As the storming of the U.S. Capitol by a pro-Trump mob captured the attention of the nation and world this past week, quieter shifts were already taking place in Washington, D.C., to make way for a new presidential administration.
Some could have big consequences for Wyoming.
Election results for two races in Georgia tipped the U.S. Senate in Democrats’ favor. The blue wave sweeping through Congress and the executive branch likely sets the stage for President-elect Joe Biden to enact his plans to combat global warming.
Biden campaigned on a climate plan that would set into motion a 30-year transition to net-zero emissions by pivoting away from burning fossil fuels.
Power shifts like these can leave an energy-dependent state like Wyoming on edge.
Wyoming leads the nation in coal mining. It ranks among the top 10 in terms of oil and natural gas production. In short, fossil fuels play an outsize role in the economy here. The industry showers the state’s coffers with billions of dollars in revenue each year.
Many voters in the Equality State who have provided the country with power for generations worry the change in guard in Washington could break their families’ — and state’s — economic backbone.
Although energy producers in the state could face new regulatory hurdles under Biden’s watch, industry leaders and energy analysts also pointed to several ways that Wyoming could capitalize on the transition to a low-carbon economy.
Will Biden repeal Trump’s changes?
When it comes to the country’s future energy policies, a lot is at stake for Wyoming.
For one, some of the regulatory changes orchestrated by the Trump administration to ease burdens on energy operators could be undone in the early days of the Biden administration.
“With control of both Congress and the White House switching parties, many rules and programs that are working well for the state may be altered, abolished or halted,” Randall Luthi, chief energy adviser for Gov. Mark Gordon, told the Star-Tribune. “The Governor is committed to preserving the progress we have made under the Trump administration and will be reaching out to the new administration and Congress to explain and emphasize how the current policies are important to us.”
For one, the new makeup of the Senate means Democrats could have sufficient votes to enact the Congressional Review Act. The oversight tool gives Congress the opportunity to overturn recent rule changes enacted under the former administration.
Many of the over 100 environmental rollbacks introduced by Trump appointees over the past four years sought to streamline regulatory requirements in the name of the administration’s energy dominance strategy. They included reducing mineral royalty rates, relaxing methane emission standards or overhauling the landmark National Environmental Policy Act. And the rules finalized in approximately the last six months could be at risk of repeal under the Congressional Review Act. If Democratic lawmakers chose to enact the review act to invalidate recent rule changes, they would need to garner a majority of votes in the House and Senate.
But doing so would come with a catch: If it is used to rescind a rule made under Trump’s thumb, lawmakers would not be able to draft a rule that was “substantially the same” in the future, according to the act. For that reason and others, Democrats have used the act sparingly.
In contrast, between 2017 and 2018, Republicans in Congress overturned 16 rules introduced under the Obama administration using the act.
Even if the new Congress opts not to utilize the review act, federal agencies under Biden could start the slow process of undoing rule changes that worked in the favor of many energy companies in Wyoming.
“I think there’s a relatively high degree of certainty that it is going to be very hard here the next four years. I’m not wondering what is going to happen, I’m preparing for the worst,” said Pete Obermueller, president of the Petroleum Association of Wyoming. “I’m thinking about how we’re going to help Wyoming rebound and thrive in a setting where there is a clear objective to severely curtail any economic development of any kind on federal land.”
Drilling bans loom large
The razor-thin majority clinched by the Democratic party in the U.S. Senate last week could also give the Biden administration the upper hand to speed through significant cabinet nominations.
Since the presidential election, Biden has tapped Rep. Deb Haaland — a Democrat representing New Mexico — for the Interior Secretary. The federal agency manages the Bureau of Land Management, which is charged with holding the quarterly oil and gas lease sales.
Luthi, Gordon’s advisor, called Haaland’s previous comments opposing fracking “red flags.” Some fear Haaland would enact a drilling ban on federal land or a leasing moratorium.
Regardless, many Wyoming politicians predict the Biden administration will lease public lands more restrictively to help curtail the nation’s carbon emissions.
