Reality will force Trump to moderate US energy policies: former FERC chair

A former head of the US Federal Energy Regulatory Commission expects President Donald Trump will moderate some of his anti-renewable energy policies due to economic realities and industry pushback.

Former FERC Commissioner Neil Chatterjee, who twice served as chair, described Trump's current policy stance as "'drill, baby, drill,' with an emphasis on fossil fuels and almost a demeaning posture toward clean energy resources," while speaking at the BNEF Summit, hosted in New York by research firm BloombergNEF, on April 29.

Chatterjee was confident that Trump would soon have to rethink that position.

"I actually think we're going to see a shift in the coming year or two because of questions regarding reliability," Chatterjee said.

Trump appointed Chatterjee as a FERC commissioner in 2017 and served until 2021. During that time, he was named chair for four months after the death of the sitting chairman in 2017 and again from October 2018 until November 2020 when Trump demoted him late in his term, an action Chatterjee attributed at the time to his supportive positions on carbon pricing, distributed energy resources and diversity training.

While Trump has prioritized increasing fossil fuel production, he has also promised to lower consumer energy prices and to promote the domestic data center industry as a means of bolstering national security. Meeting the latter two goals will force Trump to adopt more flexible policies toward renewables, Chatterjee said.

"Well, I think that is going to cause a recognition within the administration that for them to be able to do that while preserving reliability and resource adequacy, they cannot possibly do it with fossil fuels alone," Chatterjee said. "It's going to require every available electron."

In the short term, solar-plus-storage alongside gas peaker plants will be needed to meet much of the new power demand coming from data centers, Chatterjee said. If that power is not available, data center operators will cancel plans to build in the US, and the Trump administration will have to act, he added.

"I think the first time a major data center goes overseas because we can't supply reliable and affordable power in an efficient and timely manner here in the US is when that awakening will occur," Chatterjee said.

Chatterjee also said Trump's effort to stymie offshore wind development could run into resistance from an unexpected quarter -- the nation's oil and gas industry. However, he stopped short of predicting Trump would reverse course on that policy.

Chatterjee said the administration's April 16 announcement freezing construction of Equinor's Empire Wind offshore wind project in New York state, which came despite the project having received all necessary permits under the Biden administration and having already begun construction, has greatly concerned hydrocarbon producers.

"If you're oil and gas, you don't want to set this precedent that you have an approved permit that could potentially be rescinded by a future administration," he said. "How do you make those kinds of investments?"

Chatterjee said he is "very interested" to see how the matter plays out in the courts and said oil and gas companies might submit briefs in the case opposing the administration's decision.

"As a former regulator, I think anytime you have an approved permit rescinded, it creates a tremendous amount of uncertainty," he said.

Trump's imposition of sweeping tariffs against the nation's trading partners, along with repeated signals that he wants to revoke the Inflation Reduction Act's clean energy tax credits, has also created unwelcome uncertainty for the energy sector, Chatterjee said. He predicted that fears over those policies' effects will encourage at least some Congressional Republicans to fight to preserve the IRA credits.

"The economic disruption caused by the tariffs, in my view, is going to have an impact on the budget reconciliation process," Chatterjee said. "And if electricity prices continue to go up, and Americans continue to feel the inflationary pressure that will be exacerbated potentially by the tariffs, rescinding tax incentives that will drive up the cost of electricity the next day if they're eliminated will not make a lot of sense."

Chatterjee noted that several Republican senators have already come out in support of keeping the IRA tax credits, and he suggested other party members in the chamber share that opinion but are so far keeping it to themselves.

"I do think you will see Republicans come to the table and protect some of these incentives, because again, all of this is kind of intertwined," Chatterjee said. "The business case for clean energy has really been improved dramatically, and I do believe that more and more Republicans are starting to recognize that."