While it may seem cliché to say at the end of any given year that it’s been one for the record books, looking back at what the energy sector went through in 2021 it’s certainly true for this whirlwind, milestone-setting year. Mainstream attention continues to rain down upon the power industry, as customers demand more than their lights to turn on when the flip switches and fair bills: now they also seek out clean energy, digital programs, and other personalized options on the customer journey. Similarly, new technologies unlock ground-breaking possibilities, while public leaders are honing in on energy more than ever before.
Given that landscape, and from the unfolding of numerous events that shook the industry—from ERCOT’s near collapse to the tense international climate negotiations-- no doubt this year will be a main player in many future energy-focused books. But rather than wait for those full-length hardcovers, we can start with the CliffsNotes versions.
So as we close out 2021, let’s look first at a handful of the major public policy stories related to the world of energy from this past year, which set the landscape ahead. Then next week, in Part II to this year-end review, we’ll dive into the major events that caused twists, turns, and pivots throughout the year.
The Start of the Biden Administration and Their Clean Energy Goals
In January, the year started with the ushering in of a new Presidential Administration. When President Joe Biden was inaugurated, he was carrying on his back a host of notable energy-related campaign promises. On the 2020 campaign trail, then-candidate Biden featured a number of notable positions for the energy sector. As BrokerX previously noted, these promises included resetting many of the energy policies from President Trump, a commitment to push towards net zero emissions by 2050, investing $400 billion in the coming decade on clean energy, creating 10 million clean energy jobs, and doing so by leaning into the possibilities of electric vehicles (EVs), offshore wind and other renewable energy, building energy efficiency opportunities, and highlighting the need for energy equity and environmental justice.
Advocates and stakeholders across the sector were, of course, eager to learn whether this was political posturing or if he would live up to his pledges. Within the first month in office, Biden signed a suite of Executive Orders on tackling the climate crisis at home and abroad, showing he was serious. Additionally, by nominating Jennifer Granholm as the latest Secretary of Energy, Biden made good on a promise to prioritize leadership towards electric vehicles. In the early days of his Presidency, Biden also assembled numerous leadership summits and prioritized publicly the need to act towards clean energy.
Towards the end of 2021, he even put pen to paper to make sure the federal government was walking the walk rather than just talking the talk, requiring carbon-free power for federal government facilities by the end of the decade, 100% zero emission vehicles by 2035, and put the power of government procurement to work behind carbon-neutral opportunities.
While there’s still plenty of work to be done to come close to those initial campaign promises, 2021 can be seen as a year where Biden hopefully set the stage for further action to come throughout the rest of his presidency. A job well-started, but not yet done. That said, the other big story towards Biden’s goals came from another of the federal government’s branches.
Building the Energy Sector Back Better via the Infrastructure Act
For most of the summer and into the fall, the floors of the House of Representatives and the Senate were filled with debate about the Infrastructure Act, often referred to as Biden’s Build Back Better Plan. In a nation still reeling from the economic hurdles of the COVID pandemic, an injection of federal funds was seen as necessary, and doing so via infrastructure that would create economic activity, jobs, and long-term impacts to the energy sector were a great way to accomplish multiple goals at once.
To be sure, the initial version of the Infrastructure Bill that was unveiled in June looked quite different than the one that was ultimately passed in November, though many would argue that’s simply how politics work. While this bill of course encompassed more than just energy-related topics, some of the utility, clean energy, and climate provisions were among those that received the most public attention and scrutiny. These hot-topic line items included funds to deploy more EV chargers, a potential Clean Electricity Plan, upgrades to modernize and expand the U.S. grid system, and more.
Ultimately, some of the key provisions—like the aforementioned Clean Electricity Plan—did end up on the cutting room floor for the sake of negotiations in a Senate where the party in power has quite literally the slimmest majority possible. In the end, the Infrastructure Bill boasted the following inclusions:
$7.5 billion to build a national electric vehicle charging infrastructure
$6 billion in funding for battery storage research, development, and implementation
$3 billion for funding advanced nuclear reactors
$2.5 billion to develop new carbon capture demonstration projects
$1 billion towards electrifying the nation’s school buses
$500 million to develop clean energy projects on former mines
$500 million in grants for energy efficiency upgrades in public schools and $120 million for the same in industrial facilities
$65 million to upgrade the grid for reliability, resilience, and to expand capacity for renewable energy
Note, of course, that there are still debates going on for the Reconciliation Package that may include addition energy-related funding, such as the hotly debated incentive for the purchase of new EVs. So, 2021 may still have additional energy wins coming from the Legislative Branch depending on how final negotiations play out.
Energy and Climate on the Global Stage at COP26
Stepping back from the national level to the international arena, the latter half of the year was clearly defined in the energy sector by the convening of COP26 in Glasgow, Scotland, the international conference for businesses, world leaders, and advocates in pushing towards solutions on climate change. These two weeks of meetings, debates, and behind-the-door deals have done more to set the stage on the coming years of clean tech and climate investment, for better or worse, than pretty much any other event. While many came away wishing greater levels of commitment could have been reached by international representatives, some of the key provisions agreed to during these talks included:
An explicit call to phase down coal and fossil fuel subsidies
An agreement about the key role of carbon markets
Commitment to put an end to deforestation
Some shortcomings included the delay until 2023 at the earliest for the nation’s developed nations to meet the $100 billion climate finance goal, as well as reviews that found that the current level of global carbon reduction commitments indeed fall below the necessary level to prevent temperature increases of more than 1.5 degrees Celsius.
So, COP26 could have been more successful, but it did still provide insights into where the world’s commitment levels are. The biggest outcomes for the energy sector, though, did in fact come not from policy but instead from the business world who was also in Glasgow for the meetings. COP26 “unleashed a wall of new private sector money” according to one corporate head at the meetings, and “investors steal the stage from diplomats’ said another. Those business leaders present had productive meetings with investors, shook hands with leaders, and when we look back these might be where the most major impacts came.
Other Major Policy-Related Stories
Lest we overstep on the promise to simply deliver CliffsNotes, here are some last few notable headlines that also made energy policy headlines:
State-level governments have been leading the way on energy storage investment, seen by many as the key to unlock the future of the grid
Pending fuel shortages and rising spikes in oil prices have resulted in some careful policy needed to provide relief to comsumers, which the Biden administration ultimately engaged in
No doubt it’s been a dizzying year for the industry, but the leaders in positions of power have made their mark in 2021. Their decisions outlined what happened this year, and more importantly what will happen in years to come. But of course, it’s not all about predictable policy, and oftentimes it’s about reacting to the unpredictable outside events—so stay tuned for Part II of the year end wrap when we highlight those notable stories that struck the energy industry.
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