As expected, President Trump issued an executive order today to dismantle the Obama administration’s Clean Power Plan -- a policy designed to curb carbon emissions from new and existing power plants by accelerating the adoption of lower-polluting energy resources.
The "Energy Independence" order also lifts a moratorium on federal coal leasing, triggers a review of methane and hydraulic fracturing restrictions, and eliminates use of the EPA’s “social cost of carbon” -- a value placed on the long-term negative consequences of carbon emissions -- in policymaking. The order does not address whether the U.S. will remain a part of the Paris Climate Agreement. The White House is reportedly divided on Trump's campaign promise to withdraw.
Some aspects of the executive action, like lifting the freeze on federal coal leasing, will take effect immediately, while the legal process of pulling back the Clean Power Plan (CPP) is more complex. Trump has formally called for the EPA to initiate a review of federal carbon regulations, which he is widely expected to weaken or eliminate.
“My administration is putting an end to a war on coal,” Trump said at a press conference this afternoon. “With today’s executive action, I’m taking historic steps to lift restrictions on American energy, to reverse government intrusion and to cancel job-killing regulations.”
Supporters of the CPP, including environmental organizations, state leaders, health groups and business associations, were quick to denounce the order -- calling it an attack on clean energy and a dangerous change of course on climate action. If Trump does not offer a new climate plan, the EPA is likely to face an onslaught of lawsuits for failing to comply with the 2009 endangerment finding. EPA Administrator Scott Pruitt urged Trump not to address the endangerment finding in the executive order because of the legal messiness.
But not everyone who supports addressing carbon emissions is concerned, and at least one influential group sees it as an opportunity.
No renaissance for coal, still a loss for renewables
Today, 75 percent of states are already meeting their 2022 interim greenhouse gas targets, and 85 percent of states are on track to meet their final 2030 targets, pointed out William Becker, executive director of the National Association of Clean Air Agencies, an association of state and local governmental air pollution control agencies in 45 states, Washington, D.C., and the territories. The extensive stakeholder process of finalizing the CPP has already laid the groundwork for significant greenhouse gas reductions across the country, he said.
“If the Trump Executive Order prevails, the CPP will, nonetheless, leave a legacy in the form of a substantial impact on states’ actions to address the challenges of climate change,” said Becker.
A weakened CPP will allow coal plants to remain in operation a few years longer. In response, U.S. coal shares edged up as Trump signed the executive order. But even coal industry experts believe the industry won’t be revived. And when it comes to clean energy, market research shows that it won’t stop the boom in solar and wind.
GTM Research never accounted for the CPP in its solar projections, and it nonetheless forecasts a 3 percent compound annual growth rate over the next six years, from 14.8 gigawatts of total solar capacity in 2016 to 18.3 gigawatts of solar capacity in 2022. The regional grid operator in Texas projects up to 27 gigawatts of new solar capacity in the state over the next 15 years -- without the CPP. Taking a broader view, the U.S. Energy Information Administration’s latest Annual Energy Outlook forecasts renewable energy will be the world’s fastest-growing energy source through 2040.
FIGURE: Cumulative Additions and Retirements of Generating Capacity in 5 Cases, 2015-2040 (GW)
“Solar provides an awesome value proposition regardless of whether or not coal plants account for the pollution they produce,” said Adam Browning, executive director of Vote Solar. “With or without the Clean Power Plan, it’s really hard to beat a 20-year power-purchase agreement for new generation below 4 cents per kilowatt-hour. You can’t build new gas, coal or nuclear power plants and guarantee those rates. Solar can, while delivering clean air and good jobs across America.”
With wind prices at 2.5 cents per kilowatt-hour without the CPP, that market is also on track to see robust growth.
So there’s good reason to believe the renewable energy industry will survive the Trump presidency, but it would be wrong to think that rolling back the CPP won't have any effect on the renewable energy sector. As the EIA’s 2040 outlook shows, growth for renewables without the CPP is markedly slower.
Growing quickly, but not quickly enough
“I don’t think people should be treating the growth of clean energy like a binary thing -- growth or no growth,” said Noah Kaufman, climate economist at the World Resources Institute. “Clean energy can be growing quickly, but not quickly enough. Both are probably true right now if we take any of our carbon emissions and long-term climate risk seriously.”
Kaufman worked on the Obama White House’s United States Mid-Century Strategy for Deep Decarbonization last year that found the country would need to get 55 percent of its electricity from renewable resources as part of a broader plan to reduce U.S. emissions by 80 percent by 2050. Renewables currently make up around 14 percent of the U.S. electricity mix.
FIGURE: Mid-Century Strategy for Deep Decarbonization
From a climate action perspective, there’s widespread agreement that Trump’s executive order is bad news. According to an analysis by the economic consulting firm Rhodium Group, Trump’s executive order will put the U.S. emissions 14 percent below 2005 levels by 2025, versus 21 percent below that mark had the CPP remained in place.
In conjunction with Trump’s recent announcement to review Obama-era fuel economy standards (which many expect to be rolled back), the Union of Concerned Scientists estimates there will be a 9 percent increase in energy-related emissions in 2030, or an additional 439 million metric tons of carbon in the air. “That means emissions will go up in the U.S., just when the rest of the world is transitioning to a cleaner, healthier economy,” said UCS President Ken Kimmell.
But say you don’t care about carbon emissions; you just care about the clean energy industry -- with a specific focus on project deployments and jobs. From this perspective, the CPP repeal is at best a missed opportunity to accelerate growth in the sector.
