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Donald Trump is too late to stop push for renewable energy

Donald Trump is too late to stop push for renewable energy

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There seems to be little doubt that Barack Obama’s energy and environmental policies had a significant impact on how electricity is generated in the US. Tougher air pollution rules, subsidies for wind and solar power, and a commitment to reduce carbon emissions coincided with a fracking-driven boom in natural gas production to shift the fuel mix in a big way. Now Donald Trump is president. He is an avowed friend of coal who has already signalled that he wants to pull the US out of the Paris Agreement on climate change and put a stop to the Clean Power Plan that Obama’s Environmental Protection Agency (EPA) adopted to force continuing declines in carbon emissions by utilities. He also hates windmills. So why is it that all of the people I’ve talked to and heard speak on panels this week in Boston at the annual convention of the Edison Electric Institute, a utilities trade group, seem to think the shift toward renewables and away from coal is just going to keep going.

Mainly because they think Trump is too late. “We’re over the tipping point now,” said Jan Vrins, head of the global energy practice at the consulting firm Navigant. “I think the train has left the station,” said Gerry Anderson, chief executive officer of Detroit-based utility DTE Energy Co. “The administration can’t turn a 70-year-old coal plant into a 20-year-old coal plant.” It’s not that the new administration won’t be able to slow things down. Regulatory policies do matter. It’s just that Obama seems to have seized a moment of opportunity when regulatory policies and subsidies mattered most, but now other factors predominate. Vrins again: “We talk about three buckets: policy, technology and market demand. Technology and market demand are driving it now.”

The basic story is this: Since the advent of electrical utilities in the US, burning coal has been the country’s chief means of generating power. That means most coal plants have been around for a while. When they break down, utilities now have all sorts of reasons not to build new ones. During the Obama years, tough regulation of mercury and other pollutants was not only one of those reasons, but it also accelerated the retirements of otherwise still-functional plants. The American Coalition for Clean Coal Electricity sifted through investor and regulatory filings and found that utilities attributed three-fifths of the coal retirements since 2010 to EPA regulations.

Unlike the carbon-focused Clean Power Plan, which was tied up in court even before Trump was elected, most of those rules are already fully in place and will be hard to remove. Meanwhile, there are lots of other factors weighing against building new coal plants. One is the likelihood that, once Trump is out of office, the federal government will go back to targeting carbon emissions. In the meantime, lots of state and local governments are continuing to push for more use of renewables in power generation. Customers are clamouring for it, too, as long as it doesn’t cost more. And because of big efficiency improvements in wind and solar (and, yes, federal and state subsidies, although those are getting less important over time), it doesn’t cost more.

So when a utility needs to “invest in more modern generation facilities,” said DTE Energy’s Anderson right after his comment about 70-year-old coal plants, “the choices for new generation are natural gas and renewables.” This isn’t to say that everyone in the electrical utility industry is equally enthusiastic about all aspects of this transition. The rapid turn to natural gas as an electricity source, especially in the Northeast, has raised lots of concerns about reliability. “During cold periods, there’s not enough capacity in those pipes to bring in all the gas we need,” said Gordon van Welie, president and chief executive of New England’s regional transmission organization.

The rise of wind and solar has resulted in negative prices for power in some areas when the wind is blowing especially hard or the sun is shining especially strongly—which isn’t a great thing for power markets. The growth of distributed energy generation and storage, and the state subsidies that support it, brings all sorts of headaches for utilities as well as opportunities.

Utilities have also been coping for the past decade with a decline in per-capita electricity use in the US, driven by efficiency gains and new technologies such as LED bulbs. That actually may be one more reason, though, for them to embrace the transition away not just from coal but also from fossil fuels in general.

The only way to achieve sharp drops in overall carbon emissions is for electrification to “move more deeply into transportation, heating, industry,” said Susan Tierney, a veteran federal and state energy official who is now a senior adviser at the Analysis Group, a consulting firm. So electrical utilities have an opportunity to reverse their demand downtrend in a big way—but only if the electricity they generate is largely carbon-free. Put it all together and, as Edison Electric Institute (EEI) senior vice president Philip Moeller summed it up for me, “the cost of renewables has come down significantly and customers want them, and those trendlines are going to continue.” They’re not always going to continue uninterrupted—natural gas has actually lost ground to coal in recent months as rising gas prices drove utilities to use less of it. It’s also possible that those in the electrical utility business are underestimating the regulatory changes in store from the Trump administration. But it still seems quite significant that the people who generate the nation’s electrical power appear to have no plans to halt the transition away from coal and toward wind and solar.

Source:LiveMint
Anand Gupta Editor - EQ Int'l Media Network

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