Trump in polls. Even before the previous presidential
election, however, Trump was basically trailing behind Democratic candidate Hillary Clinton. This
fact is coupled with uncertainties about hidden Trump supporters and future economic and politicalsituations to make it difficult to predict the presidential election result. Nevertheless, the generalpublic may be aware of a potential administration change and Democrat-led Congress to bring abouta unified U.S. government and interested in such potential great U.S. changes’ impact on the world.
Attracting most attention regarding energy and environmental policies is a potentialchange in the climate change policy. While the Trump administration is not very “positive” aboutclimate change countermeasures and gives priority to fossil fuel utilization as symbolized by its
withdrawal from the Paris Agreement, Biden has come up with a policy to proactively enhance
climate change countermeasures. He has been a centrist Democrat, keeping some distance from themost ambitious environmentalist group in the Democratic Party. Through the party’s selection of its
presidential candidate, however, Biden has come closer to environmentalists’ Green New Deal
initiative, calling for cutting net greenhouse gas emissions in the electricity sector to zero by 2035.
Given that the Democratic Party plans to come back to the Paris Agreement, a Biden administration
could reverse the climate change policy of the Trump administration.
In the context of tougher climate change countermeasures, fossil fuels could faceheadwinds. Given the shale revolution that has supported U.S. economic prosperity, however, thepotential Biden administration may refrain from stalling the money-making revolution. At thewebinar, however, a conclusion was that a Biden administration’s “message” regarding energy andenvironmental policies would be great changes including that in the climate change policy.
We should pay attention to the potential changes that would be of internationalsignificance. In the climate change field, for example, the European Union is set to strongly promotea European Green Deal to push decarbonization along with a post-coronavirus restoration plan.
While whether the European Green Deal would be successful is attracting attention, a U.S. policychange coinciding with an administration change is expected to enhance U.S.-EU solidarity onclimate change and exert influence on global trends. Under the Trump administration, Japan has
been standing in the middle between the U.S. and EU stances that conflict with each other in regard
to climate change. If the United States and the EU come closer to each other or cooperate in climatechange policy, Japan’s future strategic response would become more difficult. In this sense, thepotential U.S. policy change would attract global attention. If a new U.S. administration isinaugurated, the U.S. policy on China would be one of the issues attracting the most global attention.
A dominant view is that the U.S. policy on China would remain tough even under a new U.S.
administration. Regarding climate change and other global issues, however, a new U.S.
administration could view cooperation with China as important. In this respect, future developments
are attracting attention.
However, another key conclusion at the webinar was that it is uncertain how great energy
and environmental policy changes under a new U.S. administration would be. Even if theDemocratic Party wins the U.S. presidency and Congress, top political priority would be given toeconomic initiatives including restoration from the coronavirus disaster and healthcare. Energy andenvironmental policies would be given less priority. Given this point, any energy and environmental
policy changes could not be so great or could take much time.
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It is also important to identify the limitations on and realities of U.S. federal policies andtheir influence on markets. Irrespective of U.S. federal policies, state governments’ energy andenvironmental policy as well as financial market developments and business initiatives can change
the U.S. energy market that is the most important in the world energy market. We may have to pay
much attention to U.S. trends including this point.

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