Wind and Solar Get the Stick

Is it an unjustified war on wind and solar, or is Karma a FAFO?

“So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.” - Barack Obama

There are two primary means of motivating people to do things: incentives (carrots) or negative consequences (sticks).

Wind and solar advocates often complain about uncertainty in their business models, but the main uncertainty these industries have faced over the last four decades has been regarding the size of their carrots provided by the government, rather than the swings of normal market conditions.

Will the generous production tax credits (PTC) and investment tax credits (ITC) be extended (again)? Will states continue to create an ever-larger guaranteed market for their preferred product through energy-affirmative-action renewable portfolio standards?

At the same time, wind and solar benefited from the policies of liberal politicians at both the state and federal levels, who began brandishing larger and larger sticks against the competition. These sticks took the form of legislation and regulation, constituting a “whole of government approach” against conventional energy sources.

Coal mining and oil and gas drilling leases were canceled, pipelines were protested, and permits were pulled; 100 percent carbon-free electricity standards created dead-end markets for coal and natural gas in some states, federal greenhouse gas and criteria pollutant regulations on power plants sought to limit their use nationwide, and financial regulations to chill continued investment in these industries.

There was also plenty of rhetoric that chilled investment coming from top political leaders. In the lead-up to his eventual presidential win, then presidential nominee Joe Biden signaled his opposition to fossil fuels by proclaiming at a town hall event in New York City, “I guarantee you, I guarantee you, we are going to end fossil fuel, and I am not going to cooperate with them.” He clarified that this meant no more subsidies, no more drilling on federal lands, and “no ability for the oil industry to drill, period. It ends."

The Biden presidency put these words into action, pausing new oil and gas leases on public lands in January 2021 and taking over 80 other actions by early 2022 to negatively impact the fossil fuel industry—in addition to passing the Inflation Reduction Act (IRA), which Biden described as an attempt to move “away from fossil fuels to cleaner technologies like wind…”

For the last three decades, wind and solar have been pampered energy sources that have never truly met The Stick, until now.

The “War” on Wind and Solar

Since taking office earlier this year, President Trump has enacted numerous policies that seek to take away the carrots enjoyed by the wind and solar industries, and he is also brandishing the stick.

Pro-wind and solar outlets, such as Bloomberg and Heatmap, are lamenting these actions as a war on wind and solar projects. In September, Heatmap published a timeline of the Trump administration’s “War on Wind.”

Many of the actions listed on the timeline are simply a revocation of carrots, including rescinding sweetheart deals for wind and solar leases on federal land, accelerating the phase-out timeline for Inflation Reduction Act subsidies, issuing new Internal Revenue Service guidelines for subsidy eligibility, and withdrawing $679 million for 12 offshore wind port infrastructure projects.

On day one, the Trump administration halted all new onshore and offshore wind permitting and leasing activities. The administration later revoked a Clean Air Act permit for an under-construction offshore wind facility off the coast of New Jersey, issued a stop-work order for Empire Wind in New York, rescinded all designated “wind energy areas” on the U.S. Outer Continental Shelf, created more red tape by initiating a review of current offshore wind regulations, issued a stop-work order for Revolution wind, and indicated it would revoke approvals for several other projects.

These actions have prompted pearl-clutching from many Very Serious People about the importance of regulatory certainty for investment decisions, but where were these people when the Biden administration was using the exact same tactics against oil pipelines, liquefied natural gas (LNG) facilities, and coal-fired power plants?

We all know they were actively cheering it on.

Karma’s a FAFO

Unlike the actions of previous Republicans, who aw-shucks’ed America into a grid reliability crisis by adopting lazy “all of the above” talking points and have fought to continue subsidizing wind and solar, Trump is giving the advocates of wind and solar a taste of their own medicine with The Uncertainty of the Stick(TM).

One of the most common and successful tactics used by fossil fuel and nuclear opponents over the last four decades has been to employ a strategy of creating Fear, Uncertainty, and Doubt. By using government policies—including 200 during the Biden administration—to make it increasingly risky to invest in coal, natural gas, and nuclear projects, climate advocates were able to undermine investor confidence in these conventional energy projects.

