During the presidential campaign, Donald Trump vowed to overturn much of the Obama Administration’s agenda on energy and climate. From nixing the Paris Agreement, to “bringing back” the coal industry (“Trump Digs Coal” was a slogan), his stance was basically a mirror-opposite of the last eight years.
Now that he’s in power, or close to it, climate activists are quaking at the prospect. But perhaps there are reasons not to be too pessimistic. The good news is that the energy markets have dynamics that are independent of government policy, and those markets may achieve some of the same results Obama-type policies would have.
“Washington gets ascribed too much credit and given too much blame for the way the energy markets operate,” says Ethan Zindler, an analyst at Bloomberg New Energy Finance (BNEF). “In the last eight years, we’ve had incredible decarbonization and most of that change has had nothing to do with Washington, just like most of what will happen in the four years will not be driven by policy.”
Wind and solar power have come down in price to such an extent that they’re mainstream these days, not flimsy technologies needing propping up by government. It’s true that both still receive generous federal tax credits, but these were renewed only late last year and are likely to stay in place for now, according to Zindler.
“This isn’t the week for making political predictions, but I think it’s unlikely [they would be changed] given that powerful Republican members benefit from those tax credits. In general, Congress is willing to let supports lapse, but they are usually loath to go out of their way to remove them,” he says.
The production tax credit (PTC) gives wind producers a 2.3-cent-per-kilowatt-hour subsidy. It remains in full force this year, but faces reductions in 2017-2019, and full phase-out in 2020. The investment tax credit (ITC), worth 30% of commercial and residential solar systems, is due to remain at full force until the end of 2018, before being phased out completely in 2022. That ought to be enough time for both solar and wind to become viable in their own right, according to projections (though states may vary due to local conditions).
Trump plans to kill the Environmental Protection Agency’s Clean Power Plan (CPP), which sets targets for states to reduce carbon emissions. But, again, this may not be too terrible for renewables, according to Zindler, and it may not be too wonderful for the coal industry either. For all the rhetoric about a “war on coal,” the main reason coal is now less important to the U.S. energy mix isn’t government regulation but the availability of cheap natural gas. Trump has said he wants to revive both coal and natural gas, but the two goals may be in conflict with one another. If we start fracking more, that will likely reduce or stabilize gas prices and thus continue to make coal unattractive for electricity generators.
There are other things Trump could do to hurt clean energy, including rescinding or going slow on the Obama’s car efficiency standards (due to reach at least 50 miles per gallon by 2025) and in changing how energy research money is allocated (though because many states have their own high emission standards, carmakers may still need to keep them up to access some markets). The Energy Department’s Advanced Research Projects Agency-Energy (ARPA-E) gets about $280 million a year at the moment, and Trump could switch away from, say, new batteries to “clean coal” technology.
Finally, there’s electric vehicles. BNEF expects EVs to start reaching cost parity with internal combustion engine cars by the mid-2020s (on an unsubsidized basis) and to grab a third of the market by 2040. The key driver there is the cost of batteries, which is falling fast, not government policy.
In general, the clean energy revolution is sufficiently far along that even Trump may struggle to stop it. Still, that’s not to say that another administration might not have helped along solar, wind, EVs and new energy research faster, and having a climate denier in the White House, of course, is never good. It could be better, but it could be worse.