What’s at Stake for the Clean Energy Industry in the First 100 Days of Trump?

The Donald Trump of the post-election transition sent mixed messages about clean energy. 

His transition website touted wind and solar energy as job-creating sources of homegrown American energy, an ally in the fight for energy independence. At the same time, the president-elect chose Beltway operatives with a long history of serving fossil fuel interests to run the energy transition. And then nominated an oil company executive to be the nation's chief diplomat and an opponent of regulating greenhouse gas emissions to be the nation's chief environmental regulator.

Those messages are getting darker.

This week, Trump's team ordered the EPA to take down any mentions of climate change, leaving scientists scrambling to preserve data sets. He also censored all agencies from talking about climate change or sustainability. He is also prioritize fossil fuels by expediting the Keystone XL and Dakota Access pipelines. 

Within minutes of assuming office, Trump's revamped White House website dismissed hopes that job-creating renewables would earn a place for clean energy in the president's energy vision. Instead, the America First Energy Energy Plan calls for expanding extraction of American coal, gas and oil while eliminating the Climate Action Plan and the Waters of the U.S. rule.

Based on the new administration's comments so far, repealing the Affordable Care Act, putting together a big infrastructure bill and doing something about immigration will take center stage in the first 100 days. Aside from silencing federal agencies, energy hasn't been discussed as a similarly pressing issue on the agenda — and there isn't a clear legislative goal associated with it.

Of course, we won't know what actually happens in the first 100 days until they're over.

“Our incoming president is pretty dynamic and can change pretty quickly — long-term speculation is probably not advised at this point for anyone,” said Energy Storage Association Executive Director Matt Roberts. 

As the new presidency commences, it's up to the clean energy industry to decide how to advance its goals in the framework of Trump's policymaking, while defending any gains that come under attack. The industry has matured considerably under President Barack Obama, and with the bipartisan passage of the investment tax credit in 2015, there's a runway in place for that growth to continue.

And yet, the transition to a more decentralized, lower-carbon grid has only just begun. Federal funding for advanced research and bold new ideas may wither, and whole offices dedicated to the mission could disappear. The Department of Interior has been ramping up leasing of public lands for renewables development, but those efforts have yet to yield widespread deployment.

Here are the key battlegrounds for the industry in the coming months, and how cleantech leaders plan to achieve their goals.

Protect and preserve the ITC

There's one possible future where Trump cuts off any new federal support for renewable energy, and the industry continues to move forward on its own steam. 

“Solar is at a place where it can grow, and wind is growing, because, with current federal tax incentives in place, it is competitive with wholesale retail electricity,” said MJ Shiao, director of solar research at GTM Research.

Congress extended the ITC at 30 percent until 2019, with step downs lowering the rate for the next three years; the PTC will step down until it expires in 2020. In many parts of the country, wind and solar have already reached grid parity. For many companies, though, expected growth still depends on the preservation of the solar ITC and the wind production tax credit. If it disappears, Shiao said, it would delay or stop some markets from taking off.

“That’s exactly why it was so important to get a multi-year commitment when we cut the deal for the PTC and the ITC,” said Sen. Martin Heinrich (D-NM) in an interview with GTM. “The structure that we’re under now should be able to get both technologies to the point where they are the cheapest source of power, unsubsidized, at the end of that time period.”

The risk here is that Congress, now under firm Republican control and allied with a Republican White House, changes its mind about the bipartisan compromise that extended the ITC. For instance, legislators could offer it up in a budget proposal to pay for something else, an action that Heinrich said he would “adamantly resist.”

The optics would be strange if the GOP went out of its way to reinstate tax burden on a growing American industry. Indeed, many states represented in Congress by Republicans have benefited greatly from renewables, like the wind-swept states of middle America.

Nonetheless, protecting the ITC from interference will be a priority for industry groups like the Solar Energy Industries Association.

Cleantech as infrastructure

Trump has promised a massive infrastructure bill in his first 100 days in office. Members of Congress are less sure that will happen so quickly, but the process is likely to begin early in the presidency.

Most of the infrastructure talk has centered on the traditional roads, bridges and airports, but there is another nationwide network of built assets that could come into play: the grid.

If grid modernization enters the conversation, renewables companies will have a chance to advocate for erecting new transmission lines, which play the vital role of connecting new generation with customers in load centers. The energy storage industry, Roberts said, will make the case for its ability to strengthen the grid's security and reliability.

As GTM reported in November, storage is uniquely suited to bolstering grid resiliency against severe weather and cybersecurity threats. It enables greater decentralization of the grid, which reduces the impact of failures at critical junctions. Every other critical supply network — water, food, oil, gas — builds in storage throughout the supply chain. The electrical grid has a lot of catching up to do.

Grid cybersecurity has been in the news lately, and there could be appetite for spending taxpayers on a more hardened grid. The national security argument also applies to military microgrids, which can keep critical operations running at bases when the grid goes down. Those microgrids also have the potential to save the Pentagon lots of money that would otherwise be spent on less reliable diesel backup generators, so there is a fiscal argument as well.

