Trump’s failing war on green power

Source: By ERIC WOLFF, Politico • Posted: Thursday, January 25, 2018

Wind and solar energy may have come too far for even a pro-fossil-fuel administration to stuff back into the barrel.

A coal barge is visible behind President Donald Trump. | AP Photo
A coal barge is visible behind President Donald Trump, who spent his campaign promoting an “America First” energy policy that was intended to translate into more oil, gas and especially coal. | Andrew Harnik/AP Photo

President Donald Trump and Republicans have tried again and again during the past year to turn back the clock on energy — pushing policies that would help fossil fuels stave off advances by solar and wind.

But they have repeatedly come up short.

Energy Secretary Rick Perry’s proposal to force electricity customers to subsidize ailing coal plants ran aground early this year. The Senate rebuffed efforts to water down tax credits for solar and wind power. And Trump’s move this week to impose a tariff on imported solar panels should put only a crimp in the growth of sun-powered energy, analysts have said, despite the outcry it’s generated from most of the U.S. solar industry.

Trump spent his campaign promoting an “America First” energy policy that translated to more oil, gas and especially coal — even as he slammed solar as expensive and hammered wind turbines as ugly. But after growing rapidly during the Obama years, wind and solar energy may have come too far for even a pro-fossil-fuel administration to stuff back into the barrel — especially after creating tens of thousands of jobs in red and blue states alike.

In addition, Trump and his appointees face limits on their authority. And in some cases, he has taken a compromise position, for example by choosing a solar tariff low enough to ease the damage to U.S. companies that rely on access to low-cost panels from abroad for solar power plants and rooftop arrays.

“I believe that the wish of the administration to generate again new jobs in old technologies is clearly determining their policy agenda, but that policy agenda has so far not been able to match up against the realities of the unrelenting pace of the energy transition,” said Jules Kortenhorst, CEO of Rocky Mountain Institute, a clean-energy advocacy group.

The solar tariff, along with a trade case on washing machines, gave Trump his first opportunity to implement protectionist trade policies while targeting his preferred adversary, China. It also demonstrated the way such cases can split both political parties and the industry that the trade penalties would affect.

Administration officials sold the solar tariffs, which were opposed by most of the domestic solar industry, as an effort to preserve national security. While Sen. Ron Wyden (D-Ore.), normally an environmentalist, wanted strong tariffs to protect his home-state manufacturer SolarWorld, Sens. Thom Tillis (R-N.C.) and Lindsey Graham (R-S.C.) both opposed the tariffs as potentially damaging to companies that make components for solar systems.

“It was not as bad as we expected,” Tillis said Tuesday of Monday’s tariff decision. “We were glad that the extreme scenarios that were being floated didn’t occur. Now, we’re just trying to figure out structurally how this really affects what has really become a very successful industry.”

The solar industry now employs 260,000 people and has become one of the fastest-growing energy sectors. Together, wind and solar power make up most of the new power capacity added to the U.S. grid in recent years. The Solar Energy Industries Association says the tariffs imposed Monday will cost the industry 23,000 jobs, but even CEO Abigail Ross Hopper said the 30 percent tariff was not as bad as it could have been, since Trump could have imposed a 50 percent tariff.

“I think this administration really grappled with the understanding that solar is creating more jobs in this economy than many other industries and many other energy sources,” Hopper told reporters. “This decision, while we’re not happy with it … does demonstrate some restraint, understanding that this impact is going to affect jobs and growth in the U.S.”

Since solar cells and panels make up only a fraction of a new solar system’s costs, analysts expect the tariffs to bump up overall installed prices by 6 percent for residential rooftops and about 10 percent for utility-scale plants. Rocky Mountain Institute’s own analysis says that the ongoing decline in solar installation costs will wipe out the price increases from the tariff in 18 months.

The moderate tariff will allow solar to keep chipping away at the market share of coal. But the fate of that fossilfuel, which Trump promised to restore to its former glory during the campaign, is facing bigger threats from wind and natural gas in power markets.

Republicans in the House last year tried to use last year’s tax bill to eliminate provisions that allow an existing wind power subsidy called the Production Tax Credit to climb with inflation, and would have shortened the length of solar tax benefits called the Investment Tax Credit. The two moves alarmed advocates, which, along with other tweaks, could have devastated renewables development. But Senate tax writers removed the provisions in the conference, and renewables kept their credits.

Still, rule changes in the tax bill did weaken the market used to finance some renewable projects. And the wind tax credit will phase down to zero, and the solar credit to 10 percent by 2020.

The administration’s most ambitious effort so far to tilt the scale in the direction of traditional fuels came from the Energy Department last fall, when Perry invoked a rarely used authority to press federal energy regulators to create a subsidy for a group of coal-fired and nuclear power plants in markets stretching from the Midwest to the East Coast. The move would have propped up plants that are struggling to survive in the face of rising natural gas and wind power.

But Perry’s proposal was rejected by all five members of the Federal Energy Regulatory Commission, four of whom had been appointed by Trump. The independent agency said DOE’s push for the rule wasn’t justified by conditions in the power markets, though it agreed to study the issue.

Energy experts said the preservation of the popular renewable energy tax credits and FERC’s rejection of Perry’s proposal exposed the limitations of the White House to force through Trump’s campaign promises.

“States have far more primacy over generation than the federal government does,” said Timothy Fox, a vice president for ClearView Energy Partners. And with Monday’s trade tariffs, “the president may have pulled on one of his few levers that influence renewable power build-out.”

Fox notes that Trump’s push to unwind the Obama administration’s climate change regulations for power plants and his announcement that the U.S. would withdraw from the Paris climate agreement have prompted some states to redouble their efforts on renewable energy. New York is planning to create a carbon price for its power market, New Jersey is moving to rejoin the states that erected a regional carbon cap-and-trade system, and California and Hawaii have both increased their renewable requirements.

The White House did not respond to a request for comment.

While oil and natural gas companies have applauded Trump’s policies to open new areas for them to explore, conservative groups that typically support those industries have been loath to support administration plans to prop up coal or impose trade barriers they say violate free-market principles. But they have backed Trump’s plans to dismantle Obama’s climate and pollution regulations for power plants.

“We don’t like picking winners and losers,” said Myron Ebell, director of the Center for Energy and Environment at the conservative Competitive Enterprise Institute. “I am concerned that at least on the margins, the administration seems interested in picking winners and losers. I’m not worried overall. It seems to me the main thrust of policy is getting government out of decision-making.”

Renewable-energy advocates who say the solar tariff is a bad idea nonetheless believe the industry will emerge from the trial.

“I don’t want to suggest that anyone is invulnerable,” said Greg Wetstone, CEO of the American Council on Renewable Energy. “But we have a tremendous amount of momentum in the marketplace. I think the administration understands it’s not in their interest to get in the way of the driver that is producing tremendous amounts of investment and creating jobs.”

Anthony Adragna contributed to this report.