While issues like inflation, crime and immigration are on the top of voters mind as the midterm election is upon us, energy policy is still a top priority for both political parties in 2023.
On the heels of the passage of the massive Inflation Reduction Act, which included significant climate and energy policy changes, Democrats will be looking to double down on future investments in renewable and green energy, while Republicans have an interest in prioritizing energy policy and changing energy permitting laws, according to a panel of partners at Akin Gump Strauss Hauer & Feld.
During a hour-long webinar Nov. 1 titled, “Energy Outlook for the Midterm Elections,” the firm’s energy and regulatory partners discussed the mid-term election expectations as well as a look-ahead for energy policy. Energy will be front and center in 2023 though priorities will be different in each party.
Currently, the Democratic Party controls the House of Representatives, Senate and White House, but Republicans have a chance to gain seats in both chambers after Tueday’s elections, possibly gaining control in either or both the House of Representatives or both.
“Despite the fact that the headwinds are quite strong, we know midterm elections are very much about voter turnout and intensity,” Arshi Siddiqui, Akin Gump partner, said. “When you look at a lot of the races across the country, they’re within the margin of error.”
If Republicans take control of the House of Representatives, they have already identified energy as one of the pillars of their party platform, said Akin Gump partner Jamie Tucker.
Republicans have already introduced HR 6858, the American Energy Independence from Russia Act, which includes such provisions as approving the Keystone XL Pipeline, changes in the permitting for LNG import and export facilities and tying drawdowns in the strategic petroleum reserve to certain leasing metrics of federal lands. While a Republican-controlled House could pass the bill, it would take a lot of negotiation to transform a political bill to a more nuanced legislation that can gain enough support to pass in the senate, Tucker said.
A divided government might lend itself to more bipartisan compromise, Siddiqui said. Senator Joe Manchin (D-WV) proposed a plan earlier this year to make energy permitting easier. If passed, it would have eased permitting of long distance transmission lines easier as well as sped up the process for permitting for other types of energy projects.
In addition to legislative powers, Congress also has some oversight power: they can hold committee hearings and bring in executives to testify, Tucker said. A Republican-controlled Congress will take a hard look at conflicts of interest around ESG — Environmental, Social and Governance issues — Tucker added.
At the White House, if Republicans make strides on election night, the current administration will double down on the regulatory side, said Siddiqui. This includes provisions related to recently passed legislations.
“I think from that perspective, we have a lot of runway because there’s a lot of money, there are a lot of details that need to be hashed out,” Siddiqui said. “This type [of] investment is unprecedented, especially when you look at layering that with all the other pieces of legislation that passed during COVID.”
Regardless of the election outcome, the passage of the Inflation Reduction Act will continue to impact U.S. energy policy. Among the massive new law’s provision is an estimated $300 billion or more in incentives related to energy security and climate change.
“While it’s quite well-baked conceptually in most regards, there’s a lot of detail that needs to get done,” Shariff Barakat, another Akin Gump partner said. “There’s a lot of rule-making that’s going come out of Treasury and a few other agencies related to the IRA.”
The Treasury Department has already requested comments on the renewable energy provisions tax credit transfer regime, Barakat said.
“So a big part of advocacy right now is not necessarily limited to the Hill, but it’s at Treasury,” Barakat said. “There’s a real opportunity for people to be advocating there, and some winners and losers to be decided based on that process.”
Treasury has indicated that it will prioritize guidance on items that come into effect in the near term before tackling provisions that aren’t slated to go into effect within a couple of years.
From Congress, there is an opportunity to help shape how the administration approaches rules and regulations, and there’s an opportunity to move forward on a bipartisan basis on the traditional energy side, Siddiqui said.