As part of ongoing U.S. elections coverage, this is the last of a four-part feature series taking a deep dive into key energy segments: oil, LNG, natural gas and the energy transition.
The U.S. appears headed for a clean energy future, regardless of who sits in the White House. But the pace of the energy transition, and presumably ensuing climate change impacts, could look dramatically different depending on the victor of the Nov. 3 presidential election.
The combative presidential campaigns have put Democratic nominee and former Vice President Joe Biden squarely in the clean energy camp, with President Donald Trump making the case for the country's abundant fossil fuel-fired resources.
The energy transition already underway has 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, according to data compiled by S&P Global Platts Analytics.
Platts Analytics' expectations for the next few years include a brief rebound for coal and pullback for 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 under that scenario together are seen increasing from 11% of the generation mix in 2020 to 30% in 2030.
So neither candidate appears to have much 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," even without endorsement at the federal level under Trump. "The question is: What would a Biden administration do to accelerate it?" Tezak said.
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 would increase the 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 getting bogged down trying to overcome the 60-vote threshold in the Senate that would be needed 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 historically have 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 a federal government helmed by Biden could speed up the transition is one in which a differently aligned Federal Energy Regulatory Commission is more receptive to 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 certain capacity market reforms seen by some as having deleterious effects on states' clean energy policies.
Specifically, in December 2019 FERC directed the country's largest grid operator, the PJM Interconnection, to expand the minimum offer price rule in its capacity market to counter alleged price suppression caused by state-subsidized resources' market participation. Similar policies in the ISO New England and New York ISO also have 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 strongly to his deregulatory agenda and promotion of U.S. energy exports under his 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 nonhydro renewables over the past decade, rising from 3% of the total power mix in 2010 to 12% in 2020. Over that same time frame, 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 to 39% from 23%.
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 U.S. 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 four-year term for the Section 201 solar tariffs runs through 2021 but can be extended for an additional four years, Berman noted.
He added that Trump also could serve a blow to renewable deployments through his authority over the Committee on Foreign Investment in the U.S., the obscure but powerful government body that was used to unwind a Chinese company's acquisition of video-sharing app TikTok.
Trump potentially could 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, citing developers Ørsted A/S and Equinor ASA as examples.
A continuation of fossil fuel-friendly policies and minimal 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, said Benjamin Salisbury, director of research and senior policy analyst at Height Capital Markets.
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 [of Congress] to drive an advanced energy agenda forward even in a second Trump term if it got carried along in some bigger package, such as an infrastructure package." While he suggested that Trump had less ability to impact the decarbonization push within the power sector than in other sectors, 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 take a turn that disrupts the economic viability of those voluntary actions.
Jasmin Melvin and Jared Anderson are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.