Saturday, July 22, 2017

CPP, FERC’s Bay, Honorable Among Losers in Trump Win

By Ted Caddell and Rich Heidorn Jr.

WASHINGTON — The U.S. just elected a president who has said he will tear up the Paris Agreement, block the Obama administration’s Clean Power Plan, “save the coal industry” and loosen the regulatory reins on the energy industry.

Like the entire country, the electric industry is still trying to get its head around how President-elect Donald Trump will convert his rhetoric into policy.

Trump offered little detail on the energy policies he would pursue beyond vowing to revoke EPA’s climate rule and supporting Republican calls to ease restrictions on oil and gas exploration and fuel pipelines.

There were some obvious winners and losers as a result of the Republicans’ capture of the White House and their continued control of the House and Senate, however.

In addition to the Clean Power Plan, other losers are likely FERC Chairman Norman Bay, Commissioner Colette Honorable and the Department of Energy.

One other likelihood, based on the defiant responses from environmental groups Wednesday: protests and litigation over Trump attempts to roll back environmental rules.

Edison Electric Institute President Tom Kuhn issued an anodyne statement Wednesday that nonetheless betrayed the industry’s uncertainty about what a Trump administration means to utilities. The trade group said it is looking forward to working with the new administration to “navigate the many challenges and opportunities facing our industry.”

“We want to ensure that we are communicating with the incoming administration, policymakers and key stakeholders about the investments our members are making and the projects they are undertaking to benefit their customers and our energy future.”

Reshuffle at FERC

Bay, a Democrat, will presumably lose the FERC chairmanship, and Commissioner Colette Honorable, whose term expires next June, will likely be replaced by a Republican.

Although the commission has not traditionally been marked by partisan divisions, the president gets to appoint members of his party to three of the five seats and pick the chairmanship. Since Republicans Philip Moeller and Tony Clark left, the five-member panel has been all Democrats: Honorable, Bay (whose term expires in June 2018) and Cheryl LaFleur (June 2019).

what does a donald trump ferc commission look like - and what does that mean for energy policy

Donald Trump will get to fill two Republican vacancies on FERC and replace Democrat Colette Honorable when her term expires in June 2017. Chairman Norman Bay, a Democrat, will have to hand the gavel to one of the three Republican commissioners. | FERC

Because Republicans maintained their control of the Senate, Sen. Lisa Murkowski (Alaska) will remain chair of the Energy and Natural Resources Committee, the gatekeeper for FERC nominees.

A subdued Bay, who made an appearance at FERC’s technical conference on energy storage Wednesday, declined to comment when asked by RTO Insider for his thoughts on his future.

Paris Agreement, Clean Power Plan

Neither the U.S. participation in the Paris Agreement nor the CPP were approved by Congress, so President Obama’s target of reducing U.S. greenhouse emissions by up to 30% by 2025 is clearly in peril.

Trump — who has called climate change a hoax created “by the Chinese in order to make U.S. manufacturing noncompetitive” — has promised to “cancel” the agreement, which aims to limit global warming to 1.5 degrees Celsius above preindustrial levels and went into effect Nov. 4. Trump also promised to stop U.S. payments to the U.N.’s Green Climate Fund.

According to an analysis by Climate Central, an organization of scientists and journalists whose mission is to communicate the effects of climate change, Trump would have three ways of withdrawing the U.S. from the Paris Agreement. The first is to invoke an article to withdraw from the agreement a year after it takes effect by declaring the abandonment of a 1992 treaty — the United Nations Framework Convention on Climate Change, on which it is partly built.

Another section of the agreement allows a signatory to withdraw three years after it is signed, with an additional one-year waiting period after that.

Or, in what many see is the most likely scenario, he could just abandon any of the voluntary rules and incentives to reduce emissions.

Most in the industry and regulatory bodies overseeing it believe the goals set by the agreement would not be obtainable without slashing greenhouse gas emissions from electric utilities’ use of coal.

Trump will appoint a new EPA administrator. He also could order the Justice Department to stop defending the Clean Power Plan in court should the D.C. Circuit Court of Appeals overturn it — preventing the possibility of the order being reversed by the Supreme Court (for which Trump will nominate a replacement for the late Justice Antonin Scalia). (See Analysis: No Knock Out Blow for Clean Power Plan Foes in Court Arguments.)

If the rule is upheld by the D.C. Circuit, Trump’s EPA would need to establish another rule revoking the CPP.

“It’s virtually certain that the Clean Power Plan will be revoked. The question is how,” Jeff Holmstead, a partner at the law firm Bracewell and a former assistant administrator at the EPA, speaking at a post-election conference call.

“I’m quite confident that they do intend to make good on that promise. The question is how they will do it — and will they do it in a way that will withstand legal scrutiny,” he said. “Any action to revoke the plan will also be litigated, just like the plan itself.”

Congress attempted to kill the CPP last year through the Congressional Review Act, which allows Congress to disapprove regulations that have an economic impact of more than $100 million. Those disapprovals, however, must be signed by the president or his veto overridden by a two-thirds majority. President Obama vetoed Congress’ CRA rejection of the EPA rule last December.

The GOP will retain control of the Senate by 51-48, with a December runoff election in Louisiana. Republicans will control the House by 239-193, with three races (two in California and one in Louisiana) still undecided.

Environmental Groups Vow Resistance

The reaction from environmental organizations was a mix of shock and defiance.

350.org came out of the blocks with a message calling Trump’s election “a disaster.”

