When U.S. Energy Secretary Jennifer Granholm made her first public appearance today, she said — paraphrasing — that this is America’s moment and this is what the government is meant to do: provide opportunities. The reference is to rebuilding the American economy by making it carbon neutral by 2050.
Granholm’s remarks came during CERAWeek by IHS Markit
“President Biden’s vision is a clean energy future that leaves no worker behind,” Energy Secretary Granholm told the audience. “Oil and gas communities will have the resources they need to make this transition. They have the skill set … We will help coal, oil and gas transition their skills to clean energy jobs. I’m not going to sugarcoat how hard economic transitions are.”
She adds that the transition to a net-zero economy will produce a global clean energy market worth $23 trillion. And that is a huge opportunity for this country — one that has the greatest research and technology laboratories in the world. The government can provide the funds to help scale carbon capture and sequestration, alternative vehicles, and advanced nuclear reactors to create millions of new jobs.
The International Energy Agency says that oil and gas will still make up 46% of the global energy portfolio in 2040. But net-zero does not mean the elimination of fossil fuels. It means off-setting those emissions. That can be done by creating modern transmission grids that can carry more green electrons and underground pipelines that transport the CO2 that has to be stored. We need carbon capture and storage to get to net-zero, Granholm intoned.
The energy secretary noted that the auto market is making a slow but sure transition to available alternatives. At some point, it may be hydrogen cars. But right now, EV’s have the edge: BloombergNEF figures that 10% of all new cars will be electric by 2025, although they will be 28% by 2030 and by 58% by 2040. General Motors
Pull up a Chair
The oil and natural gas industries have come to the table. To be clear, their interest may diverge because they are both extractive industries that explore for hydrocarbons. But the natural gas industry has a rosier outlook in that the fuel is replacing carbon-heavy coal used in electric generation. Natural gas liquids are also the manufacturing sector to make products for everyday use. Petroleum, meanwhile, is almost exclusively used for transportation.
But just this week, the American Petroleum Institute is purported to have said that it will favor putting a price on carbon that is tied to the markets. While it is unclear at this time what that means, it is intended to be something different from “cap-and-trade” or a carbon tax. Such a “market” approach now has the ear of key lawmakers in the U.S. Senate: Chair of the Senate Energy and Natural Committee Joe Manchin, D-WV and its ranking member Lisa Murkowski, R-Alaska.
Under cap-and-trade, if a business cannot meet carbon targets, it must buy credits that allow it to exceed those limits. Advocates say that this is a free-market approach. Critics, though, say that CO2 is a global phenomenon and action by one state or one region will have little effect.
With a carbon tax, the government would tax a business according to its carbon footprint. The proceeds from the carbon fee would help fund the development of new technologies. In other cases, the monies are re-allocated to lower-income residents to help them pay their electricity bills. A lot of experts say that such a tax is the most effective way to measure carbon emissions, including Treasury Secretary Janet Yellen who wrote that it is the “textbook solution.”
“Getting a market price on carbon is going to be really important to make sure that we’re using market forces to try to most cost-effectively reduce CO2 emissions,” Exxon
Woods emphasizes that Exxon has invested $10 billion in emissions reduction technologies. That includes everything from carbon capture to battery technology to advancing green hydrogen. While those tools are improving, he says that they need more investment and must be mass-produced to reduce cost — something the Biden Administration is committed to doing.
Exxon is joined by Chevron Corp.
The net-zero movement has been gathering momentum for a few years. But Joe Biden’s ascendancy to the U.S presidency will no doubt accelerate it. Energy Secretary Granholm’s first public comments underscore the administration’s commitment — one that vows to leave no one behind. The oil and gas industry is now spreading its risks and wants to help guide this transition.