Renewable energy growth could slow over 30% without climate plan

Source: Elizabeth Harball, E&E reporter • Posted: Friday, February 26, 2016

A new report predicts that the elimination of U.S. EPA’s Clean Power Plan could mean that by 2025 a whopping 50 gigawatts of potential renewable energy generation could go unrealized, despite Congress’ recent extension of wind and solar tax credits.

“The tax extenders alone provide a bigger medium term boost to renewables than just the [Clean Power Plan], but not as big as with both policies in place,” states the report, released today by the Rhodium Group.

Following the Supreme Court stay of EPA’s rule to curb power-sector carbon emissions, the Obama administration has repeatedly pointed to the production tax credit and investment tax credit extensions to show that the United States will continue ramping up zero-carbon energy use (ClimateWire, Feb. 23).

But the Rhodium Group report shows that a permanent Supreme Court ruling against the Clean Power Plan could significantly affect how much renewable energy is built in the next five years, a finding with implications for America’s ability to meet its targets under the recently forged Paris climate deal.

“If the CPP is struck down, we now expect 92 GW [of utility-scale wind and solar] as a result of having the tax extenders in place,” the report states. “If the CPP is upheld that grows to 142 GW.”

However, Rhodium Group Director John Larsen, an author of the report, cautioned that several important factors mean those numbers aren’t set in stone.

“We’re showing the bounding cases,” said Larsen. “Market uncertainty is important here, and it could play out very much in favor of both renewables and emissions reductions.”

Cost of renewables, natural gas key

Many states are moving forward with emissions reduction plans regardless of the Supreme Court stay, Larsen noted. Also, natural gas prices could go down. Finally, the National Renewable Energy Laboratory found that the costs for certain renewable technologies are already lower than the U.S. Energy Information Administration predicted in its 2015 Annual Energy Outlook.

The Rhodium Group used EIA’s 2015 Annual Energy Outlook to make its core projections, so it also released projections based on NREL’s numbers and lower natural gas prices from the Henry Hub.

“When cheaper natural gas and cheaper renewables are considered together with the tax extenders, both [natural gas combined-cycle units] and wind and solar generation get a boost,” the report states, adding that new wind and solar generation is 2.5 higher by 2022 when factoring in lower costs.

“Between those market dynamics and the planning and investment that is its already in play, it is very likely that the emissions story … might be somewhere in between our bounding cases,” said Larsen.

Signing climate deal ‘reckless’ after stay?

The report was released on the heels of a different Rhodium Group projection that America’s ability to meet its 2020 Paris climate target is “within reach,” but that more action will be needed to achieve the 2025 target (ClimateWire, Jan 28). That report did not factor in the stay of the Clean Power Plan.

At a Washington, D.C., event where Larsen presented these findings yesterday, he noted, “The current administration is not done yet,” but added, “The next administration is going to have a lot to think about.”

Republicans in Congress are already attacking the Obama administration’s insistence that it can meet its Paris climate obligations while the Clean Power Plan remains in legal limbo.

“I find the administration’s decision on signing this, the Paris climate deal, to be nothing short of reckless,” said Sen. John Barrasso (R-Wyo.) at a hearing yesterday while questioning Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation. “It’s like signing a loan for a luxury car after you’ve already been laid off, lost your job.”

But others are more optimistic. Speaking at the event yesterday with Larsen was Advanced Research Projects Agency-Energy (ARPA-E) Director Ellen Williams, who agreed that advances in renewable energy technology could mean greenhouse gas reductions may be easier to achieve.

“We believe that technology innovation can really change what’s possible,” Williams said.