Putting a lid on a seemingly endless presidential campaign full of fiery rhetoric and polarizing promises from both parties, on Nov. 8, the American people voted for the Obama administration to become the Trump administration.
Pushing for what he calls an “America-first energy plan,” President-Elect Donald Trump, as part of his plan for the first 100 days in office, has vowed to salvage the coal industry, take the U.S. out of the Paris Agreement, cancel tax-dollar-funded payments to United Nations global warming programs, and put a close to the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan (CPP), according to a press release Trump issued earlier this year.
However, wanting to “get the bureaucracy out of the way of innovation,” Trump did stress the need to “pursue all forms of energy,” said the press release, which added that this does, indeed, include “renewable energies and the technologies of the future,” such as wind and solar power.
“The government should not pick winners and losers. Instead, it should remove obstacles to exploration. Any market has ups and downs, but lifting these draconian barriers will ensure that we are no longer at the mercy of global markets,” the release stated under its section of how to “make America wealthy again.”
Naturally, the president-elect’s statements with regard to the support of the coal and natural gas industry and renunciation of major emissions-reducing initiatives are enough to make a stakeholder in the clean energy sector worry – or, at least, think twice – about the future of the industry in the next four years and beyond. (Let’s not forget that 2012 Twitter remark in which Trump claimed that the “concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.”)
In a prepared statement issued the day after the election, Michael Brune, executive director of the Sierra Club, offered a warning to Trump’s climate change nay-saying:
“If Trump does try to undermine climate action, he will run headlong into an organized mass of people who will fight him in the courts, in the states, in the marketplace and in the streets.”
Indeed, according to David Burton, partner at law firm Mayer Brown, the U.S. wind industry has a whole host of “powerful Republican allies in Congress,” including U.S. Sen. Chuck Grassley, R-Iowa, a longtime proponent of wind power and the father of the federal production tax credit (PTC) itself.
“It seems unlikely that Mr. Trump would opt to attack the tax credits for wind in light of wind’s Republican allies and the long list of issues that are higher on his political agenda,” says Burton.
In an interview with North American Windpower a couple months before the election, Grassley said he had “no reason to believe that Mr. Trump [would want] to do away with wind energy.”
However, speaking hypothetically, he clarified that if any president wanted to mess with wind power, the senator would put up a fight to sustain the industry – and the tax incentives in particular, which were approved in December 2015 as part of an omnibus spending bill.
Burton notes that in contrast to the EPA’s CPP, the PTC is, in fact, statutory. Thus, he says, “A statute can only be changed by Congress’ passing a new law.”
As for the investment tax credit (ITC), Merrill Kramer, chair of the sustainable energy practice at law firm Sullivan & Worcester, believes a repeal of the incentive would be unlikely.
“It was enacted as part of a bipartisan package to lift the 40-year ban on oil imports,” Kramer points out. “While omnibus tax legislation is likely this year, it will be very difficult to undo the bipartisan tax package that included the ITC.”
Additionally, because renewable energy legislation is consistently being implemented at the state and local levels, clean energy initiatives, such as renewable portfolio standards, would “largely remain unaffected by the Trump victory,” he says.
However, the CPP could be a different story, Kramer admits.
“A Trump-appointed EPA will make every attempt to restrict or repeal the Clean Power Plan,” he says.[adright zone=’190′]
The CPP, which was first released in 2014 and finalized in August 2015, calls for reducing carbon emissions from the U.S. power sector 32% below 2005 levels.
The EPA’s initiative is no stranger to opposition, though: When the agency published the final rule in the Federal Register in October 2015, a coalition of states filed a lawsuit that claimed the CPP could have “devastating impacts upon the states and their citizens.”
CPP supporters later fought against the stay by filing in federal appeals court, and in January of this year, the federal court rejected the objecting states’ request for a stay of the CPP while the legal battle went on. However, in February, the Supreme Court said the CPP would, indeed, be stayed. Most recently, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments for and against the plan, but as of press time, a decision has not yet been reached.
Regardless, according to Kramer, Trump-nominated Supreme Court judges are likely to cast a vote in favor of overturning the CPP.
In addition, he says, “A Trump Justice Department will decline to defend the CPP in courts.”
As for the EPA itself, Trump noted in a September speech in Pittsburgh that one of his goals is to refocus the agency on its “core mission of ensuring clean air and clean, safe drinking water for all Americans,” as well as kill both the CPP and Clean Action Plan – initiatives he said will “increase monthly electric bills by double-digits without any measurable improvement in climate.”
We’ll always have Paris – or will we?
On Nov. 4., the United Nations Framework Convention on Climate Change announced that the Paris Agreement had officially entered global force. At last year’s COP21 in Paris, more than 190 countries adopted the agreement. The pact, what the White House called “the most ambitious climate change agreement in history,” calls for (among other initiatives) keeping a global average temperature rise this century well below 2°C.
