Energy leadership in Congress and perhaps the Cabinet will change next year, but leaders of the Akin Gump global energy team suggest there will be few dramatic shifts in energy policy, at least initially.
“This isn’t like 2009,” Henry Terhune, a partner with the group’s policy and regulation practice said in a conference call with reporters Thursday.
He and other partners discussed the potential impact of China’s growing demand for oil, using natural gas to fuel vehicles, extending incentives for renewable energy and the boom in deals worth more than $1 billion during a 90-minute call.
Terhune suggested a decision on the Keystone XL Pipeline will be coming within the next few months.
Adam Umanoff, co-chair of the global project finance practice at Akin Gump, said President Barack Obama’s re-election last month was considered good news for the renewable energy industry, although extending the production tax credit for wind energy — set to expire Dec. 31 — isn’t assured.
“The fiscal cliff is where everyone’s attention is, and the production tax credit is insignificant compared to that,” Umanoff said.
Still, he predicted “a strong likelihood of a one-year extension,” with both Democratic and Republican support.
“It’s a jobs issue for Republicans,” he said.
The tax credit has been extended seven times in the past 20 years and allowed to expire three times, retroactively extended each time, “with real disastrous consequences to the industry, because development ground to a halt,” he said.
Other key energy issues for the Obama administration include a carbon tax, clean energy and additional investment in transmission infrastructure, but Umanoff said those aren’t expected to gain much traction in Congress.
Gen. James L. Jones, former U.S. National Security Advisor and president of Jones Group International, suggested a move to natural gas-powered vehicles as a practical step toward what he termed North American energy self-sufficiency, based on the availability of shale gas deposits.
But he acknowledged enormous hurdles, including higher up-front costs for vehicles, limited range and trunk space and lack of refuelling infrastructure.
He said there are about 1,500 natural gas refueling stations in the United States, and only about half of them are open to the public.
He said costs will eventually come down, but he suggested the solution would involve a mix of the market and energy policy.
Jones also addressed China’s growing demand for oil, noting that it currently imports half of its oil and is expected to import three-fourths by 2035.
“There’s nothing shy and nothing insular about China’s energy strategy,” Jones said.
He and Stephen Davis, a Houston-based Akin Gump partner, also discussed China’s aggressive investments in western energy plays.
Jones expressed concern about issues of intellectual property.
“The Chinese are after that and the lead we currently enjoy in tight gas,” he said. “I think we have to be careful because of their appetite for buying technological know-how. The long-term goal has to be that China behaves more responsibly on the world markets.”