Wyoming could feel a painful punch from anti-fossil fuel regulatory changes in Washington more than its oil-rich neighbors. For one, it’s often more expensive to drill in the southern Powder River Basin than it is in the Bakken in North Dakota or the Permian Basin in West Texas.
What’s more, nationwide, only about 10% of oil and gas production occurs on federal land. But in Wyoming, over half of oil production is drilled on public land, along with an overwhelming 92% of natural gas.
In other words, Wyoming produces more oil and gas on federal land than almost any other state in the country, contributing 38% of the natural gas produced on federal land nationwide, along with 16% of oil production.
Changes to federal leasing could have a disproportionate impact on oil and gas operators in Wyoming.
But Kelly Fuller, the energy and mining campaign director for the Western Watersheds Project, noted that Haaland’s experience representing New Mexico — a state also deeply dependent on oil and gas development on federal land — would inform her policy decisions.
“She knows the tensions of governments that rely on funding from oil and gas development,” Fuller said. “She is not somebody who would be naive about those problems. She already has seen them as a representative of the state of New Mexico.”
And any overhauls to the nation’s energy policies will take time to trickle down to oil and gas, according to Chuck Mason, University of Wyoming economist and associate dean for research in the College of Business. He spoke to the Star-Tribune about a Biden presidency in November. In the short term, business will likely go on as usual in Wyoming’s oil and gas sector, he said.
A new report released on Friday by Moody’s Investors Service also noted Biden’s plans to combat climate change would not end the development of fossil fuels.
“The centerpiece of Biden’s Build Back Better economic recovery plan is a $2 trillion investment in green infrastructure projects,” the report noted. “While the plan pushes for major investments in clean energy, it does not call for divestment of fossil fuels or a carbon tax. It also does not call for a ban on hydraulic fracturing, which has driven the surge in domestic oil and gas production for more than a decade.”
Renewable energy and carbon capture
Nonetheless, Biden’s vision to steer the country toward more clean energy could undercut the coal, oil and natural gas production the state still deeply depends on, according to industry leaders.
In turn, renewable energy development could see a healthy boost under a Biden presidency.
Wyoming should jump on the opportunity to expand wind and solar energy, advocates of clean energy in Wyoming said.
Shannon Anderson, staff attorney for the Powder River Basin Resource Council, sees increased federal support for renewable energy as something Wyoming should capitalize on to expand employment opportunities and economic development.
“It’s important for the state to get to the table to think about how we create those jobs responsibly given the landscape and viewshed impacts or wildlife interests that we have here in the state,” Anderson said.
Wyoming needs a seat at the table to manage the transition away from coal, she said.
“There is a very important conversation that needs to happen once you accept the reality that we are going to continue to lose coal jobs and coal income,” Anderson continued. “How do we work with the federal government to have economic development to replace that? There are already established agencies that are willing to have that conversation with Wyoming, if Wyoming is willing to have that conversation with them.”
In the meantime, the state’s lawmakers and the governor appear ready to double down on keeping the state’s coal sector alive.
“The Department of Energy provides great opportunities to study new technologies and energy innovations,” Luthi said. “We will strongly encourage the increase of available funds for deployment of C02 capture facilities in Wyoming. We have the (Integrated Test Center), we have the coal and natural gas and we have the power plants, making Wyoming ideal for moving ahead with being the next state with a carbon capture facility.”
Carbon capture involves trapping, reusing or storing carbon dioxide, a greenhouse gas and pollutant emitted when fossil fuels are burned.
The governor and other proponents of the technology hope to find a commercially viable method to eventually capture all carbon emissions coming from coal-fired power plants or other industrial facilities. The captured carbon could then be used for enhanced oil recovery, transformed into new products or sequestered underground.
The Integrated Test Center is a research center tacked onto a coal plant in Wyoming. It’s one of the world’s only utility-scale carbon capture laboratories attached directly to a coal facility and capable of hosting large pilot projects.
A piece of legislation tucked into the federal spending bill signed by Trump in December could help speed up the development of carbon capture technologies in Wyoming and across the country. If the money is appropriated, there could be progress on a carbon capture demonstration project in Wyoming.
