The results of this week’s election are certainly a surprise and will impact the focus and direction of policymakers moving forward. As we look ahead, historically, Congress is most active when one party controls the House of Representatives, Senate and White House. We expect 2017 to follow this trend, particularly because Republicans campaigned, in part, on a message of fixing the gridlock that exists in Washington. As a result, the next two years are going to be busy and significant.
The 38 North Solutions team has a proven track record of working with legislators on both sides of the aisle and feels well positioned to help companies and organizations navigate this new period. The weeks and months ahead will clarify where the Trump Administration and Republican Congress will focus their attention, but here are our initial thoughts about what lies ahead:
Lame Duck, 114th Congress
Before the election, the prevailing assumption was that the end of this year (Lame Duck Session) of Congress would be especially busy as members from both parties try to clear the decks of any remaining pieces of legislation before the bipartisan-viewed wildcard of a Trump Administration assumes power. However, the overwhelming nature of Trump’s win, coupled with the fact that Senate and House Republicans performed better than expected, has diminished the appetite amongst Republican members to negotiate with Democrats and President Obama at the end of the year in any significant way. As a result, the opportunity for successful enactment of clean energy provisions like reinsertion of the technologies that were removed from the Investment Tax Credit last year has closed significantly. Funding for the federal government expires on December 9th, so Congress will have to address that before adjourning, but the likelihood that the ITC or any other policy provision gets attached is limited.
Federal Legislation, 115th Congress
With a GOP-controlled House, Senate, and White House, we expect the new President to be able to pass energy legislation that could include PURPA and Federal Power Act reform. We will need to be vigilant to ensure that those provisions are not detrimental to clean energy technologies and applications, while mining opportunities to insert clean energy provisions into non-controversial legislation. There is no realistic scenario for passing a carbon tax, renewable portfolio standard, clean energy standard, or additional clean energy tax credits. In fact, we will need to work hard to shore up support for existing clean energy provisions to ensure that they are not repealed. On the positive side, innovation is key to growing the economy and jobs and we can continue to hammer those messages to energy policy and tax committee leadership. There may also be a path for additional transmission provisions that can increase build-out of infrastructure across the U.S., although we would not expect a large spending provision in any case.
Companies interested in advancing clean energy policy must not view yesterday’s election as an imperative to disengage in advocating before Congress. Rather, moving forward, we know that the Trump Administration has every intention of passing an aggressive legislative agenda next year. It is therefore critical that we continue to make the strongest case possible for policies that will continue to support an innovative energy economy.
Environmental Protection Agency
The Obama Administration’s landmark achievement regulating carbon dioxide emissions from power plants, known as the Clean Power Plan (CPP), is now in serious jeopardy. Because the CPP is a federal regulation, the Trump Administration can undertake steps to undo the policy without seeking congressional approval and we expect taking such action to be a priority. The good news is that the CPP has helped states to think strategically about how to move to a cleaner energy generation mix and investment in those technologies has shifted to support that movement. We believe that utility and corporate investment in clean energy will continue to grow. In addition, regulatory processes on clean energy in states will continue to move forward.
Department of Energy
Funding for specific programs within the agency may shift to more fossil and nuclear research and development funding and less renewables and energy efficiency funding. Less clear is how the Office of Electricity Delivery and Energy Reliability would be impacted, although Trump’s energy agenda includes grid modernization. It is hard to envision the Quadrennial Energy Review process continuing since this was a project led by Secretary Moniz.
Federal Energy Regulatory Commission
FERC is generally not considered political and the two vacancies are slotted for Republicans. We know at least one of those potential appointees and think that other credible nominees would likely come from regulatory and public policy arena. We will need to continue cultivating those relationships to ensure that wholesale markets for innovation will continue to be considered.
While yesterday’s result may not have been what we expected, it is the reality we face moving forward. We would be happy to set-up a time to meet to discuss specifically what the Trump Administration’s ascension may mean for your business and how we can work together to ensure that your interests are being adequately addressed in Washington.