When President Donald Trump entered office, it was clear that policies boosting energy production would take precedence over those protecting the environment.
The administration’s 2019 budget and its addendum proposed sweeping rollbacks to programs designed to limit environmental pollution and mitigate the effects of climate change, while slashing funds devoted to research on renewable energy.
Yet despite this setback, these policies should not leave investors in renewable energy holding the short end of the stick. Instead, this sector is showing signs of a revival thanks to public-private partnerships at the state and local levels.
Renewable portfolio standards have been adopted or increased in 29 states and the District of Columbia as of August 2017. These guidelines require utilities to sell a specified percentage or amount of renewable electricity. The requirement can apply only to investor-owned utilities, but many states also include municipalities and electric cooperatives. These policies are integral to state efforts to diversify their energy mix, promote economic development, and reduce emissions.
The U.S. Energy Information Administration’s Annual Energy Outlook for 2018 dramatically raised projections for renewable energy compared with the previous year. The 2017 report included two projections for 2050: one with the Clean Power Plan to cut utility carbon emissions established by the Obama administration, and one without it.
The EIA has been overly cautious in its renewable energy predictions, perhaps because of Trump’s election and rising fossil fuel prices. Moving to the 2018 Energy Outlook, the baseline “reference case” scraps the Clean Power Plan entirely, assuming the Trump administration will follow through on its vows to do so. Still, even without the clean power program, the report predicts that wind and solar will lead the growth in renewables generation throughout the projection, accounting for 64 percent of the total electric generation growth through 2050. It also anticipates a 93 percent rise in generation if the Clean Power Plan is left in place.
In the reference case, renewable generation is estimated to increase 139 percent through the end of the projection period. To put this in dollar terms, the output for renewables based on current and forecasted electricity prices, which stay relatively flat throughout the period, were $66 billion in 2016 and estimated to grow to $182 billion in 2050.
And even better, the energy sector doesn’t need to wait until the next presidential election to see increases in renewable energy production. This is already occurring as seen below.
U.S. Renewable Energy Supply (current and projected)
The EIA projects that wind generation will rise to an average of 705,000 megawatt hours per day (MWh/d) in 2018 and 765,000 MWh/d in 2019. If project conditions hold, conventional hydropower generation is projected to average 730,000 MWh/d in 2019, making it the first year that wind generation exceeds hydropower generation. EIA forecasts total solar electricity generation to increase from an estimated average of 209,000 MWh/d in 2017 to 240,000 MWh/d in 2018 and to 287,000 MWh/d in 2019.
These estimates are encouraging for investments in renewable energy. Furthermore, because of higher energy prices, the big oil and gas exploration and production companies are increasing revenues, meaning they have more funds to devote to clean energy investments — they are all in it because they have to be. These companies are facing environmental pressures from stakeholders — customers, shareholders, board members and portfolio managers of sustainable funds and indexes. And other sectors are following suit. General Motors plans to generate or source all electrical power for its 350 operations in 59 countries with 100 percent renewable energy by 2050.
The nonprofit “We Are Still In” has emerged as the largest cross-section of local leaders in support of U.S. climate action. It represents over 1,700 businesses from every state, over 200 cities and counties, and a large and growing number of colleges and universities that embrace climate leadership.
Trump’s $1.5 trillion infrastructure plan only calls for $200 billion in overall federal spending: $100 billion in grants to cities, counties and state governments, $50 billion for state block grants for rural communities, and the balance for transformative infrastructure projects. The remaining $1.3 trillion Trump expects will be generated by state and local governments, as well as private investors.
Thus, the onus is on state lawmakers to align with the private sector. Acknowledging the dire need to reduce carbon emissions and to repair aging utilities and the electric grid, the private sector should see the value in going green, and incorporate renewable energy and new enabling and storage technologies.
So even as the U.S. remains on the sidelines of both the Paris climate agreement and the United Nations Sustainable Development Goals, the private sector, allied with states and cities as well as other nations, will march forward.
Bloomberg Prophets Professionals offering actionable insights on markets, the economy and monetary policy. Contributors may have a stake in the areas they write about.
To contact the author of this story:
Shelley Goldberg at firstname.lastname@example.org
To contact the editor responsible for this story:
Max Berley at email@example.com