On March 28, President Trump formally shifted direction in U.S. climate and energy policy with the release of an executive order to review and likely attempt to roll back the U.S. Environmental Protection Agency’s Clean Power Plan (CPP), as well as other climate executive actions. Aimed to reduce carbon pollution from existing power plants, the CPP was the cornerstone of President Obama’s climate policy to transform the nation’s power sector and deliver on the country’s commitments outlined in the Paris Climate Agreement. Interestingly, the Trump order was largely silent on whether the U.S. should stay or withdraw from the accord – though later reports indicate the White House could make a decision on the pact in advance of the G-7 meeting.
As we wait for the full picture of Trump’s energy policy to take shape, it’s important to take stock on what the likely demise of the CPP will mean for the booming renewable energy sector. There is no denying that long-term investment in the nation’s renewable energy infrastructure would have benefited from the CPP’s goal of reducing carbon-dioxide emissions from the power sector by 32% by 2030. The near-term reality, however, is that the president’s order is unlikely to impact the continued growth in the renewables industry.
Renewable energy provided 70% of the nation’s electricity capacity additions over the past two years, with more than 22 GW of new solar and wind generation installed in 2016 alone. In fact, the renewable energy sector garnered a whopping $96 billion in investments over the same period and is currently the largest source of private-sector infrastructure investment in the U.S. This growth has created hundreds of thousands of new jobs and generated hundreds of millions of dollars in tax revenue for local communities, mostly in remote rural areas. This market momentum will no doubt continue, with more than 90 GW of solar and wind contracted or expected to be installed over the next five years.
What’s driving this growth? The simple answer: economics! America’s renewable energy industry is growing rapidly because of declining costs and increasing demand by residential and corporate electricity consumers alike – a trend that will continue for the foreseeable future, aided by bipartisan federal tax policy and forward-looking red- and blue-state policies.
Of course, any federal energy policy limiting carbon would help renewables. Yet even without a regulatory mandate, the current renewable energy growth trajectory being driven by competitive power market economics suggests we may be able to stay on track with the CPP’s original emissions-reduction objectives. The renewable energy sector will continue to be a major source of modern, price-competitive and virtually emissions-free power. That’s a win-win-win – for consumers, system reliability and the environment.
Furthermore, Trump is a businessman and a politician. He has surrounded himself with a number of other notable businessmen and advisors, including Energy Secretary Rick Perry, who are well versed in the role of renewables as an infrastructure and power generation engine of investment and economic growth. In April, Perry said, “We are committed to developing, deploying and commercializing breakthrough technologies and developing the necessary policies that will help renewables become competitive with traditional sources of energy.” This is an encouraging sign from an administration that will need to work with Congress to decide on whether to move forward with a truly “all of the above” energy strategy, which includes a major role for renewables.
We are also looking ahead to possible tax reform. Renewable energy incentives are scheduled to ramp down; meanwhile, conventional energy tax incentives are permanent. Tax reform will offer the opportunity to update tax and energy policy to drive more investment in energy infrastructure and innovation. Will the administration and Congress invest in continued renewables growth and ensure a level playing field? Let’s stay engaged to ensure as much.
Todd Foley is senior vice president of policy and government affairs at the American Council On Renewable Energy.