Post Election Assessment: What's at Stake for U.S. Energy Policy - Energy Analysts from: Bloomberg Government Bloomberg New Energy Finance ...
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What’s at Stake for U.S. Energy Policy
Post Election Assessment: What’s at
Stake for U.S. Energy Policy
» Energy Analysts from:
Bloomberg Government
Bloomberg New Energy Finance
//
Bloomberg Industries
November 7, 2012ELECTION SUMMARY* 1
» With at least 303 electoral votes and about
50 percent of the popular vote, President
Barack Obama was elected for a second
term
What’s at Stake for U.S. Energy Policy
Senate
» The Democrats retain a majority in the
51 Democrats Senate
2 Independents
45 Republicans
(2 Undecided)
» The Republicans retain control of the House
//
House of Representatives
236 Republicans
188 Democrats
(11 Undecided)
*Results as of 11 AM EST on Nov 7.
Illustration by David Ingold / BloombergKEY FINDINGS 2
1 Sweeping energy policy changes are unlikely during
President Obama’s second term.
What’s at Stake for U.S. Energy Policy
2 Most immediately, there is a small chance that the wind
production tax credit could be renewed as part of a
broader tax effort.
3 EPA is likely to continue marching forward on regulations
to reduce everything from sulfur dioxide to greenhouse
gases.
4 Water-focused fracking requirements are unlikely to be
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adopted at the federal level. EPA is expected to release a
study on the matter in 2014.POLICY IMPACT: ENVIRONMENTAL PROTECTION 3
AGENCY
President Obama’s second term is likely to look similar to his
first term. EPA will continue promulgating new regulations on
everything from ozone to greenhouse gases.
What’s at Stake for U.S. Energy Policy
Major » Sulfur dioxide and nitrogen oxide regulations (power sector)
Regulations » Mercury regulations (power and industrial sectors)
From Last 4 » Greenhouse gas regulations (transportation and power sectors)
Years
Court » First wave of greenhouse gas regulations upheld by courts
Challenges » Sulfur dioxide and nitrogen regulations remanded to EPA
» Pending challenge to mercury rule
//
Possible » A replacement for Cross State Air Pollution Rule
Upcoming » Final coal ash disposal and water cooling rules
Regulations » Additional greenhouse gas standards (power plants & refineries)
» New ozone standardsPOLICY IMPACT: COAL 4
Power Sector Coal Market Share* Key Risks
60% » Conventional Pollutants: EPA
50% has a variety of regulations on deck
What’s at Stake for U.S. Energy Policy
40% that could require costly
30% environmental retrofits at existing
20% coal plants – new regulations on
10%
sulfur dioxide, nitrogen oxide,
0%
mercury, coal ash and water
2000 2002 2004 2006 2008 2010 2012 cooling.
U.S. Coal Production* » Greenhouse Gases: The wild card
Thousand Short Tons is what EPA will decide to do on
120,000
greenhouse gases for existing
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100,000 power plants.
80,000
60,000 » Natural Gas Prices: Most
40,000 environmental retrofits are
20,000
uneconomical at current gas price
0
levels.
2000 2002 2004 2006 2008 2010 2012
*Source: Energy Information AdministrationPOLICY IMPACT: FRACKING + OIL & GAS 5
President Obama is likely to define his position on fracking in
his second term. Federal oil and gas resources will continue to
be developed cautiously.
Status » Fracking: Primarily a state issue. Notable exceptions include
What’s at Stake for U.S. Energy Policy
EPA’s “green completion” regulation and the Interior Department’s
proposed chemical-disclosure policy on federal lands.
» Federal Land: Greater productivity, but less land available
» Onshore: Natural gas production slightly down, oil production is up
» Offshore: Production remains down after Gulf drilling moratorium
Possible » Fracking: EPA currently studying the connection between fracking
Upcoming and groundwater contamination. Findings (expected in 2014) may
Action
lead to proposals for broad federal regulation. States with
minimalist regulatory approach (e.g. North Dakota, Texas) would
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be hardest hit.