The Sierra Club’s Brune noted in his statement that it would be “extraordinarily difficult” for the president-elect to take the U.S. out of the agreement.
“His position is already causing international blowback abroad and in very pointed ways that are, in some respects, unprecedented,” he said.
Mohamed Adow, international climate lead for U.K. charity Christian Aid, said in a statement after the election that the world “will not risk a global climate catastrophe because of one man’s opposition.”
“On a practical point,” he said, “now that the Paris Agreement has come into force, no country can easily withdraw for at least three years.”
Ed Einowski, partner at law firm Stoel Rives LLP, although noting the U.S. president’s “significant powers when it comes to foreign affairs, including trade agreements and treaties,” says the country’s involvement in the Paris Agreement still remains to be seen.
“I suspect – but don’t know for sure – that he can abrogate the Paris accord,” he says.
Wind speaks for itself
Though he has voiced his support for “all forms of energy,” Trump’s stance on renewable energy, says Kramer, is “not clear.”
Mayer Brown’s Burton agrees that, yes, Trump’s views have been conflicting. However, he says, “I would not assume that once he is in presidential mode that he will be an opponent of wind.”
After all, look at where the majority of Trump votes came from: wind-rich states such as Texas and those in the Midwest.
“In those same rural areas, farmers are being compensated well for leasing land to wind farms, and young people are being employed as wind turbine technicians – which, by some accounts, is the fastest-growing job in the country,” says Burton, adding that he doubts Trump would want to “upset those trends.”
In fact, according to a statement from Tom Kiernan, CEO of the American Wind Energy Association (AWEA), more than 80% of all U.S. wind projects are located in “Republican-held congressional districts.”
In turn, he said, “We envision that the Republican leadership in Congress and the White House will want to keep our industry growing.”
Blake Nixon, president of Minnesota-based wind developer Geronimo Energy, believes that Trump’s election will not “fundamentally alter the path of the industry.”
“First off, I don’t believe that Trump will remain negative on wind once he sees the tremendous economic growth it provides to rural American communities and low-cost power for all electricity consumers,” he says.
For Einowski, the future of wind power is “fundamentally dependent on it being a useful resource at a competitive price.”
“It is now competitive with natural gas on a subsidized basis and is within spitting distance on a non-subsidized basis,” he says. “Politics can influence it at the margins, but economics will govern in both the near and long term.”
In fact, he says, coal is “no longer price-attractive,” thanks to the “abundance of cheap alternatives.”
In turn, Einowski says coal could “likely continue its decline, as there seems little in the way of government action that could turn that tide.”
Sullivan & Worcester’s Kramer echoes a similar sentiment, that “economics, as much as energy policy, are driving the markets.”
“Worldwide demand for oil is down, and the cost of coal retrofits is prohibitive,” he says. “Conversely, the cost of solar PV panels and wind turbines continues to decline.”
Additionally, considering the aforementioned Trump support from wind-rich red states, a Trump administration would likely be “pro all energy resource development” rather than anti-renewables, Kramer contends.
2017 and beyond
Since the election, many renewable energy groups have emphasized that Trump’s election is not necessarily doomsday for the industry.
AWEA, for one, remained unequivocally upbeat following Election Day.
“According to [election] exit polls, the top issues on Americans’ minds as they went to vote were the economy, security and health,” said Kiernan. “Wind can help with all three. Our determination to fulfill on the U.S. wind industry’s enormous potential has never been stronger.”
350.org, a nonprofit dedicated to fighting climate change, said in a statement that the world needs to “charge ahead and look beyond the White House to partner with civil society, businesses and local governments who are still committed to climate action.”
“Our work becomes much harder now, but it’s not impossible, and we refuse to give up hope,” the group said.
Geronimo Energy’s Nixon notes that wind is not likely to lose its spot as a “major player in the new electrical generation fleet of America,” which, according to AWEA’s third-quarter report, currently has 20 GW of wind projects either under construction or in late-stage development.
As for the wind developer’s plans going forward, Geronimo Energy doesn’t intend to alter its course of action too much.[adleft zone=’190′]
“We develop projects that will make sense for communities and customers throughout long cycles, so from a high level, we will not do much differently,” explains Nixon. “However, we will look more closely at regulatory environments, tax qualification and financing structures that could be influenced differently by new leaders at the relevant agencies as part of the Trump administration.”
Of course, only time will truly tell what the next four years (or eight) will bring – and if nationwide support for an increasingly flourishing wind industry can trump any potential hardships coming its way under the new administration.
“There will likely be some uncertainty in the minds of industry participants – which may slow some near-term actions,” says Nixon, “but long term, the industry will continue its growth based upon its strong fundamentals.”