As the dust settles after Tuesday’s presidential election, energy insiders are beginning to fathom what four years under a President Trump could mean for the sector.
In the immediate aftermath, the surprise result and the dearth of specific policy proposals from the Trump campaign meant that any consequences beyond a general upending of the Obama administration’s climate legacy were unclear.
But according to energy lawyers and consultants reached on the day after the election, turning back the clock on the last decade of clean energy growth and decarbonization is easier said than done.
While Trump has a number of avenues to repeal the Clean Power Plan and cease U.S. involvement in the Paris Climate Accord, he faces more of a challenge in repealing clean energy laws through Congress, even with Republican control.
“It's much easier for Trump to repeal rules than statutes,” Brian Potts, a partner at the law firm Perkins Coie, told Utility Dive. “With the Clean Power Plan, he's got multiple options if he wants to scrap it or cut it back.”
Insiders caution that Trump’s unpredictable nature and vague policy platform complicate any predictions on what he could do. But even so, they say the president-elect is more likely to opt for policy changes that can be administered through his executive branch — like repealing the CPP — rather than turning to Congress.
But even if Trump and the GOP Congress go further and attempt to repeal renewable energy tax breaks, wind and solar power are expected to sustain strong growth throughout his term, thanks to declining costs and regional programs. The problem is that even their most optimistic growth trajectories aren’t enough on their own to help the U.S. meet its climate goals.
“We will continue to see progress on decarbonization driven by the momentum behind these [renewable] technologies,” said Jesse Jenkins, an MIT researcher and former energy director at the Breakthrough Institute. “But these technologies aren’t sufficient, and the trajectory we've been on already is not enough.”
Ripping up the Clean Power Plan
Repealing an active EPA regulation is not as easy as ripping pages out of the Federal Register, said Jeff Holmstead, a partner at Bracewell and former EPA official who worked on the transitions of both Bush presidencies.
“When we came in in the George W. Bush administration, there were certain things Clinton had done that we wouldn’t,” he said. "But for legal reasons, we couldn’t change it.”
However, because the Clean Power Plan is not yet implemented and faces a court challenge, it would be “relatively easy to undo,” Holmstead said.
The simplest outcome may also be the most likely. The D.C. Circuit Court heard arguments on the CPP in September. If they do not issue a decision before January 20, when Trump takes office, the administration could simply ask them to give the rule back for changes.
“The Trump administration could come in and submit a motion to ask the court to issue what's called a voluntary remand,” said Holmstead. “They can basically just tell the court this rule has been challenged and litigated and now we intend to revisit the rule, so please send it back to us.”
It’s “more likely than not” that the D.C. Circuit will not yet have ruled by Inauguration Day, according to Holmstead, but he cautioned that the judges could reject the motion if they are close to a decision, particularly if it’s unanimous or the opinion is unexpected.
If Trump can’t get the voluntary remand, the likely option is for the administration to issue a new EPA rule that would repeal the CPP, outlining the reasons they think the carbon regulations are unlawful or unduly costly. That would mean a whole new rulemaking process.
“They would put this new proposal out there, they would take public comments, look at those comments and then would draft a final rule to revoke the [CPP] or they … may revise it substantially,” Holmstead said. “You can’t do it with the stroke of a pen.”
Because that process could take a year and open the administration to legal challenges, President Trump's EPA might be tempted to simply not enforce the Clean Power Plan and other EPA regulations. That’s unlikely, however, according to Holmstead, mostly because it’s more trouble than it’s worth.
“They could certainly drag their feet, but the problem is with the regulation on the books, that regulation is enforceable with citizen suits,” he said. “So let’s say California doesn’t submit a state compliance plan [for CPP]; the environmentalists couldn't sue California, but they could sue EPA for failure to provide a federal plan to the state.”
A legislative move could be a simpler fix than all the rulemaking. With a one-sentence bill, Potts pointed out, Congressional Republicans could redefine the word “pollutant” in the Clean Air Act so that it explicitly excludes CO2. That would “effectively make all the existing Clean Air Act not be a tool for climate regulation.”
But legislative fixes have their complications, too. In 2011’s AEP vs. Connecticut, the Supreme Court ruled that individuals may not file nuisance lawsuits regarding carbon emissions under federal common law because carbon emissions are already regulated by the Clean Air Act. If the act is amended to remove carbon as a pollutant, those lawsuits could have ground again.
More of a deterrent is the likely legislative battle, Holmstead said.
“Amending the Clean Air Act is never going to be easy,” he said. “No matter how much the president may want to, he would need 60 votes in the Senate, and that's hard to see. Can you imagine the lobbying campaign environmentalists would put up?”
But even if a protracted legislative attack on the Clean Air Act isn’t as likely, the CPP probably won’t be the only regulation on the chopping block, Holmstead said. Changes to the new source pollution rules for power plants are probable, particularly for coal generators, as are changes to the Waters of the U.S. rule. Methane regulations for the oil and gas sector are another likely target. But existing regulations, such as the Mercury and Air Toxics Standard (MATS), are likely to stay on the books.
