The Biden administration has hit the ground running on its climate agenda, but it’ll have to break into a dead sprint if it wants to reach its environmental goals. Before the sun had set on Inauguration Day, the Keystone XL pipeline project had been canceled (for the second time), oil and gas leasing activity had been suspended on federal lands (both onshore and offshore), and the U.S. had committed to rejoin the Paris Agreement. Yet none of these policies will come close to meeting the promises President Biden made during his campaign—notably, eliminating carbon pollution from domestic power plants by 2035 and realizing a “net zero” economy by 2050. To find out if he’ll take the radical steps necessary, watch the Dakotas.

Mr. Biden’s recent moves on energy policy will make future oil and gas expansion difficult, but that’s not going to be enough. The American energy industry is already consolidating after an unprecedented multiyear period of growth—punctured by last year’s pandemic-related demand shock—so the blow to the sector is likely to be glancing. If the president intends to keep his vows on carbon emissions and the like, his administration will have to reduce the size of the fossil fuel industry aggressively, not merely curtail its growth.

If he’s willing to do that—which seems likely given the cast of true climate believers slated to head up various regulatory agencies—the first target will probably be the Dakota Access Pipeline.

Read the full The Wall Street Journal article. 
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Paul Tice is an Adjunct Professor of Finance at NYU Stern.