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After Hydrocarbons: How the US Presidential Election Will Affect Global Energy
This formula sums up the results of the Biden administration’s energy policy, which insists that “trends are more important than personalities.” A good example is the oil industry. Biden began his presidency by revoking the permit for the Keystone XL pipeline, part of a system designed to transport crude oil from the Canadian province of Alberta to export ports on the Gulf Coast. Canada is a top-five oil producer, but a lack of export capacity means Canadian oil is essentially “tied” to North American markets, with its key grade, Western Canada Select, selling at a discount of more than 100% to Brent crude. $20 a barrel.
The Keystone XL shutdown, announced on Biden’s inauguration day, delayed these issues and indirectly made it easier for OPEC+ to rebalance the market. However, it did prompt an upgrade to the TMPL pipeline, which is designed to transport crude from Alberta to export ports but operates entirely within Canada. By May 2024, TMPL’s production capacity will increase from 300,000 barrels per day (b/d) to 890,000 b/d. That represents nearly 20% of Canada’s oil production. As a result, Canadian producers have been able to increase their supply to global markets.
At the same time, during Biden’s presidency, many countries that did not participate in the distribution of quotas were able to quickly increase oil production and exports. We are talking about Brazil, Guyana and Argentina, which together produced 1.3 million barrels per day more oil and gas condensate in 2023 than in 2019. According to the Energy Institute, these countries’ combined share in the global production structure increased from 4% to 6%. The development of Argentina’s Vaca Muerta shale formation is similar to the largest shale formations in several respects. We are also commissioning floating production, storage and offloading (FPSO) vessels in the waters of Brazil and Guyana, as well as in the United States.
In the US itself, production exceeded pre-COVID levels in late 2023 (12.9 million bpd vs. 12.3 million bpd). Most importantly, in April 2024, the Biden administration issued a permit for the SPOT deepwater export terminal project with a capacity of 2 million bpd. The terminal, which will operate until 2027 on the Gulf Coast, will be able to accommodate very large tankers (VLCCs) and increase US oil exports from the current 4 million bpd to 6 million bpd. This will make the US the second-largest oil exporter after Saudi Arabia, and will make OPEC+ less effective if it continues until then.
The suspension of new liquefied natural gas (LNG) export permits in January 2024 has had little impact on energy markets. The restrictions, lifted six months later by a Louisiana district court, did not apply to projects already underway that would significantly alter global supply and demand. Total LNG train capacity in North America is expected to more than double from the current 320 million cubic meters to 680 million cubic meters by the end of 2028, according to the Energy Information Administration (EIA). m/d (regassification equivalent). Three-quarters of the increase will come from the United States, with the remaining quarter coming from Canada and Mexico.
For comparison, the total volume of gas imports to the EU for the first nine months of 2024 amounted to almost 800 million cubic meters, according to the European Network of Transmission System Operators for Gas (ENTSOG). m/day, of which 296 million cubic meters per day are 98 million cubic meters of LNG. m/day are supplies from Gazprom. The implementation of new projects will increase the availability of gas in Europe, and new players will appear in Europe.
Among them is Türkiye, which discovered the Sakarya gas field in the Black Sea in 2020 with reserves of at least 540 billion cubic meters of gas. Current gas production in Sakarya is already around 5 million cubic meters per day, but will increase to 60 million cubic meters by the end of the 2020s. This exceeds Turkey's current LNG imports. As a result, Türkiye will be able to start supplying gas to the European market, which will help stabilize prices in the long term.
Global and technological trends have also shaped the development of low-carbon energy. According to the International Renewable Energy Agency (IRENA), the average global cost of commissioning onshore wind turbines fell by 25% between 2020 and 2023, while solar panels fell by 26%. This largely explains why installed wind power capacity in the United States has grown by almost 30% over the past four years, from 118 gigawatts (GW) to 152 gigawatts (GW), while large-scale solar power capacity has increased 2.5-fold (from 46 GW to 113 GW).
This figure does not take into account the residential sector, which is the driving force behind the growth of small families. During the same period, installed off-grid solar capacity in the U.S. grew from 28 GW to 52 GW, according to the EIA, with 36 GW installed per household by September 2024. In 2023, Congress extended for nearly 10 years a federal program that allows individuals to deduct a portion of the cost of purchasing and installing off-grid solar panels from their tax bills. So the off-grid solar boom in the U.S. is expected to continue regardless of the outcome of the presidential election.
The same applies to the energy storage sector, which has proven particularly in demand since the energy crisis of the early 2020s, when renewables failed to meet the surge in demand following COVID-19. The installed capacity of storage in the US electricity sector increased from 1.5 GW in December 2020 to 24.5 GW in September 2024. The need to balance the use of renewables in cloudy and windless weather provides further growth in the use of storage devices. Accordingly, the combined share of wind and solar power generation is expected to increase, increasing from 11.6% in 2020 to 15.5% in 2023.
At the same time, the US will play a major role in the nuclear energy market, where new demand niches are emerging. Large IT companies that need to supply low-carbon energy to their data centers 24/7 will be the main customers for small modular reactors (SMRs) in the future. One of the SMR manufacturers is the US-based NuScale, which has already begun exporting its technology abroad. Last summer, Romania signed a contract to build an SMR. Turkey is also interested in NuScale reactors, which plans to commission a new nuclear power plant to replace coal power.
Finally, the development of electric transport will also determine overall trends. A striking example of falling technology prices is the decision by European and American regulators to impose tariffs on Chinese electric vehicles. The share of electric vehicles and plug-in hybrids in new passenger car sales in the US increased from 2.3% in 2020 to 9.5% in 2023, and by vehicle mix increased from 0.8% to 2.1%. By 2030, these figures will reach 55% and 17%, respectively, according to the IEA’s baseline forecast, based on an analysis of existing trends and regulations.
Overall, the Democratic Party's wary attitude toward traditional energy or the Republican Party's slightly conservative views on renewable energy development could seriously change the current trend, namely, the growth of oil and gas exports to the United States, along with the growth of exports to the United States. Global leaps in the development of renewable energy and electric transport will help stabilize the hydrocarbon market. The key "story" in the low-carbon energy sector will be the boom in energy storage, which will make the use of renewable energy more reliable. The icing on the cake can be considered the emergence of new demand niches in the nuclear energy market, for which the United States has the technological capabilities, including one of the world's first sodium reactor construction projects, which the United States is implementing. Terra Force.
But the US election could have major implications for environmental issues and energy market regulation. At issue is the relationship between the US and China, which is particularly important for clean energy. China is a major producer and processor of metals and minerals for low-carbon energy and transport, including silicon, lithium, graphite and rare earth elements. If Donald Trump wins, the US will certainly take steps to reduce the dependence of global markets on Chinese supplies. At the same time, President Trump plans to increase pressure on China to build coal-fired power plants, although their rate of operation has slowed significantly in recent years.
The situation in the US-China standoff is very important for Russian energy. If a new Cold War becomes a reality, it could facilitate Russia’s reintegration into the global economy, especially if the largest armed conflict in Europe in 80 years is resolved. The lifting of sanctions will determine whether Russia can realize opportunities to increase energy exports over the next five years, as demand for oil continues to grow.
The editor's opinions may not coincide with the author's point of view.