The US appears headed for a clean energy future regardless of who sits in the White House. But the pace of the energy transition – and presumably the severity of ensuing climate change impacts – could look dramatically different depending on the victor of the Nov. 3 presidential election.
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The combative presidential campaigns have put Democratic nominee and former Vice President Joe Biden square in the clean energy camp, with President Donald Trump making the case for the country's abundant fossil fuel resources.
The energy transition underway has already taken its toll on the coal industry. More than 41.5 GW of coal-fired generation has been retired during the Trump administration, while nearly 46 GW of wind and solar projects have come online in that same time frame from 2017 to mid-2020, according to data compiled by S&P Global Platts Analytics.
Platts Analytics' expectations for the next few years include a brief rebound in coal and pullback in natural gas, while renewable generation continues to march upwards. But by 2030, coal's current 21% share of the generation mix would be closer to 5%, under a reference case that assumes a federal carbon price starting in 2026. Wind and solar generation in that scenario is seen increasing from 11% of the generation mix in 2020 to 30% in 2030.
So, neither candidate appears to have any choice but to ride the energy transition train, just as the power sector will have to adjust to whether Biden is hitting the accelerator or Trump is pumping the brakes.
Emily Fisher, general counsel for the Edison Electric Institute, noted that much of the transition underway by investor-owned utilities has not been driven by government action, as "right now this is a lot about economics and what our customers want."
And Sasha Mackler, the Bipartisan Policy Center's energy project director, asserted that "the trends in the power sector really demonstrate that this is the part of our economy that is furthest along in the energy transition."
Still, he said "the federal government could make that transition happen more quickly if it had a unifying, coherent policy framework for the power sector."
As such, Mackler asserted that the impact of the election is "really more a question of time, rather than endpoint, when it comes to electricity," whereas "the other parts of the economy are going to be more difficult" to transition to a low-carbon future.
A Biden presidency
Christine Tezak, a managing director at research firm ClearView Energy Partners, said the energy transition was "clearly moving forward on a regional basis," without endorsement at the federal level under Trump. "The question is: what would a Biden administration do to accelerate it?"
Biden's four-year, $2 trillion climate plan seeks to decarbonize the power sector by 2035 and reach net-zero emissions across the entire economy by 2050. His plan also aims to expand electric vehicle charging infrastructure and make efficiency upgrades to buildings.
A Biden win combined with a "blue wave" giving Democrats control of Congress increases chances for consideration of greenhouse gas legislation aimed at the power sector, Tezak said.
However, getting a climate bill through Congress on a thin Senate majority is "probably a long shot," due in part to expectations that recovering from the coronavirus pandemic and the economic dislocation associated with that crisis will be top of mind. The difficulty of getting enough lawmakers to agree on something as historically contentious as the issue of climate and energy policy without an overwhelming majority is another hurdle.
"The reason climate legislation is hard – even if you limit it to the power sector – is because different parts of the country are positioned differently, and that can have an impact on the vote count," Tezak said.
Rather than get bogged down trying to overcome the 60-vote threshold in the Senate to pass a climate bill, Democrats could find success working to advance some low-hanging fruit, such as extending tax credits for wind and solar projects, said Jeff Berman, Platts Analytics' director of emissions and clean energy analytics.
Those tax credits have historically received bipartisan support, and "you can see this as being an easy area of compromise," Berman said.
A more receptive FERC
A more likely scenario under which the federal government helmed by Biden could speed up the transition is one in which a differently aligned Federal Energy Regulatory Commission is more receptive and supportive of state initiatives to incrementally green their portfolios through the wholesale power markets.
The current Republican-led lineup at FERC has received mixed reviews from clean energy advocates, gaining applause and recognition for working to lift barriers to market entry for new technologies while also pushing capacity market reforms seen as having deleterious effects on states' clean energy policies.
Specifically, FERC in December 2019 directed the country's biggest grid operator, PJM Interconnection, to expand its minimum offer price rule in its capacity market to counter alleged price suppression caused by state-subsidized resources' market participation. Similar policies in ISO New England and New York Independent System Operator have also drawn fire for reportedly frustrating states' clean energy goals and resource procurement decisions.
A second Trump term
If Trump can hold onto the White House for a second term, industry observers see the president sticking strong to his deregulatory agenda and promotion of US energy exports under the energy dominance mantra.
Trump is promising to "stay the course" and "ensure that the federal government works for all of America's energy producers, not just renewables," said Tom Pyle, president of the American Energy Alliance and former head of Trump's 2016 Department of Energy transition team.
"If you separate the rhetoric from reality, the train is not moving toward clean energy," Pyle asserted. "Despite billions in direct subsidies and forced mandates, the ratio of hydrocarbons versus renewables in the energy mix is largely unchanged."
Data from the Energy Information Administration shows a slow but steady increase in non-hydro renewables over the past decade from 3% of the total power mix in 2010 to 12% in 2020. Over that same timespan, coal has experienced a rapid decline from a 46% share of total generation to 20%, while natural gas-fired generation's share has seen a boost from 23% to 39%.
Still, longtime Republican energy lobbyist Mike McKenna, a former Trump adviser, also expressed skepticism about the level of support for clean energy. Yet, he said he did not expect Trump to proactively work against state and corporate carbon and green energy goals.
"I don't think the administration will care all that much, unless someone wants the federal government to put their thumb on the scale," he said, specifying that any attempt to expand or extend tax credits for electric vehicles or wind energy would be resisted.
A potential blow to renewables
But Berman said one must look no further than Trump's Oct. 10 proclamation regarding US tariffs on imported solar panels for a preview of what could be expected in a second term.
That proclamation revokes an exemption for bifacial solar panels and moves to raise the rate of the import tariff in 2021 to 18% from the originally planned 15%.
The Section 201 solar tariffs have a four-year term that runs through 2021, but can be extended for an additional four years, Berman noted.
He added that Trump could also serve a blow to renewable deployments through his authority over the Committee on Foreign Investment in the US, the obscure but powerful government body used to block a Chinese company's acquisition of the video-sharing app TikTok.
Trump could potentially turn to CFIUS "to block offshore wind investment, given the fact that a lot of the major players in the offshore wind industry are companies that have some degree of state ownership," Berman said, noting developers Ørsted and Equinor as examples.
A continuation of fossil fuel-friendly policies and little focus on climate change at the federal level, however, is not expected to scuttle price-driven outcomes that have allowed natural gas, wind and solar to gain market share in the generation mix based on their affordability, Benjamin Salisbury, director of research and senior policy analyst at Height Capital Markets, said.
States, localities and private actors may even "double down [on clean energy] if the president is reelected, sort of recommitting themselves to those ongoing efforts," as long as the underlying market dynamics remain favorable to such voluntary action.
Mackler said he "wouldn't rule out the ability [for Congress] to drive an advanced energy agenda forward even in a second Trump term, if it got carried along in some bigger package like an infrastructure package."
While he suggested that Trump had the least ability to impact the decarbonization push within the power sector, he contended that "the extent to which alternative technologies like wind and solar can deploy in additional applications across the economy will really depend on a federal innovation and climate policy agenda that in a second Trump term is unlikely to materialize."
Further, Salisbury warned that momentum behind clean energy could "peter out over the next several years," if the costs and jobs environment takes a turn that disrupts the economic viability of those voluntary actions.