This type of coercive policy has been partially responsible for the premature closure of the nation’s coal fleet. Even if plant owners wanted to upgrade coal plants by installing new pollution control equipment for criteria pollutants and continue operating, it would be a shame if greenhouse gas regulations were to render it a stranded asset. Many come to the conclusion that it’s better to shut it down and replace it with natural gas, wind, and solar—and Green Plate their systems, to boot.

What’s happening now is that the Trump administration is making wind and solar industries live by the same rules that climate activists and liberal lawmakers have made coal, natural gas, oil, and uranium live by for the last 30 years, and it’s abundantly clear they don’t like it.

On the Uptime Wind Energy Podcast, the hosts said the actions taken by the Trump administration were unnerving and that these erratic actions—in this case the stop work order issued by the Trump administration for Revolution Wind— would stifle investment in the industry:

So, you drag this out long enough where the pain gets to be so heavy that eventually people have to cut their losses and, or, you know, eat, eat some of the costs here, or something has to happen, and in a negative way. The trouble with that is either of these outcomes, to be honest with you, what we have done is made investing in the United States risky.

By having a situation where you can’t, as an outside investor, you can’t count on things, right? It would just be like if you were, if you were gonna buy a new car and all of a sudden… you were basically taking ownership of the car and then they changed the terms of the loan or told you you couldn’t drive it, you know, only but Tuesday nights or something of that sort like this, I, I don’t want that anymore.

I think the, banter that’s going back and forth is the Keystone XL Pipeline was shut down and just outta the blue LNG ports shut down, like immediately, boom, there’s an order. Everything stops. So now it’s retribution. It’s it’s payback time. We’re going to flex the other way and watch what we can do with our pen and our phone [emphasis added].

The final line is a direct callback to former President Obama, who claimed that he could use executive orders (a pen) to achieve policy outcomes he could not get through Congress. One of these policies was a cap-and-trade program for emissions, and when this policy failed to pass, Obama famously claimed there was “More than one way to skin a cat.” (regulation).

Let’s Make a Deal

A tit-for-tat cancellation of energy projects that changes based on which party currently controls the White House is not in the country’s best interest, precisely because it stifles the private sector’s ability to confidently invest in critical energy infrastructure.

But the only thing worse than both sides targeting energy projects they don’t like is to have only one side targeting reliable, affordable energy sources like nuclear, coal, natural gas, and oil, while mandating and subsidizing unreliable and expensive sources, which is essentially the world we’ve been living in for the last two decades.

That’s why the Trump administration’s hardball tactics on wind and solar projects provide an important opportunity to make deals and level the playing field.

We’ve already seen this dynamic to some extent with Trump’s willingness to negotiate with New York Governor Kathy Hochul. As part of an alleged deal for lifting a stop-work order on Empire Wind One, Hochul’s administration is now conducting a review of two natural gas pipeline projects, the Constitution pipeline and the Northeast Supply Enhancement.

Whether or not the governor made a deal with Trump, her moves suggest she’s not putting up any obstacles to the projects, which were previously stymied by state regulators during both her tenure and that of her predecessor, former Gov. Andrew Cuomo, wrote E&E News.

The best case scenario is to come from this is that everyone agrees to end the handouts and targeting of energy sources by regulation and legislation, and allow a semblance of a free-market for different technologies to emerge to let the best win.

However, this is unlikely, as wind and solar advocates know that this would likely cripple their industries. It has already become clear that wind and solar cannot exist to the extent they do now without mandates and subsidies, while fossil fuels have been hanging on despite the years of onslaught against them. And why? Because they are clear winners for society.

Conclusion

If supporters of wind and solar want to understand Trump’s reasons for removing carrots and wielding The Stick, they would be well served to reexamine the actions taken to limit the development of coal, oil, and natural gas over the last 18 years, because the administration is largely using the same playbook developed by climate activists and progressive politicians over the last two decades.

Who could forget Hillary Clinton’s speech where she declared she was going to put a lot of coal miners out of business, or the common refrain from journalists in response to job losses in the coal sector was “Learn to Code?”

We should probably expect an escalation of these policies in the near future, as the debate over permitting reform will likely need to reach levels of mutually assured destruction before good-faith compromises, that do not include socializing the cost of transmission needed for wind and solar, can be achieved.