Trump’s crackdown on wind shows how both parties use energy policy to pick winners and losers, ultimately undermining market competition.
Energy policy in the United States feels a bit like the song from the musical Annie Get Your Gun: Anything you can do, I can do better. Except in this instance, “better” means unnecessarily targeting specific energy sectors rather than letting them compete on their economic merits. The tit-for-tat escalation of anti-energy policies and regulations is harmful to energy consumers, energy abundance, and investment certainty for new energy supplies.
Policymakers on both sides of the aisle have common objectives of lowering prices for hardworking families, leading the world in global competitiveness, and increasing energy supply to feed power-hungry data centers. To do that, Democrats and Republicans need to lower their weapons and refrain from engaging in continued resource battles.
Biden’s Transition Away From Fossil Fuels
During the last four years and dating back to the campaign, President Joe Biden called for less drilling (including no new production on federal lands) and a transition away from oil and natural gas. Among many other “keep it in the ground” policies, the administration cancelled and restricted oil and gas leases on federal lands, revoked the Keystone XL Pipeline permit, and paused liquified natural gas exports. Biden’s power plant regulations would have prematurely shuttered existing plants and restricted new natural gas plants.
While the administration certainly didn’t do the oil sector any favors, oil production still climbed to record highs under Biden. In fact, for many environmental activist organizations, the mere fact that the Biden administration allowed any oil and gas development to continue was a betrayal of the planet.
Trump Targets Wind
In his first seven months back in office, President Trump said the political equivalent of “hold my beer.” With his sights set on the wind industry, Trump issued a Day 1 memorandum to pause federal permitting for wind projects and suspend offshore wind lease sales. In recent weeks, new directives from several agencies would subject renewable project activities to a more scrutinized level of review, create more administrative burdens, and impose new regulations on where developers could build turbines.
While most issued projects have been able to proceed without delay, several offshore projects have had remanded permits, stop work orders, or additional challenges to permits. During the reconciliation negotiation, Republicans even floated a new tax on future renewable energy development.
The Wind Industry Doesn’t Need a Safety Net
To be clear, some recent policy changes perceived as anti-wind are sound economic and energy policy. The production tax credit (PTC) that started as an infant industry argument has existed for more than three decades. When President Bush signed the Energy Policy Act of 1992, which enacted the PTC, Matthew Wald of The New York Times wrote:
A new generation of windmills that Don Quixote could never tilt at is ready to take its place as an economical and vital source of the nation’s energy. Because of striking improvements in technology, the commercial use of these windmills, or wind turbines as the builders call them, has shown that in addition to being pollution free, they can now compete with fossil fuels in the cost of producing electricity.
We’ve heard a similar song and dance over the last thirty-plus years. The industry can compete without subsidies. But when the PTC is set to expire, the policy is critical to the industry’s success. The wind industry has experienced significant cost declines, as have solar and natural gas, which is why the market should dictate its success, not preferential treatment in Washington.
Let the Market Lead
With ample market opportunities, particularly in meeting expected load growth increases from artificial intelligence (AI), taxpayers shouldn’t be footing the bill for projects that can and should be fully financed from the private sector. In fact, the long-term health of the wind sector will be better off for it, as they will be forced to innovate and compete in a world where their prices and competition determine their fate, rather than relying on subsidies. Energy subsidies made little sense back then and make even less sense as America rapidly heads off a fiscal cliff.
Importantly, energy sectors and companies shouldn’t have to worry about targets on their backs, either. Each time an agency finds a new way to stall, block, or cancel a legitimate energy project, it sets new precedents for future administrations to do the same thing to the sources of energy they don’t like. Not In My Backyard (NIMBY)ism that restricts energy supply will harm consumers through higher prices, threaten energy security ambitions, and inhibit global competitiveness. The solution is not selective Yes In My Backyard (YIMBY)ism—for me but not for them—but rather open access development, developing efficient permitting, and reducing costly, ineffective regulations for all forms of energy.
Political Favoritism Undermines Energy Progress
Policymakers talk a big game about leveling the playing field, but are all too quick to tip the scales in favor of industries they like, that benefit their respective districts, and that will help them come election time. That’s politics. But regrettably, each anti-energy action will curb investment, slow development, and inhibit America’s ability to maintain and expand its standing as an energy-dominant country.
About the Author: Nick Loris
Nick Loris is the Executive Vice President of Policy at C3 Solutions. Loris studies and writes on topics related to energy and climate policies, including natural resource extraction, energy subsidies, nuclear energy, renewable power, energy efficiency, as well as the ways in which markets will improve the environment, reduce emissions, and better adapt to a changing climate.
Image: fokke baarssen/Shutterstock
