Trump DOE transition team issues vague threat to energy subsidies

Donald Trump has not yet made many of the key decisions for his administration, including on energy. But while pundits furiously read tea leaves, it’s clear that his transition-team appointments have presented a worst-case scenario for environmentalists and the climate movement.

As yet, however, there is little in the way of a concrete threat to solar.

On Sunday the Center for Media and Democracy leaked a memo by Department of Energy transition leader Thomas Pyle, who replaced Mike McKenna in November, that outlines the Trump Administration’s energy and environmental policy ambitions. Many in the mainstream media and climate-focused non-profits are greatly alarmed by the 14-point plan, which includes withdrawing from the Paris Agreement, canceling the Clean Power Plan and expanding fossil-fuel extraction and infrastructures.

Point 10 of the plan speaks directly to energy subsidies, parroting what the Trump campaign had said on the campaign trail:

"This is an issue for Congress and the people they represent. Subsidies distort markets and should be used only when national security is at stake. Eventually, all subsidies should end so that the demand for energy will set prices, allow consumers access to the best values, and encourage all facets of the energy industry to do all they can to keep their particular source competitive.”

This is actually the same argument that many in the solar industry have made — that the United States should eliminate all subsidies for energy and allow solar to compete on its merits against un-subsidized fossil fuels. This is also typically not how politics work, of course, and certainly there are few voices in the solar industry who ever called for an end to the investment tax credit (ITC) while keeping preferential tax treatment for oil and gas.

So it is unclear whether this promise of free-market energy reform across all resources is simply more an empty campaign promise —such as Trump’s promise that he would “drain the swamp” in Washington of lobbyists before appointing those same lobbyists to lead key portions of his transition team.

What it does not indicate is that repeal of the ITC is on the Trump Administration’s agenda any time soon.

An issue that the administration will likely address with greater speed is the withdrawal of the United States from the Paris Agreement and the repeal of the Clean Power Plan. As the first and sixth bullet points on the plan, these are dealt with unambiguously.

But the potential impacts on solar of the Clean Power Plan are likely overstated. In a September interview Bloomberg New Energy Finance, Senior Analyst Nathan Serota told pv magazine that Clean Power Plan will likely have “minimal impact”, as the first compliance period is still six years away and solar markets are expected to change substantially during that time.

In the 14-point plan there is no mention of clean-energy research and development support at the Department of Energy, programs that have helped the expansion of the solar industry but will likely be axed under a President Trump.

The remainder of the Trump Plan reads like a wish list for the fossil-fuel industries, including plans to expand fossil-fuel extraction on public lands and support infrastructure projects like the Keystone XL pipeline project and natural-gas export terminals.

As was clear during the Obama Administration, though, rising oil and gas extraction can coincide with clean-energy deployment. Furthermore, as we have previously noted, many of the most important policies for solar will now occur at the state level instead of the federal level.

So while the Trump Administration’s Energy Plan makes for grim reading, it is not clear that there are direct threats to the solar industry or solar markets presently.