IEEJ：November 2020©IEEJ 2020
Special Bulletin
A Japanese Perspective on the International Energy Landscape (507)November 19, 2020

Importance of U.S. in Global Energy Situation under the Next Administration (2)Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
While U.S. President Donald Trump has yet to declare his defeat in the presidential
election, with uncertainties lingering about the transition to a new U.S. administration,
President-elect Joe Biden’s announcement of his incoming chief of staff and other moves toward aBiden administration have happened. In such situation, climate change policy among U.S. policies
expected to change dramatically under the new administration is attracting attention in the UnitedStates and the rest of the world.
Trump has been skeptical about the climate change issue itself since his campaign for the2016 presidential election. As soon as his administration was inaugurated, he unilaterally offered towithdraw the United States from the Paris climate agreement that his predecessor Barrack Obama
tried hard to produce, claiming the pact was detrimental to the U.S. economy, industries andemployment. Trump has supported the expansion of shale oil and gas production and exports
backing up U.S. economic prosperity and admitted the importance of coal, implementing policies
giving priority to fossil fuels. No one can say that the Trump administration has seriously tackled theclimate change issue. Trump’s policy stance thus can be understood as negative on climate change
countermeasures.
In contrast, Biden known as a centrist Democrat has clarified his positive attitude oftackling the climate change issue, though distancing himself from aggressive environmental
conservation policies or stances advocated by hardcore environmentalists within the Democratic
Party. In pursuit of victory in the presidential election, Biden has offered long-term environmental
targets including the decarbonization of the U.S. power sector by 2035 and the entire United Statesby 2050, while giving due heed to hardcore environmentalists in a bid to secure the party’s unity andconciliation. He has also clarified his plan to come back to the Paris Agreement soon after his
inauguration as president. Biden’s climate change policy message clearly differs far from Trump’s.
The dramatic revision of the U.S. climate change policy message is destined to exert great
impacts on climate change and energy issues in the United States and the rest of the world. First, itwould enhance global momentum for tougher climate change countermeasures. As the United States
under the Trump administration has retained a negative stance on climate change countermeasures incontrast to the European Union’s proactive stance on them, developed countries have been divided
over climate change. Japan has been positioned to balance between the United States and theEuropean Union. Recently, however, China has offered a target of achieving carbon neutral status by
2060 in the wake of the European Union’s 2050 carbon neutrality (net zero greenhouse gasemissions) target. Japan has also come up with the 2050 carbon neutral status target. Moves toenhance climate change countermeasures have thus gained momentum. If the Biden administrationis realized, a U.S. 2050 carbon neutrality target would lead such moves to accelerate.
Irrespective of whether the tough carbon neutrality target is achievable within their1

IEEJ：November 2020©IEEJ 2020
respective target period, Japan, the United States, the European Community, China, and South Korea
that pursue carbon neutrality accounted for 58% of global energy-related CO2 emissions in 2019. If
these major CO2 emitters commanding more than half of the global emissions try to achieve carbon
neutrality, it would be significant. Their emission reduction would not only make great contributions
to global emission cuts but also encourage other countries to enhance climate change
countermeasures. International talks on tougher climate change countermeasures could gain
momentum.
The United States itself would have to implement various measures or initiatives toachieve carbon neutrality in the power sector by 2035 and in the whole of its economy by 2050,
exerting great impacts on its economy and society and its energy sector. First, the United States
would have to thoroughly enhance energy efficiency. To this end, it would be required to toughen
auto fuel efficiency standards that have been eased under the Trump administration, as well as
efficiency standards for energy-consuming appliances and buildings. The United States would also
be required to promote overall electrification including vehicle electrification while achieving zeroemissions in the power sector. The power sector decarbonization would require the United States tospread non-fossil power generation using renewable energy such as wind and solar photovoltaics, aswell as nuclear power plants including small module reactors. Large-scale investment in clean
energy innovations would also be required to develop and diffuse advanced or innovativetechnologies. Given that energy supply and demand would have to structurally be transformed toachieve carbon neutrality, the U.S. energy market would undergo dramatic changes towards 2050.
However, the problem is how far the policy message change under the new administration
could lead the U.S. energy market to be actually transformed. As noted above, carbon neutrality is
not an easy challenge. In 2019, natural gas was the largest power source in the United States,
accounting for 39% of power generation, followed by 24% for coal. Fossil fuels thus covered a
combined 63% of power generation. Coal-fired power generation is on a decline. Given the large
power generation share for natural gas that has grown more competitive, however, it would not beeasy for the U.S. power sector to achieve zero emissions in the next 15 years. Of primary energy
supply in the United States in 2019, oil captured the largest share at 39%, followed by 32% fornatural gas and 12% for coal. Fossil fuels accounted for a combined 83%. Given oil’scompetitiveness and convenience as transportation fuel and the vast land of the United States, itwould not be easy to dramatically lower the oil share. Natural gas that has become price-competitive
thanks to abundant supply through the shale revolution would remain competitive. Therefore, itwould be indispensable for the United States to seriously mobilize all policy and investment
resources to achieve decarbonization.
At present, however, top priorities for the United States include the fight against
COVID-19, economic reconstruction, and healthcare reform. Climate change countermeasures areunlikely to become a real top priority. One option is to follow suit behind the European Union thathas positioned clean energy investment as the center of economic reconstruction from theCOVID-19 pandemic to simultaneously realize economic reconstruction and emission cuts. However,whether such option would be accepted widely in the United States is uncertain. How far the next
U.S. administration would mobilize policy resources for climate change countermeasures or what
priority it would give to climate measures would attract much attention. Both Obama and Trump had
difficulties in coordinating with Congress over policy planning and implementation and depended on
executive orders and authorities in dealing with various issues. Such relationship between theexecutive and legislative branches could remain unchanged under President Biden. If Republicans
win control of the Senate, Congress will remain divided, forcing key policies accompanied by2

IEEJ：November 2020©IEEJ 2020
budgetary measures to be stalled. In this sense, whether Biden could realize his policies would
depend on twin runoffs in Georgia on January 5 next year. At present, Republicans have won 50
seats against 48 seats for Democrats in the 100-seat Senate, leaving two seats for the Georgia
runoffs.
Within the Democratic Party, confrontation between hardcore environmentalists andconservatives has grown remarkable since the presidential election. How Biden would promoteclimate change countermeasures could be susceptible to various opinions within the party. The
Democratic Party could not necessarily be completely united to promote climate change policies. We
should pay much attention to what specific changes would come in the United States in response toclimate policy message revisions.

Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/special_bulletin.html

3