The CPP would have expanded the deployment of wind and solar, as well as a suite of other clean energy technologies, in new markets. Many states may continue to advance electricity modernization plans, but states that have been slower to act will have less pressure to do so without a federal mandate.
The policy consulting firm Energy Innovation put some specific numbers on the missed opportunity for renewables. If the CPP is repealed, the group found that coal generation capacity would be 55 percent higher in 2030 than if the CPP were to remain in place. Wind and solar generation capacity in the same year would be 35 percent and 23 percent lower, respectively.
“While it doesn’t stop renewable energy from growing – wind and solar absolutely can compete on cost alone -- but they still do benefit from having the CPP, so there is an impact when the CPP is removed,” said Jeffrey Rissman, head of modeling and energy policy expert at Energy Innovation.
He added that clean energy deployments aren’t the only tangible effect. The same analysis found that repealing the CPP would result in $600 billion in new economy-wide cumulative net costs, due to increased capital, fuel, and operations and maintenance expenditures.
FIGURE: Energy Innovation's Renewable Energy Forecast
The American Sustainable Business Council, a national network of over 250,000 businesses, also sees the CPP rollback in economic terms. “Businesses want action that addresses climate change,” said David Levine, CEO and co-founder of ASBC. “They know that rolling back the Clean Power Plan without a meaningful alternative in its place, like a carbon fee, will make climate change worse. That will further hurt economic growth.”
The Sierra Club highlighted that weakening federal regulations also undermines the potential to create new clean energy jobs.
“Right now, clean energy jobs already overwhelm dirty fuels in nearly every state across America, and that growth is only going to continue as clean energy keeps getting more affordable and accessible by the day,” said Sierra Club Executive Director Michael Brune, pointing to recent employment numbers released by the Department of Energy. The report shows that the number of jobs in solar, wind, energy efficiency, smart grid technology and battery storage is notably higher than the number of U.S. jobs from the coal, oil and gas sectors -- including in power generation, mining and other forms of fossil fuel extraction.
“These facts make it clear that Donald Trump is attacking clean energy jobs purely in order to boost the profits of fossil fuel billionaires,” Brune said. “If we truly want to grow our economy, reduce air and water pollution, protect public health and create huge numbers of new jobs for American workers, we must seize the opportunity that is right in front of our eyes: invest more in clean energy including solar, wind, storage and energy efficiency.”
At the very least, repealing the CPP creates uncertainty after 2019, when the federal Investment Tax Credit for solar and Production Tax Credit for wind begin to decline. It’s no coincidence that the CPP’s clean energy early incentive program was timed to begin as the tax credits faded and the federal regulations took full effect.
“The Clean Power Plan was supposed to start in 2025, so there would be no carbon pricing signal in theory until 2025. So to say more renewable energy is being driven today by the CPP doesn’t make sense,” said Prajit Ghosh, head of Americas power and renewables research for Wood Mackenzie. “But the importance of the CPP is more that it brings a certain amount of certainty about where the industry is going from a policy standpoint and what kinds of investments are less risky investments.”
So the CPP, or any carbon mandate, is a long-term signal that helps to guide investors. And even if the cost of compliance is low, it’s still a safeguard against a trend reversal, said Ghosh.
“In theory, we all believe gas prices will be low for the next 20 years…and we all know that marginal pricing for solar will fall, but these are forecasts, and with that comes uncertainty, “ he said. “So when we a have carbon mandate, it’s a backstop.”
Conservatives see an opportunity
There is at least one person working to advance climate action who sees Trump’s review of the CPP in a purely positive light. Ted Halstead, president and CEO of the Climate Leadership Council, said he’s “the only optimist in this town,” while speaking at a Brookings Institute event in Washington yesterday.
Halstead has been spearheading a proposal to implement a carbon dividends program starting at $40 per ton of carbon dioxide emitted. It’s being pitched as the “conservative climate solution” because it’s market-based, it cuts back government regulation, and is aimed at benefiting working-class Americans. The Council’s plan is estimated to give the average family of four a $2,000 carbon dividend in the first year, which would increase over time.
Because all citizens are rewarded equally for reducing their carbon footprint, lower-income communities would be sure to benefit. Meanwhile, wealthier people who emit more would face higher costs. Halstead pointed to a recent analysis from the Treasury Department that found the bottom 70 percent of Americans come out ahead under a carbon dividends program.
While White House Press Secretary Sean Spicer dismissed the carbon dividends plan, the proposal has the backing of several senior Republican lawmakers, as well as growing support among CEOs.
“No one has put forward a conservative, market-based climate plan before,” said Halstead. “When you do…there’s a surprising amount of open-mindedness we’re finding.”
In that vein, 17 House Republicans signed a resolution this month that pledges to seek “economically viable” ways to combat climate change. Halstead could find support among these GOP members, and eventually the White House, once the rollback of the CPP sets in.
If there are any lessons to be drawn from the failure of the heath care bill, he said, it’s that repealing a major national program requires two things: a better replacement and bipartisanship. A repeal-only strategy is fine for now, “but I believe there will soon enough be a significant backlash against that,” said Halstead.
A recent survey of Trump voters conducted by the Yale Program on Climate Change Communication found that 62 percent support taxing and/or regulating the pollution that causes global warming. Nearly three-quarters of Trump voters think the U.S. should use more renewable energy in future. When pushback against inaction gets strong enough, Halstead believes Republicans will start looking for a new plan, which is where the Council’s conservative climate plan comes in.
“Maybe that’s wishful thinking, but we’re in this for the long term,” said Halstead.
[This story was updated with additional information on the executive order on March 29]