Why Kamala Harris faces an energy transition challenge if she wins the White House

If she is elected president today Kamala Harris could find the US energy transition’s second act more challenging, even with the benefit of a strong running start engineered by her outgoing boss Joe Biden.

“If you look at the industrial strategy the administration has really developed and enacted and how they describe it – government enabled and private sector led – I would expect that model to continue,” said Josh Freed, senior vice president for climate and energy at Third Way, a centre-left think tank in Washington.

While providing important tailwinds should Harris take office in January, that template also has limitations which are becoming apparent. Addressing them would require leadership skills at the national level she had little opportunity to employ as vice president.

Harris would inherit the landmark Inflation Reduction Act (IRA) and bipartisan $1.2trn infrastructure law, Biden’s signature legislative accomplishments which he narrowly got through Congress in 2021-22. Together, they provide historic levels of US appropriations for clean energy and climate-change mitigation and adaptation.

IRA long-term tax credits and its broad suite of federal grants, loans and loan guarantees, have led companies to announce $265bn in new clean automotive, generation, and domestic manufacturing supply chain investments, according to the White House.

While an announced project does not signify it will get built, progress toward establishing a domestic manufacturing supply chain would be critical for Harris to ramp a move away from fossil fuels. For decades, US firms left for cost reasons, mainly to China and Southeast Asia.

Clean energy generation should set annual records during the next presidential term, although supply will increasingly lag forecast demand growth, according to private consultants. How to get significantly more solar and wind interconnected to an aging electric grid poses a problem without easy solutions.

“That is going to be one of the big questions that whoever wins the White House and is in power over the next four years is going to have to navigate. How do we meet that demand? It’s a new world,” said Freed.

Harris is a big supporter of electric vehicles (EVs) and offshore wind as energy transition puzzle pieces. Still, they face tough economic and supply chain hurdles even with lucrative federal tax credits and other financial assistance. What more would she try and do to help with opposition Republicans taking a dim view of both?

Is the public feeling the benefit?

Even as the energy transition has picked up pace under Biden, the cumulative impact of his policies is only now starting to be felt by some of the US population, which remains largely tethered to carbon electricity and the internal combustion engine.

Harris has sought to assume political credit for how the administration has addressed climate change but most Americans, particularly those outside cities in progressive Democratic stronghold coastal states, aren’t paying a lot of attention.

They don’t share her view that climate change is an “existential threat,” even if most generally agree that emissions from human activities are playing a role. For them, more pressing issues are crime, economy/jobs, education, healthcare costs, housing affordability, illegal immigration, inflation, taxes, and terrorism.

Perhaps for this reason, Harris did not focus on climate in her campaign despite longstanding activism on the issue. Once in the White House, that would not be an option.

Without expediting clean energy adoption, the US won't attain Biden's climate targets through 2035 that Harris supports.

US history is full of examples where presidents successfully took their case for action on issues of national importance directly to the people. This, in recognition that the executive branch can only do so much without ample public support, even after presidential actions and with laws are on the books.

This appears the case with the energy transition. Most Americans oppose the US government forcing accelerated electrification of the economy. They cite potential impacts such as the cost of household goods and utility bills, EV infrastructure shortcomings, grid reliability, and lifestyle changes.

Their aversion to Democrats’ aggressive top-down “all-of-government” approach – executive branch coordination to impose federal policy changes, rules, standards, and structural reforms – raises questions over how far and fast Harris would, or could, pursue this.

She would almost certainly be under pressure to quicken the pace on climate from fellow progressive Democrats, her core base of support that want big, expansive government to wield its regulatory powers.

Reconciling public-party positions would not be easy although Harris has shown she can be pragmatic, if necessary. An example was her dropping a call for a ban on hydraulic fracturing in response to objections from within her party in major natural gas states such as Pennsylvania, a key electoral battleground.

Supporters contend that she would be up to the task of creating a broader public understanding of the challenges involved and explaining the science behind potential solutions and measures.

Harris’ powers of persuasion would be further tested given most Americans support an “all-of-the-above” energy policy. This runs counter to her aim for an accelerated phase down of fossil fuels (and Donald Trump’s rejection of renewables).

Americans who back either increased or continued domestic production of oil and natural gas cite supply, job creation, and US’ ability to help allied nations facing shortfalls.

Then there is cost. While most consumers are willing to buy clean energy, they are generally wary about paying much more for climate action. The cost issue is complex and has become a political football against a backdrop of electricity inflation under Biden, the highest in decades.

A system that needs to be refreshed

“What we have now is a power system that is working with heavily depreciated assets that all will need to be updated and refreshed,” said Jesse Noffsinger, partner in the power solutions group at McKinsey, who questions critics' argument that, “Let’s stop the energy transition and bills won’t go up.”

The consulting firm estimates total energy transition spend at 1-2% of gross domestic product, according to Humayan Tai, global leader of its electric power and natural gas practice.

“The broader question for me is we’re going to be paying for this over time anyway. We’ve paid for big transitions in the past. Is this very different than what we have seen before? Is the affordability piece just political in nature or is it something that gets passed on over time like inflation?” he asks.

Tai cautions that after a first round of massive implementation, the US is at a point where levelised cost of energy (LCOE) gets “much trickier” for clean technologies even with IRA benefits, which could slow deployment of capital.

He notes capture prices continue to fall, difficulties accessing more marginal resource, equipment costs are higher post-Covid, interconnection queues are longer and permitting and policy uncertainty.

“The costs are actually not as clearly coming down as they used to,” he said.

Harris is aware that she could not afford to lose the political argument for clean energy on cost, a major selling point, even more so when it is under attack for grid reliability, environmental, and human rights issues associated with its use.

This is particularly the case with solar, which she and Biden are partial to, but heavily relies on critical minerals processing, materials, and modules from China.