Clean Power Lives On Even as Trump Ends Obama ‘Clean Power Plan’
- Wind, solar forecast to boom even without Clean Power Plan
- Economics and tax credits are key drivers for renewables
President Donald Trump’s long-expected executive order to roll back climate change regulations is drawing cheers from fossil-fuel producers and howls from environmentalists. The reaction from clean-energy companies?
While repealing the Clean Power Plan is deeply symbolic, the move will probably have little impact on the U.S. wind and solar industries. After years of being supported by subsidies, prices have plunged so much that renewables can compete with fossil fuels. That’s why energy companies are pushing forward with long-term plans to generate power with clean alternatives, even as Trump vows to breathe life back into coal country.
“I don’t think politics are needed to support these asset classes,” Sachin Shah, head of Brookfield Asset Management Inc.’s renewables unit, said in an interview. “They will do just fine because they are economically viable and they make sense.”
Wind and solar accounted for more than half of the new capacity added to U.S. grids in the past two years, thanks to two economic trends. The first is low natural gas prices, which have driven down the price of electricity and forced record numbers of aging coal-fired generators to close. The second is that wind and solar farms have become much cheaper to build, making them an attractive replacement for shuttered fossil-fuel plants.
Even without the Clean Power Plan, or CPP, Bloomberg New Energy Finance forecasts that wind and solar energy will grow 51 percent over the next three years, with companies including NextEra Energy Inc., Duke Energy Corp. and NRG Energy Inc.expanding their portfolios.
“We think our goals are responsible business and also good business,” said Bruno Sarda, head of sustainability at NRG, which plans to reduce its emissions 50 percent by 2030. “Regardless of what happens around CPP, we will continue on our path to create a sustainable energy future and decarbonize power generation.”
While wind and solar industries may be shrugging off Trump’s move, environmentalists aren’t. The Clean Power Plan was the cornerstone of President Barack Obama’s effort to combat climate change. Over time, it could have been strengthened to ensure future emissions cuts even if coal-fired generation somehow becomes more economically viable, said Jake Schmidt, director of the Natural Resources Defense Council’s international program.
“This is an important setback in the effort to move the U.S. economy to a much lower carbon future,” Schmidt said.
Still, economics alone won’t fuel the growth of wind and solar. State laws requiring utilities to source a portion of their electricity from renewables play an important role. So do federal tax credits for wind and solar farms that were extended in 2015 with support from Republican lawmakers. And these policies remain intact, at least for now.
“As long as you have the tax credits, you should continue to see solid growth of renewables over the next three to four years,” Ethan Zindler, an analyst with New Energy Finance in Washington, said in an interview.
Another big driver is demand from the private sector. That includes dozens of large companies that have pledged to power their operations entirely with wind and solar, including Bank of America Corp., General Motors Co. and Alphabet Inc.’s Google. Part of that is marketing. But it’s also because buying power directly from wind and solar farms lets companies lock in long-term rates, and they like that predictability.
Individual investors, meanwhile, appear to be emboldened by Trump to support clean power more than ever, said David Richardson, an executive director at Impax Asset Management, which focuses on sustainability and has about $6.8 billion under management. The London-based company raised a record 479 million pounds ($598 million) during the fourth quarter and is on pace for a record first quarter, Richardson said.
“We almost see a doubling down in an environment like this,” Richardson said. “People are both seeing opportunity, and they are angry. They feel they have a moral responsibility, if not a financial responsibility, to take some action that is going to be helpful in this transition to a lower carbon economy.”