» Federal Land: More inactive federal oil and gas land removed from
circulation.
» Offshore: OCS plan would limit production to certain areas in
Alaska and the Gulf. No allowances for Virginia or California.POLICY IMPACT: NUCLEAR POWER 6
Policies Obama backs nuclear power in 80% “clean” electricity standard
» NRC approved first new plants in 30 years
» Loan guarantees conditionally approved (Georgia plant)
» Additional plants unlikely without carbon fee or increased subsidies
What’s at Stake for U.S. Energy Policy
Status » Two new plants not a “nuclear renaissance”
• Nuclear power loses vs. natural gas -- new plants unlikely
without carbon fee or increased subsidies
o Federal incentives fail: $10 billion in loan guarantees unclaimed
• No final license approvals for 2 years pending waste plans
Possible » Finding permanent waste repository
Upcoming » New NRC appointees - 4 of 5 terms will expire 2013-2016
Action
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» Carbon Fee?
• BGov Study: Nuclear power competitive with:
o $100/ton carbon-emission fee, or
o Natural gas prices quadruple, or
o Federal production tax credit increased 5x
» Post-Fukushima changes?POLICY IMPACT: CLEAN ENERGY 7
Wind
Obama supports extending the $22/MWh Production Tax Credit
(PTC), which expires at end of 2012
» Bloomberg New Energy Finance 2013/2014 US wind forecasts:
• With PTC: 4.8GW/8GW Without PTC: 1.5GW/3GW
Solar The federal Investment Tax Credit (30% Capex) supporting solar is
on the books through 2016
What’s at Stake for U.S. Energy Policy
» No major immediate impact on US photovoltaic demand growth in
the short term of Obama win. BNEF forecasts:
• Conservative: 3.3GW in 2013, 3.7GW in 2014
• Optimistic: 3.9GW in 2013, 4.6GW in 2014
Biofuels Obama has supported the Renewable Fuels Standard, now
being challenged by governors arguing it boosts gas prices
» EPA decision on whether to grant a waiver is pending and is
expected to be decided on during the lame duck period
» The administration’s position is unclear: Vilsack supportive of
RFS, Jackson less so.
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Clean energy Obama has stated his support for U.S. clean energy as a
trade with China domestic manufacturing hub
» 18 December: final antidumping duties expected from
Commerce Department
» Obama administration to continue to block China-US
mergers?ENERGY MARKET CONTEXT 8
Natural Gas Prices* Key Observations
$ per mmBtu (Henry Hub) » The President and Oil Prices:
$16
$14
Although campaigns sometimes
What’s at Stake for U.S. Energy Policy
$12 claim otherwise, there is limited
$10
$8
ability for the president to control oil
$6 prices or energy prices in general.
$4
$2
$0 » Natural Gas Prices: Historically low
2002 2004 2006 2008 2010 2012 natural gas prices have made it
difficult for coal to compete in the
U.S. Oil Prices* electric power sector. Higher natural
$ per Barrel (West Texas Intermediate) gas prices would be welcome news
$160 for both natural gas producers and
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$140
the coal sector
$120
$100
$80 » Domestic Energy Supplies: U.S.
$60 natural gas and oil production will
$40 continue to expand as a result of
$20
$0
hydraulic fracturing and horizontal
2002 2004 2006 2008 2010 2012 drilling technologies.
*Source: Bloomberg TerminalMODERATED Q&A WITH BLOOMBERG ENERGY 9
ANALYSTS
How to » Type your question into the dialogue box in the lower left hand
Participate corner of your screen and hit “Submit.”