“But it cannot be the end of the international climate process. We’re not giving up the fight and neither should the international community,” the group said in a statement attributed to Executive Director May Boeve. “In the United States, the climate movement will put everything on the line to protect the progress we’ve made and continue to push for bold action. Our work becomes much harder now, but it’s not impossible, and we refuse to give up hope.”

The Environmental Defense Fund’s political arm, EDF Action, said in a statement Wednesday that Trump’s positions are “in complete contradiction to the realities of climate science. Mr. Trump should listen to the scientific experts on climate change and recognize that a clean energy transition is already underway. America’s economic future depends on embracing this trend,” EDF said.

The Sierra Club called it “a deeply disappointing day for the United States, and the world.”

“For people all over the country, the pain, anger and fear at the prospect of a Trump presidency are very real,” Executive Director Michael Brune said in a statement that was nearly a call to man the barricades.

“What we know is that it would be extraordinarily difficult for Trump to remove the U.S. from the Paris Agreement,” Brune said. “His position is already causing international blowback abroad, and in very pointed ways that are in some respects unprecedented. If Trump does try to undermine climate action, he will run headlong into an organized mass of people who will fight him in the courts, in the states, in the marketplace and in the streets.”

Earthjustice, a nonprofit environmental law organization, said Trump “might be the most anti-environment president in history” and suggested that Trump’s EPA may face court fights from environmentalists akin to those the Obama administration had to fend off from industry and coal states.

“He has publicly stated that he does not believe in the overwhelming amount of evidence supporting climate change and his record on all matters involving justice, equity and human rights is troubling,” Earthjustice President Trip Van Noppen said in a statement. “Therefore, Earthjustice will be working overtime in the courts to hold President-elect Trump and his administration accountable under our nation’s laws, which protect Americans’ right to a clean and healthy environment.”

Wind

Trump has called wind turbines expensive eyesores and decried their impact on bird populations.

Nevertheless, the American Wind Energy Association proclaimed itself “ready to work with President-elect Donald Trump and his administration to assure that wind power continues to be a vibrant part of the U.S. economy.”

“An unstoppable shift to a cleaner energy economy is underway, and the fundamentals of wind energy in America are strong,” AWEA said in a statement, in which it noted that the wind industry has 88,000 jobs, “a quarter of them made-in-the-USA manufacturing jobs.”

“In his victory speech early this morning, the President-elect said, ‘We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.’ Wind power is some of the best infrastructure America has ever built and we are on track to doubling it from today’s levels by 2020.”

Coal

In his campaign visits to coal country, Trump promised to put miners back to work. Regardless of what happens to the CPP, however, it’s hard to imagine any utility board of directors authorizing construction of a new coal-fired plant when existing plants are having trouble competing with natural gas.

“Forget the Clean Power Plan. You cannot build a coal plant that meets existing regulation today that can compete with $5 gas,” Charles Patton, president of Charleston-based Appalachian Power, told a state energy conference earlier this year, as reported by American Public Media’s Marketplace. “It just cannot happen.”

The Labor Department reported coal mining jobs have declined from about 84,600 in March 2009, after Obama took office, to 56,700 in March. At least six publicly traded U.S. coal companies have entered Chapter 11 bankruptcy proceedings since 2015.

Goldman Sachs issued a report in February saying that declining demand for thermal coal is “irreversible.”

donald trump giving victory speach (what's his energy policy)

Trump

It followed a report last year that concluded “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.”

The investment bank’s conclusion contradicts the International Energy Agency, which predicted last year that coal consumption would rise by about 2.1% annually through 2019.

“This is a great day for America,” Murray Energy CEO Robert Murray said in a statement. “I have personally spent time with Mr. Trump, and I know that he will surround himself with the very best people to fix the many problems facing our country. Indeed, Mr. Trump will finally implement a national energy policy whereby all energy sources will compete on a level playing field.”

One of those people could be Myron Ebell, a climate skeptic and executive at the Competitive Enterprise Institute. Trump has vowed to take away EPA’s regulatory powers and make it an advisory council. Ebell has been running the EPA working group for the Trump transition team and is seen as a contender for the EPA administrator post.

Trump has also said he wants to open federal lands to oil and natural gas drilling and coal mining. Forrest Lucas, cofounder of Lucas Oil, has been mentioned as a candidate for secretary of the Interior Department.

Nuclear Power

Despite Trump’s opposition to the CPP — which could provide support for the carbon-free generation of nuclear power — the Nuclear Energy Institute said his election is good news for the industry.

“Despite a tepid economy, the Department of Energy forecasts a 23% growth in electricity demand by 2040, the equivalent of more than 200 large power plants,” said Maria Korsnick, NEI’s incoming CEO. “Couple this with Mr. Trump’s all-in approach to energy and it’s apparent that the low-carbon, reliable electricity that nuclear energy facilities provide must continue to be a key part of the nation’s energy portfolio.

“Throughout the presidential campaign, nuclear energy was a bipartisan issue and one of the few areas of general agreement between the candidates. Additionally, public polling shows that the importance of nuclear energy to this nation’s energy mix is one thing voters could agree on, irrespective of their candidate preference.”

Department of Energy

Trump’s appointee to head the Department of Energy is sure to be less enamored than the Obama administration in investments in renewables and energy efficiency.

“Off the bat, it’s likely to be a fairly antagonistic transition given the overall dynamics in the election and given his stances on energy,” Teryn Norris, a former special adviser to the department, told Greentech Media. “Trump has repeatedly expressed disdain for renewables, and seems likely to gut those programs in” the Office of Energy Efficiency and Renewable Energy.

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