A Donald Trump appointee at the Forrestal Building bodes well for oil, natural gas and nuclear power, but renewables will remain robust contenders, analysts say.
Drillers and nuclear energy advocates are excited about the prospect of new Republican leadership at the Department of Energy in hopes of policies that could extend a lifeline to threatened nuclear power plants and boost oil and gas developers struggling with low fuel prices.
“We believe the Trump administration is going to get the economy back on track and investment back in place,” said Ron Ness, president of the North Dakota Petroleum Council.
However, the department as a whole may see a step down in prominence from the position it held over the past eight years in the fight against climate change.
DOE formed in 1977 in response to international shocks in the oil market, succeeding agencies that regulated nuclear power and nuclear weapons. The agency is tasked with stewarding nuclear weapons, managing nuclear waste, running 17 national laboratories, approving natural gas exports and researching the next generation of energy.
Under President Obama, DOE was also a muscular arm of the administration’s economic and environmental agenda.
The U.S. economy lost 700,000 jobs in the month Obama took office, amid the Great Recession. The administration stanched the bleeding with $787 billion in spending under the American Recovery and Reinvestment Act of 2009. Of that money, $90 billion went to clean energy programs, and of that, $31 billion went to DOE, increasing its budget by 75 percent.
The extra money went to research, development and commercialization of clean energy technologies like renewable power and more efficient appliances.
Now, with most of the Recovery Act money spent, no energy crisis on the horizon and climate change becoming a minor issue at best for the new White House, DOE will likely have less to do in environmental policy and economic development.
“My assumption is it is returning more to its traditional role,” said Spencer Abraham, who served as Energy secretary during President George W. Bush’s first term. “I don’t think you’ll ever have quite the experience of 2009 and 2010.”
Can Trump policies buck the market?
That means DOE will still have a major role in fundamental science research and technology development, as well as helping manage national electricity transmission and fossil fuel markets. Under a President Trump, DOE will likely play a bigger role in encouraging domestic oil and gas production while approving more opportunities for export.
“There had been allegations from the oil and gas industry that DOE [under Obama] has been slow-playing authorizing the export and sale of American hydrocarbon fuels,” said William Yeatman, a senior fellow at the Competitive Enterprise Institute.
More buyers for American fuels would “drive prices back into a favorable position,” according to Ness. He added that DOE could also remove federal regulations that are redundant to state regulations, thereby allowing “the energy sector to grow and get back on its feet.”
But federal policy can only do so much to push back against global market forces.
“President Trump may be surprised to find there’s a global oil glut underway that severely constrains whether or not it’s economically sensible to attract more investment,” said Mark Muro, a senior fellow and policy director at the Brookings Institution’s Metropolitan Policy Program.
The nuclear energy industry is also optimistic about a Trump presidency, as a number of existing nuclear power plants are slated for early retirement.
“During the campaign, Mr. Trump spoke out on the need to build more nuclear plants and expand the nation’s overall energy supply,” said Maria Korsnick, the Nuclear Energy Institute’s incoming president and CEO, in a statement. “We encourage President-elect Trump to continue advancing his support for nuclear energy to maintain our nation’s leadership in nuclear technology and its indispensable role in our critical energy infrastructure and environmental interests.”
Renewables may depend on bipartisan support
Nuclear energy, which provides 63 percent of the United States’ carbon-emissions-free electricity, offers a silver lining for some environmentalists.
“[Trump’s] been a very large supporter of our largest source of clean power, and that’s nuclear,” said Michael Shellenberger, founder and president of Environmental Progress, an organization pushing to end dirty fuel use and fight climate change, with a prominent role for nuclear energy in the energy mix.
Republicans have a more robust history of supporting nuclear energy than Democrats, so it could be an important political bridge between those seeking lower greenhouse gas emissions and those who want cheap, baseload power. “We’re still in a crisis when it comes to nuclear,” Shellenberger said. “Republicans have a disproportionate moral duty to defend it.”
For DOE, that would mean using the agency’s bully pulpit to defend nuclear power, supporting research on new reactor designs and helping utilities build new plants with loan guarantees.
Renewables, on the other hand, may not get support for new large-scale installations through DOE loan guarantees, but enough momentum has built up for wind and solar power over the past eight years that those industries will still grow without DOE backing.
Wind energy prices have declined 41 percent, and solar photovoltaic costs have fallen 64 percent since 2008. Wind and solar also received a crucial extension for their tax credits late last year.
Though Trump has railed against renewables, particularly wind energy, many Republican-leaning states, like Texas, Oklahoma and Iowa, strongly support them. “If [Trump] wants to do away with it, he’ll have to get a bill through Congress, and he’ll do it over my dead body,” Sen. Chuck Grassley (R-Iowa) told Yahoo News in August.
“That is an area that has enjoyed bipartisan support,” said Dan Reicher, who led DOE’s Office of Energy Efficiency and Renewable Energy under President Clinton and served as an adviser to Hillary Clinton’s presidential campaign. “Energy efficiency has also tended to be fairly bipartisan.”
Will Mission Innovation survive?
Though Trump will appoint DOE’s new leader, Congress will have its hand on the rudder, and it’s not certain what direction it will point the agency. “It’s very much a function of the Congress to set the authority and the focus areas of the Energy Department,” Reicher said. “Funding for the regulatory programs, setting efficiency standards — what’s going to be the fate of the funding for that?”
Yet even without climate change as a motivator, the United States still has good reason to continue developing clean energy systems. “There’s a lot of money to be made in clean energy, from the sale of products globally to the development and finance,” Reicher said. “I don’t want to see us give up the economic upside of these industries, many of which the U.S. invented and many of which the U.S. government through the Department of Energy originally funded.”
What may be lost in the transition to a Trump administration is the focus on energy innovation. One of Obama’s signature initiatives was Mission Innovation, a commitment among 20 countries to double their funding for clean energy research and development over five years.
But funding appropriated by Congress so far is on track to miss that pledge.
“There will be an interruption of two [presidential] terms of enlightened focus on innovation and the broad paradigm of decarbonizing the economy,” said Muro. “Some of this does come down to budget priorities, and it’s likely the priorities will be very different.”
As for the next person to lead DOE, the past three Energy secretaries were scientists, but that is not a prerequisite for the office, and many of the proposed names to succeed Energy Secretary Ernest Moniz at the helm are lobbyists and former energy company executives.
“What I wish upon the next secretary is to immerse themselves in the department and get to know all the different program leaders and career senior officials so they can take a measured and strategic approach, rather than a crisis management approach,” Abraham said.