What’s at Stake for U.S. Energy Policy
Participating » Sanford C. Reback, Energy Analyst Team Leader, BGOV
Bloomberg
Analysts » Rob Barnett, Energy Analyst, BGOV
» Rich Heidorn Jr., Energy Analyst, BGOV
» Alison Williams, Energy Analyst, BGOV
» Ethan Zindler, Head of Policy Analysis, BNEF
» Sam Brothwell, Senior Analyst, Energy & Utilities, BI
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For additional information please email us:
BGOVConnect@bloomberg.netABOUT THE ANALYSTS 10
Sanford C. Reback, Energy Analyst Team Leader, Bloomberg Government
Sanford Reback leads the Energy and International Trade teams at Bloomberg Government. In the
energy area, his team analyzes and quantifies the business impact of government laws, regulations and
proposals in the oil and gas, nuclear, coal and renewable technology sectors, among other projects.
Reback has more than 25 years of business, policy and legal experience, including service in the
Office of the U.S. Trade Representative, Executive Office of the President. He graduated from Stanford
What’s at Stake for U.S. Energy Policy
University where he earned a B.A., with honors and distinction, in political science. He holds a J.D. from
Harvard Law School and a master's degree from the Harvard Kennedy School of Government, and was a
Fulbright Fellow at the Royal Institute of International Affairs in London.
Rob Barnett, Energy Analyst, Bloomberg Government
Rob Barnett, an energy analyst at Bloomberg Government, specializes in energy sector economics,
environmental policy and strategy, and emissions markets. Before joining Bloomberg, he was an
associate director of Climate Change and Clean Energy at IHS Cambridge Energy Research
Associates. At IHS CERA he led the environmental and energy analysis for various studies, including
Growth in the Canadian Oil Sands: Finding the New Balance, and Crossing the Divide: The Future of
Clean Energy. Before that, Barnett worked for Clemson's Power Quality and Industrial Applications
Laboratory, where he modeled electric power systems to assess the impact of distributed generation.
Barnett holds a master's degree in economics from Boston University and undergraduate and master's
degrees in electrical engineering from Clemson University.
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Rich Heidorn Jr., Energy Analyst, Bloomberg Government
Rich Heidorn Jr. is an energy analyst with Bloomberg Government. He has been writing about energy
and public policy for more than 25 years. He worked for The Philadelphia Inquirer, where he won awards
for investigative and business reporting. He also served as general manager of an Internet startup
serving electric and natural gas traders. Before joining Bloomberg, he was an investigator and analyst for
the Federal Energy Regulatory Commission. He has a B.A. in journalism from Penn State University and
an M.B.A. from Temple University.ABOUT THE ANALYSTS 11
Alison Williams, Energy Analyst, Bloomberg Government
Alison Williams is an energy analyst with Bloomberg Government. She worked at the U.S. Department
of Energy, providing policy and budget recommendations. She also has worked at World Resources
Institute and the Woodrow Wilson Center's Environmental Change and Security Program. She holds a
master's in public policy from American University and degrees in political science and English from UC
Davis.
What’s at Stake for U.S. Energy Policy
Ethan Zindler, Head of Policy Analysis, Bloomberg New Energy Finance
Ethan Zindler is Head of Policy Analysis at Bloomberg New Energy Finance, the world's leading
provider of data, research and news on the clean and low-carbon energy sector. Zindler is charged with
managing and expanding BNEF's coverage of key policy developments around the globe impacting
renewables, biofuels and energy efficiency. He oversees BNEF research in the Americas. Zindler
previously served in the White House Office of National Service. Zindler holds an M.B.A. from Columbia
Business School and a B.A. from Georgetown University.
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Sam Brothwell, Senior Analyst, Energy & Utilities, Bloomberg Industries
Samuel Brothwell is a senior analyst for Bloomberg Industries, a new dynamic platform for in-depth
industry intelligence available on the Bloomberg Professional service. Brothwell specializes in the utilities
space, including electric and gas utilities, merchant power and integrated natural gas pipelines. Brothwell
earned his bachelor's in accounting and finance from the University of New Mexico, and is a certified
public accountant. He has been recognized or ranked by Starmine, Greenwich and Institutional Investor.You can also read
