The Biden climate plan and what it means for Arab Gulf States

Although the American presidential race hasn’t officially been settled, it looks increasingly likely that Joe Biden will be the 46th President of the United States. President-elect Biden’s climate and energy plan is the most ambitious ever of any major party presidential nominee – a plan that raises exigency of climate change to “the greatest threat” facing US national security.

Biden has promised to pay more attention to environmental issues, including fracking. If the new US administration bans fracking on federal lands and in its waters, the GCC states stand to benefit from such a move through an expected increase in global oil prices.

The Biden plan– a $2 trillion climate plan to eliminate carbon emissions from the US power sector and accelerate a research-driven transition to renewables – marks an unprecedented commitment to tackling climate change. The plan is set to commit the US economy to net-zero emissions by 2050, while promising bold executive action on methane emissions, stricter fuel-economy standards, and nationwide energy efficiency standards.

His pledge to reassert the United States' leadership role on climate and environmental policy will likely propel the US to rejoin the Paris Climate Agreement and undo much of the Trump administration’s deregulatory agenda through a series of executive order reversals.

This is great news for the environment; but one aspect of the Biden’s climate plan is particularly good news for states in the GCC – namely, his promise to ban fracking on federal lands and in waters. So, what is fracking? And how exactly is a ban on fracking relevant to Gulf states?

Fracking is the technology that allows oil and gas to be extracted from shale rock by drilling thousands of feet into the ground and injecting a solution of water and chemicals to fracture layers of shale rock. The recent fracking boom has propelled the US into a state of energy abundance: The US went from being the world’s biggest oil importer to a net oil exporter by tapping into the unmet potential of unconventional oil and gas.

Economically, the fracking boom reduced the country’s trade deficit, added over $430 billion to annual GDP, while generating at least 3 million American jobs that pay double the median US salary. Geopolitically, the shift to energy abundance grants the US greater freedom of action in the realm of foreign policy. Prior to the fracking boom, the US was forced to strike a much more delicate – yet perilous – balance between national security interests and oil market dynamics. Fracking-induced freedom has given the US the latitude to counter Iran’s destabilizing activities and support for militant proxies through aggressive economic sanctions.

However, fracking introduces a number of serious environmental risks, including stress-induced earthquakes, greenhouse-gas emissions (i.e. methane), community exposure to harmful substances, and groundwater contamination.

Read more: Merkel: US, Germany must stand together on climate change

Fracking is therefore a double-edged sword, which may explain the President-elect’s inconsistency: In 2019, Biden said "we would make sure it's eliminated" when asked about the future of fracking, later qualifying his stance by saying the ban would be restricted to federal lands and waters, which nevertheless forms a sizable percentage of overall US oil and gas production. Interestingly, Biden’s running mate Sen. Kamala Harris did not retract her initial promise to eliminate fracking entirely, declaring that "there’s no question” she is favor of a complete ban on fracking.

Beyond the fracking ban on federal lands and waters, the Biden-Harris regulatory agenda will likely limit the oil and gas industry, particularly given the need to appease the less moderate segments of the democratic party (i.e. Congresswoman Alexandria Ocasio-Cortez and Senator Bernie Sanders). We can expect the Environmental Protection Agency, Department of Commerce and the Department of Interior in a Biden administration to make it much more difficult for oil companies to explore or drill new wells initially, and transport oil when produced.

That being said, how does this impact Arab Gulf states embarking on national economic diversification projects?

It gives them a much-needed cushion to navigate the delicate balance between alleviating pandemic-induced economic difficulties and ambitious plans to diversify and successfully transition into knowledge-based economies.

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How? The expected decrease in oil and gas production under a Biden-Harris administration will drive an increase in global oil prices. With economies in the GCC still reliant on the production and sale of oil and natural gas, the Biden-Harris regulatory agenda would mean greater oil revenues in the short-term, and a a faster, smoother path to economic diversification in the long-term. In addition, although US energy prowess makes American strategic interests in the Middle East more important than commercial interests, the global nature of the oil market means that the price at the US gas pump is inextricably tied to regional stability as well as corresponding supply and demand trends.

It is therefore clear that whether fracking is partially or entirely banned, a significant diminution of US interests in the region is highly unlikely. Indeed, US interests in the Gulf transcend oil supply, transit, and pricing—the relationship is central to regional stability, countering terrorism, and the promotion of a rules-based global order. While the fate of fracking remains in flux, one thing is certain: A Biden-Harris administration has various regulatory avenues to limit US oil and gas production, and will likely act on them through a plethora of policies and executive actions. Fortunately, this comes with great potential for both the environment and Arab Gulf States in particular.