While a number of actions of the Trump administration have had a direct impact on renewables – most notably the 30% tariff imposed on imported solar panels in 2017 – most of the actions have been directed at making it tougher for renewables to compete against fossil fuels.
Thus, in looking at the Trump administration’s war on renewables, we have to review not just those actions that make renewables more expensive or more difficult to develop, but also those actions that reduce the cost of fossil fuels relative to renewables.
The actions taken by the Trump administration over just the past three years to support fossil fuels are almost too numerous to mention: the Keystone Pipeline, the US withdrawal from the Paris climate accord and, as of September 2019, the 85 separate environmental rollbacks that have been completed or that are in progress. A significant number are designed to benefit the oil and gas and coal industries, including a loosening of offshore drilling regulations and a weakening of the rules related to the disposal of coal ash at power plants.
That is not to say that other Trump policies have not directly harmed the renewable industry. Trump’s tax cuts of 2017 reduced the corporate tax rate from 35% to 21%. Since the federal support for renewables is primarily in the form of tax credits, this reduction in the corporate tax rate, in effect, reduced the value of the tax credits for renewable energy projects by 40%.
Other more direct actions taken by the administration have cut deep into renewables and the trend is on course to continue. Specifically, the proposed 2020 Department of Energy budget calls for a 70% cut and a 2020 budget proposal eliminated DOE Loan Programs Office, ARPA-E, and included a 31% cut in the Environmental Protection Agency (EPA) budget. At present, these are proposals that still require a fight through Congress, so their future remains uncertain.
Yet, despite all of these efforts by the Trump administration, renewable energy has shown remarkable resilience.
There has been a steady growth in wind and solar in particular over the past three years. Installed wind capacity has increased over 30% during the past three years and is estimated to be at 107GW at the end of 2019, up from 82GW at the end of 2016. The US solar industry reported that, as of the end of the third quarter of 2019, total US solar installations had topped 71GW, up significantly from slightly over 40GW installed at the end of 2016.
So how has this happened?
First, the impact of the step down and expiration of the PTC for wind and the soon-to-be stepping down of the ITC for solar are factors that have just been too big for the Trump administration to overcome. There has been an outright rush to secure and install projects to take maximum advantage of these tax credits before they disappear. While other factors may have also been supportive, I think most in the industry will agree that this factor has outweighed the rest.
Second, despite the administration’s rollback of environmental and other initiatives, states and local governments are stepping up to the plate to counterbalance these efforts. Where federal governments have failed to lead, states like Hawaii, California and New York have expanded their renewable requirements. There are now eight states with 100% renewable or clean energy targets, and over 100 cities and other governmental bodies have similar targets.
Third, corporate buyers have also stepped up. Disappointed with actions the administration has taken against renewables, corporate purchasers are upping their focus on becoming greener with their energy purchases. This somewhat unprecedented move by US corporations – including both tech giants and more so-called household brands – further spotlights how the fight against climate change is recognized as a global effort.
All in all, given the efforts by the Trump administration, which should have completely undermined renewables in the past three years, the double-digit annual growth has been nothing short of remarkable.
However, lest we rest on our laurels, the present administration is not done yet. In December, a Federal Energy Regulatory Commission, dominated by Trump appointees, acted to protect coal and natural gas-based power plants in the PJM capacity auction rules to the significant detriment of renewables.
This, combined with the ongoing efforts of the administration and expiring tax credits, means that the renewable energy industry and its allies are going to have to work even harder to fight these challenges and continue its success in the years ahead.