“MATS has done its damage already,” Holmstead said. “People spent billions to comply with that and you can’t recover it.”
Mixed bag for renewable energy
Like repealing the Clean Power Plan, energy lawyers told Utility Dive that President Trump will face few roadblocks in pulling the U.S. out of the Paris Climate Accord. He could try to withdraw the U.S. from the process, put the treaty up for a vote in the Senate (where it’s sure to lose) or simply ignore the voluntary agreement.
But when it comes to pushing back on other elements of the clean energy revolution, the GOP may find it more difficult. While the president-elect has made no question of his dislike of wind and solar, repealing the tax breaks that support their current growth would be an uphill battle.
The current investment tax credit for solar and production tax credit for wind were enacted at the end of 2015 as part of a bipartisan deal that also authorized U.S. petroleum exports. They are scheduled to phase out in 2020.
While energy lawyers expect omnibus tax reform next year, it would be “very difficult to undo the bipartisan tax package that included the ITC,” Merril Kramer, chair of the sustainability practice at Sullivan & Woochester, wrote in an email.
Along with Democratic support for the tax incentives, the presence of renewable energy facilities and manufacturing in many heartland states means Congressional Republicans are likely to balk at repealing them before they phase out.
“It's a bipartisan issue and it's an investment that really helps prop up rural communities and provide a significant amount of revenue for operators,” Tim McMahan, a partner at Stoel Rives, told Utility Dive. “Manufacturing facilities that have been stimulated by the PTC in particular are very significant. I tend to be fairly optimistic that [the tax breaks] are not going to be disrupted.”
State efforts will continue to drive utilities toward renewables, particularly in western and northeastern states with high RPS standards, McMahan said. And efforts from the nation’s grid operators could help as well.
ISO-New England is currently working to integrate carbon pricing into its power markets, and the Energy Imbalance Market run by the California ISO is enabling greater renewable energy integration in the West while instituting pricing signals that discourage coal. Trump could attempt to thwart these state and regional efforts through FERC appointments or amendments to the Federal Power Act, but each energy lawyer Utility Dive spoke with indicated that is unlikely.
Even if the tax breaks and other wind and solar supports are repealed, there’s evidence “the renewables train has left the station,” Kramer wrote.
“Economics as much as energy policy are driving the markets,” he elaborated. “[F]racking is not economic at current gas prices, worldwide demand for oil is down and the cost of coal retrofits is prohibitive. Conversely, the cost of solar PV panels and wind turbines continue to decline.”
What’s more probable than an assault on renewable energy itself is support for fossil fuels, according to all the experts Utility Dive spoke with.
“I think it's more likely he's going to relax the regulation of natural gas and coal and that would make it essentially less economic for solar and wind,” Potts said.
For climate observers, that conclusion is troubling. Scientists say the world is already behind the needed trajectory of emissions reduction to meet the Paris goal, and investments in more fossil fuel assets — scheduled to be in service for up to 40 years — could commit the world to see the most catastrophic consequences of climate change if they are not retired early.
“[F]or a 50% probability of limiting warming to 2°C, assuming other sectors play their part, no new investment in fossil electricity infrastructure (without carbon capture) is feasible from 2017 at the latest, unless energy policy leads to early stranding of polluting assets or large scale carbon capture deployment,” Oxford researchers wrote in March.
Even if EPA standards are relaxed, construction of new coal-fired power plants in the U.S. remains unlikely due to market forces. But the conclusion may not apply to natural gas plants and pipelines: That industry expects a big boost as the Trump administration rolls back proposed EPA rules and takes a more hands-off approach to permitting.
The upshot, said MIT's Jenkins, is that even accelerated renewable energy growth under the Trump administration will not be enough to meet the stated goals of the Paris climate accord, which roughly equates to an 83% economy-wide decarbonization by 2050.
“I'm a technological optimist and have been advocating a need to focus on making clean energy cheaper to lower the political burden needed to drive transformation in the power sector,” he said. “Those changes are underway, but they're not sufficient.”
While renewable energy is welcome, Jenkins said the urgency of climate change will require a broader swath of options, from supporting existing nuclear plants to developing new emissions-free technologies. And with a president who has dismissed climate change (even calling it a Chinese hoax), federal support for other energy programs like modular nuclear plants or carbon capture remains in question.
“Unless we get extremely lucky and see the cost of new modular nuclear reactors or NET Power's CCS gas plant somehow become cost competitive overnight, the current trajectories for wind and solar are by no means sufficient to carry us to the kind of deep decarbonization that we need,” Jenkins said. “We need to be continually accelerating the pace of renewable energy development while expanding the portfolio of options we have, and we're probably not going to do that."