Renewable Energy and the New Administration

December 12, 2016 Allison Schweizer

Renewable Energy and the New Administration

While the cabinet selection process is still underway, there’s a fairly clear idea of where Donald Trump stands on core energy issues. In short, Donald Trump is skeptical of climate change, critical of United States’ participation in global environmental efforts, and highly supportive of the US fossil fuel industry. In virtually all aspects, this marks a decisive shift from President Barack Obama’s administration. However, as anyone will learn in a third grade civics class, the U.S. government operates on a system of checks and balances. That means that while some of Donald Trump’s energy proposals could be enacted the moment he takes office, others will face opposition from a gridlocked congress and political practicality.

With that in mind, it can be useful to look not just at what would or could change, but perhaps more importantly, what likely won’t, based on the political tools at a president’s disposal. While many question marks remain, one aspect remains clear; simple economics will support the growth of renewable energy in the years ahead, even if federal policies won’t always do the same.

View on Eiffel tower at sunset, Paris, FranceEasily Changed

U.S. Participation in the Paris Climate Agreement: In December 2015, 193 countries concluded COP 21 by signing the Paris Climate Agreement. Based on campaign statements, Donald
Trump intends to reduce that figure to 192 signatures, by removing U.S. participation. While recent comments have suggested a full withdrawal may not be a top priority, the policy path to do so is quite clear.

Because U.S. participation stems from an executive order by Barack Obama, Donald Trump will have the option to pass a similar order to reverse it. That will trigger certain time requirements for pulling out of the deal, which can vary from 1-3 years. Alternatively, Trump’s administration could simply opt not to act on any the emissions targets, given that the COP21 agreement has no mechanism for forcing countries to act on their pledge. In either case, the president has a clear path with few obstacles, though the net result is more symbolic than fundamental.

Likely to Change

Young engineer at modern office space, sitting at the table and working on energy project. Focus on wind turbine models on the table.The Clean Power Plan: Donald Trump is clear on his dislike of the EPA’s Clean Power Plan, but his path for overturning it is slightly more difficult. Currently, the plan awaits a ruling on its constitutionality from the D.C. Circuit Court, which would almost certainly trigger an appeal to the U.S. Supreme Court. That opens a judicial route for ending the CPP, with the current court likely split 4-4. Donald Trump will likely begin his presidency with a Supreme Court vacancy, which he’ll presumably look to fill with a justice that shares his anti-CPP views.

Alternatively, a Trump administration EPA could simply neglect to enforce the rule, even if it’s technically implemented. Still other options remain, such as signing a congressional bill overturning the law. However, individual states can still take steps to comply with the rule (many already are), and those states may look to defend the rule in court, even if the Federal government declines.

Not Likely to Change

The Investment Tax Credit (ITC) and Production Tax Credit (PTC) for Renewable Projects

wind turbines and modern solar panels in the country sideIn an increasingly rare moment of bipartisan compromise, the U.S. congress ended 2015 by passing a spending bill that included an extension of the ITC and PTC until at least the next presidential election cycle. While Trump criticized giving renewable energy preferential treatment, he never suggested removing the ITC and PTC would be a policy priority. Moreover, while Democrats tend to be more open to renewable incentives, surveys continue to show that renewable energy continues to be valued by voters on both sides of the aisle.

Perhaps most importantly, even if Trump did decide to favor removing the credits, a president cannot easily overturn an existing budget. Congress has the power of the purse and any changes to ITC/PTC will likely rest with the legislative branch, not the executive. Given strong support around the credits and less passionate opposition, their continuation appears probable. As a result, simple economics will likely translate to growing renewable market share in many parts of the country regardless of other federal policy.

Renewable Energy and the New Administration: Key Takeaways

  • ITC/PTC credits are the most directly impactful federal policy for renewable projects, and last year’s congressional budget already extended them through the next presidential term.
  • Trump will have a direct path for cutting off U.S. participation in global climate efforts and agreements, like COP21. Additionally, Trump’s administration will likely be able to halt the Clean Power Plan’s implementation either through legal means or through lack of enforcement.
  • States that want to continue favorable renewable policies can and will continue to do so.
  • Renewable generation is projected to see continued growth, and coal’s market share is projected to shrink, regardless of presidential policy. The question is how quickly the trend moves, not the direction it’s going.

Only time will tell the impact of the new administration, but one thing’s for sure, businesses are driving sustainability growth and that doesn’t show any sign of slowing.

Learn more about strategies companies can deploy today to start on their journey toward renewable energy procurement.


The post Renewable Energy and the New Administration appeared first on Schneider Electric.

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