On Monday night, Environmental Protection Agency (EPA) administrator Scott Pruitt told a meeting of the Kentucky Farm Bureau that the federal government should end tax credits for the wind industry. Although the EPA doesn’t have control over tax incentives for renewable energy, the agency has considerable authority to hamper similar programs that boost renewables—most recently seen in Pruitt’s efforts to repeal the Clean Power Plan—and his comments reflect how energy policy is being approached in the nation’s environmental bureau.
“I’m not in Congress, and the state of Oklahoma has similar incentives, [but] I would do away with these incentives that we give to the wind industry. I would let them stand on their own and compete against coal and natural gas and other sources,” Pruitt told the audience, with senator Mitch McConnell at his side. (Senate majority leader McConnell, notably, does have sway over federal tax incentives.)
Pruitt added that he believed the US government should, “let utility companies make real-time market decisions on those kinds of things as opposed to being propped up with tax incentives and other types of credits that go through the federal and state level.”
The statement in favor of real-time market decisions without government meddling seems in opposition to the proposed rule that Energy Secretary Rick Perry put forward in September, which would require utilities to increase compensation to power plants that can store more than 90 days worth of fuel reserves on site (i.e., coal and nuclear plants). Such a rule must be approved by the Federal Energy Regulatory Commission (FERC), but energy stakeholders say that under it, markets would be distorted to favor coal and nuclear, which are more expensive sources of energy than natural gas. Last week Robert Powelson, a Federal Energy Regulatory Commission (FERC) member appointed by Trump, even said he would resign before he allows FERC to “destroy the marketplace,” according to UtilityDive. This week Cheryl LaFleur, another FERC commissioner, endorsed Powelson’s comments.
But in the same speech Pruitt seemed to support Perry’s proposed rule, praising a focus on ‘resiliency’ from utilities:
We need to ensure that whatever decisions we make from an energy policy perspective, that fuel diversity and the generation of electricity is maintained, that we see coal representing a healthy percentage of the power generation mix, because having a solid hydrocarbon on site at a utility company is really important, because there’s only so much natural gas you can get through the pipe and then if there’s an attack on the infrastructure as far as delivering that natural gas then you have what? you have a problem.
In his dismissal of wind tax credits, Pruitt also made no mention of the $2 billion in federal tax incentives that are given to fossil fuel producers every year. A recent study found that at the current price of $50 a barrel for oil, nearly half of the discovered-but-not-yet-developed crude oil fields in the US are profitable where they otherwise would not be.
Renewables in Trump’s America: Playing a minor role
The EPA Administrator also told the Kentucky audience last night that renewables were “expensive.” This is true in some situations in the US, but the price of wind energy has been falling dramatically here and elsewhere. This year, Europe saw some of the first proposals for offshore wind developments submitted without the need for subsidies. And utility-grade solar has reached a record-low of six cents per kilowatt hour in the US.
But Pruitt stopped short of advocating for an entirely fossil fuel-based economy. “Renewables definitely do play a mix and will play a mix in the generation of electricity […] 17 percent of our electricity that we generate in Oklahoma is generated by renewables, by wind,” he said. But Pruitt added that relying too much on renewables was bad “because diversity matters.”
He recounted an interaction with his “counterpart from Germany,” saying that 2 or 3 months ago, the unnamed German official was in Pruitt’s office.
“He was bragging and he said ‘Scott, by the mid-2020s Germany’s going to be all renewables, no nuclear, and no fossil fuels,’” Pruitt said on Monday night. “And because I’m a diplomatic person I didn’t say anything, but I thought to myself, ‘Really. That is just crazy to think that you’re going to be that reliant, and think about that cost.’”
In July, the German Renewable Energy Federation announced that in the first half of 2017, the country served 35 percent of its electricity needs with renewable energy, compared to 19.35 percent in the US. Although results have been good in the electrical sector, Germany has had a tougher time breaking from fossil fuels in the heating and transportation sectors.