But it may be too little too late to save Wyoming’s top industry, according to Dennis Wamsted, an energy analyst at the Institute for Energy Economics and Financial Analysis, an energy think tank.
“The bigger issue, from my perspective, is that these carbon capture demonstrations are 10 years too late,” he said. “The market has moved very, very quickly away from the coal industry. There is going to be a huge influx of renewable energy projects in 2021 and 2022 and that is going to eat away (demand) from coal.”
“What you now have is an administration that is going to reinforce those existing market forces,” he added.
Markets over policy
Regardless of what policies the Biden administration ushers through in the early days of 2021, coal’s structural decline will likely persist over the next decade, several energy analysts underscored.
According to initial data released by U.S. Energy Information Administration, an impartial data center, Wyoming produced about 221 million tons of coal in 2020. That’s about 20% less than the year before.
Still, overall production outpaced the bearish forecasts initially made by analysts in the state when the pandemic hit. A financial report published by the state’s Consensus Revenue Estimating Group in May predicted in one estimate that annual coal production from Wyoming’s surface mines would land around 205 million tons for both surface and underground coal mines.
Analysts emphasized it didn’t matter so much who had control of Congress or the White House. Coal would still be in trouble.
Since peaking around about a decade ago, coal production in Wyoming has been steadily sliding downward. With that decline has come the loss of jobs: There are 40% fewer miners employed here in Wyoming than there were about 10 years ago, according to University of Wyoming economist Rob Godby’s analysis.
Roughly a dozen years ago, coal was responsible for generating about half of the country’s electricity. New analysis by the Energy Information Administration shows coal contributed to just 20% of the country’s electricity supply last year. Coal-fired power plants have continued to shut down, drying up demand for coal.
Many utility companies supplying customers with electricity across the country have been divesting from coal. Growing public pressure to transition to renewable energy along with cheaper alternatives have pushed coal out of its top ranking in the generation market.
In Wyoming, about 4,400 workers have jobs in coal, about 1.6% of the state’s population. Add to that the indirect and ancillary jobs connected to the coal industry, and the number of jobs tied to coal in Wyoming jumps to 12,000, according to Godby.
That said, in the short term, a Biden presidency could lend Wyoming’s coal industry a very temporary boost by making it slightly more competitive against natural gas, if drilling is restricted on federal land. (The less natural gas supply, the better time coal has holding its own in electricity markets.)
For now, coal operators may be able to recover some of the ground lost in 2020 this year.
Energy analysts’ earlier prediction that higher natural gas prices may be in coal’s favor appears to be playing out, based on the rosier annual production numbers for Wyoming coal.
“It is really just a reprieve,” Godby said.
More stimulus, more bipartisanship
Godby, the UW economist, ultimately cautioned Wyomingites not to jump to the conclusion that all the changes under Biden would necessarily harm the energy-dependent state of Wyoming.
“We have to remember that Biden has talked about being a moderate,” Godby said.
The shift in the Senate could catapult Sen. Joe Manchin, a Democrat representing the coal-producing state of West Virginia, into a position of power, he said.
Any energy policies proposed by Democrats will need to secure his and others more moderate votes too.
“When you have a razor-thin majority, moderates are probably going to have the floor,” Godby explained.
“Potentially we may see some real progress between Sen. Manchin and Sen. (John) Barrasso (of Wyoming) in the U.S. Senate Committee on Energy and Natural Resources,” Godby added.
Wyoming can probably expect more federal stimulus to flow to the state in the early months of Biden’s presidency too.
More economic stimulus packages could help struggling small businesses and families in Wyoming. That in turn, Godby noted, could help prop up energy demand. Bipartisan legislation to speed along energy infrastructure projects could also be possible to restart the country’s crippled economy.
“The flipping of the Senate doesn’t suddenly mean drilling bans and leasing bans,” he said. “I think what it means is that we have an opportunity here to carve out a long-term, planned energy policy, which is something that we honestly haven’t had for years.”
Follow the latest on Wyoming’s energy industry and the environment at @camillereports