The Changing of the Guard - ORIGINAL CONTENT

Today marks the changing of the guard for the government of the United States. The new Administration promises many changes to programs and priorities throughout government. However, few areas will experience changes of the magnitude of the changes which will affect energy and climate, which expect to experience an almost complete reversal.

The ”War on Fossil Fuels” is over at the federal level, at least for the next 4 years, though it will still persist in some states. The federal government will return to regular oil and gas lease sales and will cease “slow walking” exploration and production permits. The LNG export “pause” will be un-paused and new LNG export terminal construction will again be determined by market demand and project economics. Pipeline expansion and new construction will not be banned by federal executive action.

Federal goals for utility-scale renewable generation installations, including offshore wind installations, will be terminated, as will the federal subsidies and incentives for their installation. Wind and solar are mature technologies which should compete for market share with fossil and nuclear generation. Grid scale batteries (2-4 hour) are also mature technology and should compete in the market as well. Offshore wind is already far more expensive than any of the alternatives, even with subsidies, and interest in future projects will likely diminish as the interest in currently proposed offshore wind projects has already done.

The EPA “mandate” for electric vehicles will be un-mandated, though individual state mandates will likely persist. Federal government incentives for the production and sale of EVs will be dramatically reduced or eliminated. Federal support for EV and EV battery manufacturing facilities will cease. Federal promotion and incentivization of EV transit and school buses will cease. The federal program to install fast charging facilities for EVs will be dramatically scaled back.

Program planning and development in support of the DOE “Decarbonize the Building Sector” blueprint will be deferred because the decarbonization goal has been abandoned and the federal funding required to incentivize the required investments will not be available. Federal incentives for building solar installations will also be reduced.

These changes do not mean that utilities and other investors cannot proceed with economically viable wind, solar and electricity storage projects. However, they do mean that utilities and investors will have the choice of developing fossil and nuclear generation capacity if they are the economical and/or operational choice and are not constrained by state Renewable Portfolio Standards. Utilities would also have the freedom to insist that new renewable facilities connected to their grids be dispatchable, which would significantly increase their value to the grid but also their cost.

These changes do not mean that individual customers or fleets cannot choose EVs, or that transit operators and school districts cannot choose EV buses.

These changes do not mean that homeowners and commercial establishments cannot choose to improve their buildings’ energy efficiency, install solar and battery storage or purchase electric heat pumps, water heaters, cooking and laundry appliances and equipment. Rather, it means that they can continue to make free choices based on preferences and economics.

For the next 4 years at least, the US federal government will allow markets to function without undue government interference or pressure.