Trump's coal revival plan probably won’t work; clean energy tech is already cheaper
While President-elect Donald Trump hopes to revive the coal industry by slashing CO2-reducing regulations, industry analysts say clean energy has become so cheap it will continue to increase its domination of the energy industry.
Trump is likely to roll back several of the current administration's clean energy policies, such as the 30% Investment Tax Credit (ITC) for solar power deployments, the Environmental Protection Agency's Clean Power Plan (CPP) and U.S. support for the 195-nation Paris Agreement.
Raj Prabhu, CEO of the Mercom Capital Group, a clean energy research firm, said that the Obama administration's Clean Power Plan (CPP) might be the first casualty.
That plan requires states to reduce carbon dioxide emissions from existing fossil generators to about 1,560 million metric tons in the 2030-40 decade, substantially below their 2005 and 2015 levels of 2,416 metric tons and 1,891 metric tons, respectively.
If the CPP were eliminated, the U.S. would likely see fewer coal-fired plant retirements due to carbon emissions and less impetus for the procurement of utility-grade solar power. However, since the CPP's targets don't take effect until the start of the next decade, this is a longer term dampener for renewables, according to MJ Shiao, director of solar research GTM Research.
And, even with the dissolution of the CPP, the number of coal-fired generators is still expected to be reduced by about one-third through 2030, or by about 60 gigawatts of capacity, according to the U.S. Energy Information Administration (EIA).
In recent years, U.S. coal production has steadily declined. Last year, production dropped 10.3% year over year to its lowest levels since 1986, according to the EIA's annual coal report released last week.
Coal's share of total electricity generation, which was 50% in 2005 and 33% in 2015, is predicted to fall to 21% in 2030 and to 18% in 2040, according to the EIA.
Today, gas-fired power plants produce about 33% of U.S. power, nuclear plants produce about 20% and hydroelectric generators (dams) create 6%. Other renewables, including biomass, wind, solar and geothermal source account for another 7%.
And wind and solar are by far the fastest growing energy sectors. Last year alone, the solar industry added 31,000 new jobs, according to the Solar Jobs Census; that was 20 times the national average for job creation.
"Not only did solar create almost 2% of all new U.S. jobs last year, those hires were concentrated in the states where solar is booming primarily because of market-friendly policies," said Amit Ronen, director of the George Washington University's Solar Institute.
Trump has also threatened to pull U.S. support for the Paris Agreement, which last year saw voluntary pledges by 195 nations to lower CO2 emissions. But the impact of such a move would be negligible at best in helping the coal industry, analysts said.
"Even if he did all those things..., which would require legislative hurdles, the economics still favor gas more as an energy generation source," said Colleen Kennedy, an oil and energy analyst with at Lux Research. "The economics just don't work out in favor of coal."
Because renewable energy can be intermittent, meaning when the wind isn't blowing or the sun isn't shining no energy is produced, EIA analysts use a "levelized avoided cost of electricity" (LACE) along with levelized cost of electricity. It represents the per-kilowatt hour cost of building and operating a power generating plant over an assumed financial life and activity level.