Biden State of the Union message sounds themes of immediate geopolitical urgency and long-term US opportunity

US President Joe Biden's focus on climate change took somewhat of a back seat to geopolitical realities with Russia's invasion of Ukraine in his first State of the Union address on 1 March. But he didn't miss a beat in emphasizing his resolve to making the US a world leader in clean energy technology, and linking it to both climate change and strengthening the economy.

Biden's speech highlighted global solidarity with the Ukrainian people and the growing array of sanctions on Russia's economic interests drew standing ovation from Ukraine's Ambassador to the US Oksana Markarova, who joined the assembled members of Congress, cabinet members and Supreme Court justices in the US Capitol.

While Biden used this opportunity to address the energy impacts at home and abroad, he didn't shy away from his resolve to shore up the country's infrastructure against the "devasting effects of the climate crisis" and promoting environmental justice.

But the response to Russia's invasion was Biden's primary message. Early in the speech, he noted that on 1 March, 31 countries said they will release 60 million barrels of oil reserves from storage, with half coming from the US. "These steps will help blunt gas prices here at home," Biden said. "We stand ready to do more if necessary, unified with our allies."

Further solutions will come from expanding US renewable energy and the infrastructure to support it, Biden said.

To yet another round of applause across the aisles, Biden reminded the members of the US Congress of the new clean technology and infrastructure investments his administration has made through the $1.2-trillion Bipartisan Infrastructure Act that was signed into law in November. The law includes billions of dollars to start installing a national network of 500,000 EV charging stations, and Biden noted that 4,000 charging station projects have already been announced. That commitment is jump-starting automakers' investments, he added, citing Ford committing $11.4 billion to EVs in the US, and General Motors committing $7 billion on factories in Michigan.

"It is going to transform America and put us on a path to win the economic competition of the 21st century that we face with the rest of the world—particularly with China," Biden said.

Securing supply chains

During the speech that lasted just over an hour, Biden redoubled his commitment to securing supply chains for minerals needed to decarbonize the power sector. A week ago, the White House announced plans to reform the antiquated mining law and related regulations. "Instead of relying on foreign supply chains," Biden said, "let's make it in America. And instead of relying on foreign supply chains, let's make it in America," Biden said.

His call did not unnoticed by the trade group National Mining Association, which tweeted: "Let's also source the materials needed to make it in America."

US mining production lags behind demand, despite having ample reserves. The US Geological Survey's mineral commodity summaries for 2022, released 1 February, revealed that the US in 2021 imported 48% of its consumption of nickel, 76% of its cobalt, 45% of refined copper, and more than 25% of lithium.

Build back a better America

Without mentioning by name, Biden alluded to the $1.7-trillion Build Back Better plan, which the Senate scuttled last year, extolling the promise of programs under that bill that he hopes Congress will revisit.

"Let's provide investments and tax credits to weatherize your homes and businesses to be energy efficient and you get a tax credit; double America's clean energy production in solar, wind, and so much more; lower the price of electric vehicles, saving you another $80 a month because you'll never have to pay at the gas pump again," he said.

Those types of programs could cut energy costs for families by an average of $500 a year while combatting climate change, Biden said.

In referencing savings from renewable energy, Biden touched on an issue that's flared its head recently: inflation, which has averaged 7% over the last 12 months, the highest rate in 40 years. He offered the infrastructure bill and passing some version of Build Back Better as solutions, saying these types of investments will reduce reliance on oil and expand US manufacturing capacity.

"I have a better plan to fight inflation," he said. "Lower your costs, not your wages. Make more cars and semiconductors in America. More infrastructure and innovation in America. More goods moving faster and cheaper in America. More jobs where you can earn a good living in America. And instead of relying on foreign supply chains, let's make it in America."

GOP rebuttal ignores climate

Commenting on the speech, Joe Britton, executive director of the Zero Emission Transportation Association, told Net-Zero Business Daily by S&P Global Commodity Insights that it's important to recognize "the time and passion President Biden spent on the need to promote and invest in electric vehicles and domestic clean energy production."

"When there is global disruption in energy markets and general instability around the world, he made sure to remind the American people and our allies that one of the best ways to combat both climate change and reliance on foreign oil is to invest in clean energy and transportation electrification—both of which are not dependent on unfriendly capitals around the world."

Predictably, Republicans in Congress were unimpressed even though the governor they chose to provide a response was from a state that was recently ravaged by unprecedented climate-fueled storms.

Iowa Governor Kim Reynolds focused on what she called failed energy policies and rampant spending that has led to increased gasoline prices. But she did not make one single mention of climate-fueled tornadoes that ravaged Iowa or the floods that overwhelmed the Midwest in 2021.

"They were warned that spending trillions would lead to soaring inflation. They were told their anti-energy policies would send gas prices to new heights. But they plowed ahead anyway, raising the price at the pump by 50% and pushing inflation to a 40-year high," she said.

However, the US National Oceanic and Atmospheric Administration's National Center for Environmental Information said six thunderstorm events from the Midwest to the South did $20.4 billion in damage. Last year, Iowa set a new unofficial record for the most tornadoes in in a year, at 63 tornadoes.

