Under President Obama’s administration, the United States led the world forward in an effort to combat human-induced climate change. By standing on the right side of science, President Obama took initiatives to protect domestic bodies of water and national parks all while pushing the international community towards the Paris Climate Agreement. His respect for science stands in stark contrast to the words and actions under the new Trump Administration, which seeks to undo just about everything related to environmental law. The appointment of Scott Pruitt, an outspoken climate change denier, as head of the EPA is a clear indicator of the current administration’s stance. However, with the incoming deregulation and repeal of laws from the Obama administration, it does beg the question as to whether or not companies will seek to take advantage of it all. As more and more Americans believe humans are responsible for climate change (68% according to a recent Gallup poll), the opportunity cost for companies to revert back to previous standards might not be worth it.
For some, abandoning the “environment first” mentality is a last-ditch attempt to hold on to the only way of life they’ve ever known. Coal mining communities have been decimated with the rise of clean energy and other alternatives, changing what once were thriving and vibrant towns into former shadows of themselves. These communities backed Trump, putting their last bit of hope into the hands of a man who promised to bring back jobs by the thousands. It may not be that simple. There are multiple factors why progressive energy strategies may prevail in the face of such an administration: China, the US Dollar, and energy resources at home.
China is the world’s largest consumer of coal, and their impact on the industry cannot be overstated. But in recent years, even they have cut back on coal consumption. Between June 2014 and June 2015, China’s coal imports decreased by 33.7 percent, and the coal that they did import wasn’t coming from the United States. Due to the strong value of the dollar during those years and thereafter, American coal prices were up, allowing for places like Indonesia and Australia to supply coal to China at a cheaper cost. The International Energy Agency projects China’s coal consumption to continue falling through 2040.
Furthermore, in 2014 China passed legislation banning the creation of new coal mines along with the targeted reduction of coal consumption across 12 provinces through 2017. This comes as a surprise considering that at one point, China was the main antagonist against global unilateral action to fight climate change. In recent years, however, Beijing has shifted its stance, likely due to the horrific climate and health conditions present in many of China’s cities. They have also set renewable energy targets, on track to reach 15 percent non-fossil fuel energy use by 2020 and 20 percent by 2030. As China steps up and takes charge in the fight against climate change, the percentage of their energy that comes from renewable sources is set to only increase.
Even in the face of China’s falling coal consumption, the largest threat to American coal communities lies closer to home. The United States has become the world’s largest producer of natural gas, and as such, the price to produce natural gas domestically has decreased. According to the National Renewable Energy Laboratory, Levelized Cost of Energy is defined as, “the total cost of installing and operating a project expressed in dollars per kilowatt-hour of electricity generated by the system over its life.” This cost accounts for financing, taxes, installation, operation, and incentives. The projected LCOE in the U.S. by 2020 (as of 2015) priced the varying types of natural gas in an average range of $72.6 – $141.5 MWh (megawatt/hour). Coal, by comparison, was $95.1-$144.4 MWh. As financial incentives like tax credits and subsidies from the Obama administration continue for the next few years, these numbers should be interesting to watch, but for the most part, the damage is done. Renewable energy sources have also become more cost-effective after the initial years of heavy investment. Wind power is 60% cheaper than it was seven years ago. For solar power, that number is 80%.
These trends have not gone unnoticed–even the executives of large electric utility companies agree. According to the Charleston Gazette-Mail, Appalachian Power President Charles Patton said, “You just can’t go with new coal [plants] at this point in time. It is just not economically feasible to do so.” Appalachian Power is just one of many major electric utility companies bracing for the shift in energy production. Rick Curtsinger, a spokesperson for Cloud Peak Energy also touched on this in an interview with the New York Times, stating that, “At the end of the day, coal will still have to compete with a host of other fuels. ‘Utilities’ long-term decisions are based on economics and the need for long-term certainty.” Appalachian Power and Cloud Peak Energy are two of the largest coal producers in the country, and although regulatory relief could restore up to 10% of most companies’ market shares, it is not nearly enough to quell their fears about the future.
In 2015, the United States added more power-generating capacity from wind than from any other energy source (natural gas and solar energy were the runners-up). Even Texas, where lawmakers are some of the most outspoken critics of climate change legislation, is following suit. In fact, the largest share of wind power in the country comes from the Lone Star state. This is because the economics behind renewable energy sources are the driving force behind going clean, as they represent one the largest sources of economic growth for the country. Solar jobs are growing 12 times faster than the U.S. Economy itself. Companies that have heavily invested in the renewable energy industry are seeing a 27 percent return on investment. As a whole, renewable energy generates around $200 billion in revenue (almost the same as consumer electronics) and employs 2.7 million Americans. And the potential investment expands beyond the borders of the United States. Dan Kammen, a professor of public policy at the University of California-Berkeley is a U.S. State Department science envoy for the Middle East and Africa. He says he has met with more than 20 national delegations at the latest round of climate talks in Morocco. According to Kammen, “These are all countries that have clean-energy targets of 50 percent or more by 2030. And they all want to buy U.S.-made technology.” He continues,”If these solar, wind and efficiency (products) are not available from the U.S., [these countries] will go elsewhere.”
It’s evident that while Trump may scale back renewable and clean energy initiatives, companies and states may choose not to follow him. Upon initial declaration of his intent to abandon the Paris Climate Agreement, Trump was met by opposition from the CEOs of hundreds of companies across the world, like Nike, Levi Strauss, Starbucks, and Mars. State lawmakers are also under pressure if they resist the advancement of renewable energy. In Ohio, a solar panel manufacturer threatened to leave the state after state legislatures made the state’s renewable energy program optional even with Governor John Kasich’s staunch opposition to the move. Hawaii plans to be 100% renewable energy by 2045. Illinois passed the Future Energy Jobs Bill, leading to billions of dollars invested into kick-starting clean energy. Over 29 states already require utility companies to get a certain percentage of their power from renewable sources. Even the main federal regulation, fuel economy standards for vehicles, could be implemented at a state level if done away with, something Trump promised during a campaign rally after the election.
Ultimately, timing will make all the difference. President Trump will face an uphill legal battle when it comes to changing the direction his predecessor faced for the last 8 years. Many of the federal tax credits for wind and solar power will continue a few years into the Trump administration. These credits also have the backing of several Republicans representatives, as states like Texas and Iowa have economic interests in developing these technologies. As the clock continues to tick, renewable energies will only continue to get cheaper and more cost effective. Coal will struggle to compete, and eventually, so will natural gas. President Obama and his administration helped catalyze the industry and follow where the money lies: in renewable energy. And for President Trump, he may watch his false promises blow away in the wind.