The twisted fate of the Clean Power Plan

Many have consigned the Clean Power Plan, the Obama EPA's rule to regulate greenhouse gases from existing power plants, to the dustbin of history. It's implementation got held up by the Supreme Court, and Trump's pick to lead the EPA helped lead the legal opposition.

The thing is, the rule is still around, even if its exact future looks murky.

“It’s really hard to pin down any one pathway for what’s likely to happen and what that would mean for any particular sector,” said Michael Burger, a climate change law expert at Columbia Law School.

The D.C. Circuit Court of Appeals heard arguments for and against the CPP in September, but has yet to release a decision. If that court rejects the legal basis for the CPP, it would be up to Trump's EPA to rework it, and that would lead nowhere fast. If the administration stalls for too long, it could get sued by environmental groups for not doing its duty toward the environment, but that will take time to resolve.

If the appeals court upholds the CPP, things could get interesting. The rule can't go into effect until the Supreme Court rules on it or declines to hear it on appeal. That could put the Trump EPA in the position of defending a rule it doesn't want. 

Alternatively, Burger said, the incoming EPA could tell the appeals court that it is reconsidering the rule, and ask the court to hold off on a decision. 

“The fate of the CPP is not determinative of what happens to the renewable energy sector,” Burger noted. “Some of the biggest market states are moving forward with climate action with or without the CPP… [It] cleared a lot of brush and really cleared a pathway for the rapid ramping up over several decades of renewable energy.”

Electricity markets have been shifting away from coal for years, and that trend will continue. Still, the rate of coal decline will slow in a world where the CPP never goes into effect, compared to the scenario where it does. And the Trump administration could enact policies to actively promote fossil fueled electricity, making it harder for renewables to compete.

Expand renewable development on public lands

The federal government owns a ton of land but has relatively recently begun leasing it for renewable energy production. Coal, oil and gas leases have been going on for years.

The Department of the Interior released a finalized rule in November to fast-track renewables leasing out west by pre-clearing certain zones as safe for development. On the other side of the country, the department's Bureau of Ocean Energy Management recently auctioned off a tract of ocean near New York state for offshore wind development, netting $42 million. DOI was in the process of ramping up wind and solar on public lands.

Now the department might take a different approach. For a big renewable project to go up on federal land requires close cooperation between state policy and federal policy, so if the latter pulls out, there will be trouble. The winner of the offshore auction has a lease, but still needs extensive approvals of the development plan before it can actually start construction.

There are a few reasons to be optimistic about continued renewables leasing, according to former BOEM Director Abigail Ross Hopper, who has since joined SEIA as president and CEO.

“A lot of people forget that the vast majority of the federal workforce will be exactly the same on [Inauguration Day] at 12:01 as it was at 11:59,” she said. “The department will be in the hands of the career employees for long time.”

A change in direction at the top, then, does not necessitate an immediate revolution in the civil servants carrying out the rules on the books further down the chain of command.

Furthermore, the renewables auctions that have already sold leases have the sanctity of contracts on their side.

“It's a contract between the U.S. government and the leaseholder,” Hopper said. “I can't imagine that the U.S. government would do anything to violate that contract.”

Interior Secretary Nominee Ryan Zinke has indicated in conversations that he would continue leasing for renewable energy, Heinrich said. The senator added that progress in public leasing for wind and solar could run up against a different barrier: constrained manpower.

Trump signed an executive order Monday freezing new hires for federal jobs outside of the military. If the Interior Department can't increase or replace staff, it will have a hard time processing new leases and permits for any type of energy. Broad-brushed responses to a problem, like freezing all new hires, can lead to unintended consequences, Heinrich said.

“I'm sure it's not [Trump's] goal to hold back oil and gas development, for example, but that's exactly what a hiring freeze in Interior would do,” Heinrich said.

Protect advanced research efforts

The wind and solar industries have matured, but Trump has signaled an interest in cutting funds for the ongoing research and development of energy technologies.

The same day Energy Secretary Nominee Rick Perry testified in the Senate that he plans to keep the science and research efforts at the Department of Energy, reports surfaced that Trump's budget will take a different approach entirely. The blueprint used to develop his budget calls for eliminating the DOE's Office of Energy Efficiency and Renewable Energy, Office of Electricity and Office of Fossil Energy, The Hill reported. Those offices have played leading roles in efforts to transition to a more efficient, lower carbon energy system.

The loss of advanced research could lead to a slower pace of adoption for future clean energy technologies. DOE teams, for instance, have ongoing projects around the nation to refine lithium-ion battery technology for longer cycle life and greater stability. If the federal government pulls back from those efforts, it would remove a valuable tool in the effort to bring down battery costs and spur their deployment on the grid.

SEIA's Hopper pledged to fight for advanced energy R&D if it comes under fire.

“I will and I would spend time with Sec. Perry and make sure he and his staff understand that those investments lead to job creation and investment in the United States,” she said.

If the administration moves ahead with widespread cuts for DOE, it will still have to make it through the Senate.

“We’re in a situation where it still takes 60 votes to get most things done in the Senate,” Heinrich said. “You’re going to have an appropriations process where both parties are relevant.”

from GTM Solar https://www.greentechmedia.com/articles/read/whats-at-stake-for-the-clean-energy-industry-in-the-first-100-days-of-trump

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