Much of the conflict between President Trump and Vice President Biden on the debate stage involved Biden’s position on fracking. President Trump accused Biden of announcing he would end the practice, something the former Vice President denied. Unfortunately for Biden, there is this thing called the internet, and recordings of Biden calling for the elimination of fracking are all over YouTube. But before you resort to accusing Russian intelligence of using AI to construct deep fake videos, just look at his environmental platform, which suggests that the elimination of fracking is central to his agenda, and just the tip of the possibly melting iceberg.
As one considers the possible impact of a filibuster-free Senate under Democratic control, it is important to look carefully at the energy agenda that has been spelled out by their candidate. Biden’s agenda is sweeping and far more complex than the debate discussion suggested. Take a deep breath. Here comes the highlight list. Biden calls for: restoring methane limits for oil and gas operations; ending federal leases for oil and gas drilling both onshore and offshore; ensuring that 100 percent of vehicles have zero emissions; eliminating carbon emissions from the power sector by 2035; making the entire economy net zero emissions by 2050; reparations to be paid by past polluters; $400 billion for clean energy research; rejoining the Paris agreement; reducing the carbon footprint of all buildings by 50 percent; and requiring firms to document and quantify the financial risk related to climate in their public reporting.
My coauthors Casey Mulligan, Tim Fitzgerald, and Cody Kallen and I just published a lengthy analysis of the Biden economic agenda, including a section exploring the impact of the climate policies listed above. We focus on estimating the costs associated with many of those large changes, but do not attempt to quantify the benefits, as the impact on the global climate will depend on the extent to which the U.S. is able to convince other countries to take similar actions. Absent such a commitment, the Biden agenda makes fossil fuels cheaper for everyone else on earth, and creates a massive rebound effect as foreign emitters capture market share for energy-intensive products at the expense of U.S. firms.
We estimate that the electrification of passenger vehicles would require a giant increase in power generation, since gasoline would no longer be the source of energy for passenger miles. Demand for power would rise by about 25 percent. Because 70 percent of power is currently generated by fossil fuels, the plan puts almost the entire grid on the table. If you assume that demand would be met by solar power, which is less efficient than power generated by fossil fuels, then the typical power bill would jump about $1,000 annually — not to mention that generating that much solar power would require a land mass about half the square footage of New England covered with solar panels. Tesla produces amazing cars, but at a high cost. We estimate that the electrification of automobiles would add about $12,000 to the price of each car. And that’s a conservative projection: The effect could be dramatically higher, as batteries rely on rare-earth minerals with a relatively inelastic supply, so higher demand could lead to massive nonlinear price increases. If you double the demand, you might quadruple the price.
Another way to think about the disruption associated with this plan is simply to quantify the value of the energy that Biden proposes taking offline. Proven fossil-fuel reserves in the U.S. are, we estimate, worth about $5 trillion. If you assume that the value of reserves left in the ground goes to zero immediately, you destroy $5 trillion in wealth. If you announce that the fuels will be worthless in a few years, then you create a race to extract them now, while they still have value. Ironically, this dynamic would make climate change worse, since it would frontload carbon emissions.
Against this backdrop, Biden’s assertion that he doesn’t oppose fracking is stunning. His plans to transition away from fossil fuels would no doubt sound the death knell of fracking, but he needs to prevaricate on the matter for a simple reason: The mineral wealth destroyed by these policies is extremely inconveniently situated politically. The Biden plan would cost, we estimate, Pennsylvania $390 billion, Colorado $184 billion, West Virginia $254 billion, and states with offshore drilling $366 billion. To put those numbers in perspective, the reduction in West Virginia’s wealth amounts to more than 3 times the state’s annual GDP.
Just as the Left has ignored the sharp decline in income inequality generated by Trump’s tax policy, it has ignored the progress we have made on climate. Our carbon emissions dropped by about 15 percent between 2007 and 2019 with the reduction driven by increased consumption of relatively clean natural gas. Skyrocketing use of natural gas has been driven by — yes, it is an inconvenient truth — fracking. The agenda described above would be calamitous and have little benefit.