After a storm with 80 mph winds in December, Reynolds was left with no choice but to declare an emergency on 16 December, and Biden approved Iowa's state of declaration on 23 February, triggering the release of federal funds to aid with recovery.

Climate awareness equated with US weakness

House Energy and Commerce Committee Republican Leader Cathy McMorris Rodgers, Republican-Washington, linked US military might to energy—adding that Biden's climate programs have weakened the US at a critical time. "It's now clearer than ever what is at stake when a rush-to-green agenda and anti-American energy policies make us and Europe more dependent on Russian oil and natural gas," she said in a statement.

"Energy costs were already skyrocketing due to President Biden's disastrous policies that have made us more reliant on energy from places like Russia," added Iowa Republican Senator Chuck Grassley. "Putin's unprovoked attack on Ukraine will make matters worse for energy costs at home."

Senate Republicans this week proposed a bill to expand US fossil fuel production and exports, the American Energy Independence from Russia Act of 2022. The bill would immediately reauthorize the permit for Keystone XL oil pipeline from Canada, which the Biden administration has let expire; allow unlimited exports of LNG; and would expand oil and gas leasing on federal land and water. "It's how we crush Putin's war chest, restore our energy dominance, stand by Ukraine and our allies, and create jobs here at home," McMorris Rodgers said.

West Virginia Senator Joe Manchin, a Democrat who was responsible for sinking Biden's Build Back Better agenda and is a proponent of an all-of-the-above US energy strategy that includes oil, gas, and coal, agreed with his Republican colleagues that direct action must be taken now to support domestic oil production. Manchin called for the US to immediately ban imports of Russian oil, which averaged 500,000 barrels per day in 2020 and 600,000 b/d so far in 2021.

"It makes no sense at all for us to rely on energy from a country that is actively engaging in acts of war against a freedom seeking democracy—Ukraine—when we are blessed with abundant energy resources right here in America," Manchin said.

At current oil prices, the US is spending about $67 million per day on imported Russian oil, Manchin said.

Energy and geopolitics

Energy industry leaders also expressed disappointment that the speech did not have clearer lines for how to strengthen US energy security, but environmental groups said that geopolitics highlight the dangers of relying on fossil fuels.

"We wonder why the president's rallying cry of 'Make it in America' excludes the American oil and gas industry, since his stated goal is to reduce dependence on foreign supply chains," said David Holt, president of Consumer Energy Alliance.

"The president's address missed the opportunity to make a course correction and loosen the stranglehold put on the domestic energy industry through over-regulation and poor policies," Holt said, noting that US oil production in February was 1.5 million b/d below peak production in 2019, and that higher production means lower prices.

Natural gas has been in the headlines of late, as the US has more than doubled its exports of LNG to Europe in the last year, and Amy Andryszak, president and CEO of the Interstate Natural Gas Association of America, said Biden can do more to enable the industry to help US allies.

"During this time of uncertainty, America's strategic position as the leading natural gas producer only further cements the central role of natural gas in achieving our global climate ambitions and providing allies and trading partners in Europe with a reliable and secure source of energy. Our industry's ability to support Europe during this crisis is no accident. It was enabled by American innovation and federal and state policies that supported natural gas infrastructure investment," she said.

Clean energy a panacea

On the renewables side, trade group American Clean Power (ACP) applauded the president's speech, with ACP's CEO Heather Zichal calling it "emphatic and unmistakably clear about the urgency of rapid clean energy investment."

In combination with the UN Intergovernmental Panel on Climate Change's report this week about the rapid and extensive impact of rising carbon emissions, Zichal said: "The way out of both of these crises is to rapidly scale affordable, reliable clean energy everywhere. We join the President in urging Congress to take action on critical investments and tax credits for the renewable energy industry that have broad bipartisan support."

Zichal's comment referenced an ACP survey conducted in October that found 93% of Americans saying that clean energy is "important to the country's energy future" and 80% supporting tax incentives to expand clean energy production and use.

The American Petroleum Institute released a survey on the day of Biden's speech that indicates there's still strong sentiment for fossil fuels as well. The survey, done by Morning Consult, found 90% of US voters greater development of domestic energy resources, and 85% "believe producing natural gas and oil here in the US helps America maintain a leadership role during a period of global uncertainty.

Environmental groups, however, say that a different lesson should be taken from Russia's invasion and high oil prices than the need to produce more oil and gas. "The horrors the world is witnessing in Ukraine should be a clarion call to end our global dependence on fossil fuels and the petrostates they prop up. Fossil fuels have driven conflict, human rights abuses and ecological catastrophes around the world for decades. It's time for President Biden to stop equivocating and fully embrace every tool at his disposal to end the fossil fuel era," said Kierán Suckling, executive director of the Center for Biological Diversity.

But Republicans in Congress said that low- and middle-income families can't wait for solutions while the administration pursues its multi-headed agenda.

"Record inflation, soaring energy prices, and broken supply chains are making it harder for the hardworking people of this country to get by. From the gas pump to the grocery store, American families are seeing an increase of $175 per month on routine expenses," said McMorris Rodgers, though misstating that inflation is at or near a record level.

Posted 02 March 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst and

Kevin Adler, Chief Editor

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.