The coronavirus clean energy crisis
The novel coronavirus pandemic could not have come at a worse time for America’s clean energy industry.
After overcoming years of attacks by the Trump administration, the resultant loss of demand is threatening to decimate key companies and technologies, and it seems we will have to wait for President Trump to get out of office to solve the rippling effects of the crisis.
To be sure, every sector of the economy is suffering. The energy sector is no different. Gasoline use is way down as most people are no longer commuting. Electricity use is also down as our factories and office buildings sit idle. Many big, established energy companies with large balance sheets will likely see this downturn as a painful, but temporary, rough patch.
But the industries needed to displace incumbents and finally solve climate change are uniquely threatened. This will reduce the tools we have to counteract the climate crisis, and, critically, cede leadership in these technologies to countries investing in their climate technology leaders to capture global markets going forward.
In the United States, the wind and solar industries, which were rapidly growing and taking market share from fossil-fuel incumbents, are facing crises beyond the short-term freeze on work. Their pipelines of future projects, critical to maintaining investments and healthy supply chains, are frozen, as are their customers — utilities, companies and individuals — who are faced with cash crunches.
Existing projects have contractual and legal deadlines that they may now miss, in many cases turning economics of the project upside down. At the individual and company level, renewable energy and efficiency procurement is slipping to the back of the line as workers shelter in place, and companies preserve cash.
U.S. production of electric vehicles (EVs) was looking fairly strong at the beginning of the year. Major automakers announced plans to electrify significant portions of their lineups, including popular models such as SUVs and trucks and major commitments to produce parts and vehicles in the U.S.
Now, with the combination of decreased demand for new vehicles, the failure of Congress to extend tax credits and the Trump EPA gutting efficiency standards, market analysts are predicting a sharp decline in domestic EV sales this year. This opens the door for foreign competitors, but also slows the transition necessary to meet the targets necessary to address climate change.
But perhaps the industry facing the biggest threat — and one that climate advocates desperately need to be growing and innovating — is low carbon biofuels. We need biofuels to fully decarbonize transportation, but they’re facing an unprecedented three-pronged attack from the Trump administration, the oil industry and declining demand from the pandemic. We are in real danger of losing this key climate-friendly industry entirely.
I’ve written before about the administration working to give market share from renewable fuels to Big Oil. Their main technique has been issuing unjustified waivers to refineries to avoid implementing the 2007 law intended to deliver low cost, low carbon biofuels to market. Trump’s EPA issued dozens of waivers — peaking at 37 waivers in 2018 — to empower the oil industry to avoid blending lower carbon biofuels into the fuel supply, destroying over 4 billion gallons of biofuel demand. Even before the economic crisis, biofuels plants were closing due to the demand destroyed by Trump’s waivers.
Now, with the dramatic drop in gasoline use due to COVID-19 shutdowns, the demand for ethanol to blend into the gasoline supply has fallen sharply, driving down prices even further and threatening the viability of biorefineries and farmers alike.
Ironically, the U.S. Court of Appeals for the 10th circuit recently ruled that the Trump administration’s use of the waivers is illegal, but the damage has been done. Today, even more plants are closing due to the dual attacks of a renewable fuel hostile EPA and demand reduction due to the pandemic. On top of that, the EPA used the pandemic as an excuse to delay implementing the court’s order to comply with the law.
Maybe we’ve all gotten somewhat used to the president’s reflexive, ideological opposition to clean energy technologies costing jobs, but biofuels were supposed to be different. They are largely a product of farm country, where Trump’s approval is high and he had promised repeatedly to take care of ethanol and farm country.
Despite the headlines, his administration has done exactly the opposite. It’s clear he’s more interested in doing the business of OPEC and his Big Oil than supporting renewable fuels, even if it’s hurting some of his staunchest supporters.
But advocates and policymakers concerned about solving climate change need to make sure the clean energy industry can survive the attacks of the pandemic and that of the Trump administration’s on wind, solar, electric vehicles and low carbon biofuels.
When Trump is gone, we will need every tool in the toolbox to combat climate change. We don’t have time to waste trying to rebuild entire industries sacrificed to blind ideology. Not when we only have a few more years to get serious about getting to zero-emissions in the power, transportation and industrial sectors by mid-century. Not if we want to secure the benefits of the long-term careers in clean energy for ourselves and our children and navigate out of the blind alley of the boom-bust fossil fuel industry.
Mike Carr is executive director of New Energy America. He previously served as principal deputy assistant secretary for Energy Efficiency and Renewable Energy, and as senior counsel on the Senate Energy and Natural Resources Committee.