he result of the US election has cast a long shadow across the US shale heartlands. Joe Biden wants to make the climate crisis his top priority, sparking real hope for global efforts to avert an environmental catastrophe and real concern for shale operators. The president-elect’s climate plans include a return to the Paris climate agreement, $2tn (£1.5tn) of spending on clean energy, and an ambition to create a carbon-neutral US energy system by 2035 through “aggressive emission reductions”. He was also quick to scotch claims by the Donald Trump campaign that he planned to extinguish the industry with a ban on fracking. The former vice-president told voters in the swing state of Pennsylvania before the election that fracking “has to continue because we need a transition”, and said there was no rationale to eliminate it “right now”. So, how tough is the new US administration likely to be on the shale industry? When asked earlier this month whether shale producers should be worried about the incoming administration, the US energy secretary, Dan Brouillette, replied: “Of course.” He told the business news channel CNBC: “I think they should be, frankly, because there are some in Congress who are going to drive a climate policy that’s going to be very aggressive. So there may be some concern on the part of those folks.” There is little doubt that Biden’s victory will spell a slow and steady decline for a fossil fuel industry that has flourished under the light touch of the Trump administration. But the fate of the industry is likely to be a careful dismantling rather than immediate destruction. Biden told voters on the campaign trail that he would “transition away from the oil industry” because it “pollutes significantly” and has to be replaced by renewable energy over time. He also said: “We’re not getting rid of fossil fuels. We’re getting rid of the subsidies for fossil fuels, but we’re not getting rid of fossil fuels for a long time.” Many believe that as the new administration tackles the coronavirus pandemic and its economic fallout, any action against fossil fuels will need to be balanced against the short-term impact on jobs. The US oil and gas industry helps to prop up the economy by supporting an estimated 10m skilled jobs, enabling relatively cheap road transport and generating more than a third of the country’s electricity. The coronavirus pandemic has caused 100,000 job losses in the industry as wells were forced to shut. Biden is expected to take steps thatgently tip the market economics against fossil fuels by gradually whittling away at the amount of oil and gas that can be produced and raising costs. He plans to limit the reserves frackers are free to tap, shrink the end demand for fossil fuels by building a green electricity system and electric vehicles, and raise the production cost of each barrel to tighten the industry’s profits. His most decisive move is likely to focus on curtailing drilling on federal land. The majority of shale activity takes place on land owned by US states or privately owned property – only about 22% of US oil production and 13% of natural gas production is produced from licences that are federally owned. The move could knock up to 2m barrels a day from total US oil and gas production by the end of 2024, according to analysts at the analytics arm of S&P Global Platts. This impact is unlikely to hit too hard in the short term, according to Artem Abramov, an analyst at Rystad Energy. “The permitting ban on federal land has attracted a lot of attention through the presidential campaign, and there are some operators who are concerned,” he said. “But I don’t think they see this as a complete deal-breaker for future growth.” Many shale operators have fast-tracked permitting applications on federal land in anticipation of policy changes, which should support growth in the short to medium term. Later fracking activity will migrate from federal to the remaining private and state-owned areas, so the impact will be muted. Some operators are even optimistic that there could be a boom for gas in the short term, as the White House takes steps to help to displace coal in the US energy system to reduce emissions. Coal was used to generate almost a quarter of US electricity last year, compared with 38% for gas. Fracking is still likely to become more expensive under Biden, who is expected to roll back many tax incentives and impose tougher regulations on methane emissions and other environmental protections. The net result could add between $5 and $6 a barrel to the cost of production, according to analysts at Goldman Sachs, which could make some operators uneconomic in a global market where price forecasts are significantly lower than they were before the pandemic. This would probably accelerate the consolidation of struggling debt-laden operators into the leaner, financially efficient oil and gas companies that are poised to lead the industry’s recovery in the years ahead, said Abramov. “But anything could happen. So that’s the major concern for shale producers.”