Following the Presidential election, many in the renewable energy industry are questioning the future. We have an Administration coming into office that is skeptical of climate change, supportive of fossil fuels, and generally opposed to subsidies for renewable energy technologies.
This same reality shook me after the 2004 election. I had just started working in the renewable energy sector. I was in graduate school and had recently completed an internship with the American Public Power Association tasked with creating an overview of the wind industry in the U.S. I was hopeful that the next Administration would embrace renewable energy as a primary solution to meet future energy needs; and thus, provide a boost to my career opportunities following graduation. John Kerry was a strong advocate for renewable energy and was prepared to make America a leader on reducing emissions which were contributing to climate change. As the election wore on, John Kerry and George W. Bush were locked in a tight contest. Polls were neck and neck. The country was divided. The stakes were high – particularly for companies investing in renewable energy.
Then it happened. On Nov. 2, 2004, George W. Bush was re-elected with a Republican-controlled Congress. The Republicans gained an 11-seat majority in the U.S. Senate (far greater than the 4 seat advantage they will have in January 2017) and a 31-seat advantage in the House of Representatives (similar to the overwhelming majority Republicans will have next year).
Tax credits for wind energy had been extended shortly before the 2004 election. Projects had to be completed by the end of 2005; which didn’t give developers much time. Chances for extending the tax credits were less likely under President Bush and the new Congress than if John Kerry had won the election and the Democrats had picked up more seats.
Despite these concerns, I had made my decision. I wanted a career in renewable energy and would go ahead and pursue it despite the expected lack of federal support. Following my graduation in May of 2005 I began my career search.
The first good news occurred during the summer of 2005. Congress was finalizing an energy bill dubbed the Energy Policy Act of 2005 or “EPAct 2005”. When approved by both houses of Congress at the end of July, the legislation provided a spark to the renewable energy industry. Tax credits for wind energy were extended through the end of 2007. Solar projects were eligible for a 30% investment tax credit (ITC), and geothermal energy was made eligible for the full production tax credit (PTC). All three technologies now had over two years to complete projects. This no doubt helped my career aspirations.
In 2006, as the Bush Administration became increasingly unpopular, a new Congress was elected that gave Democrats control of both houses of Congress, with elected officials who were far more supportive of renewable energy. Tax credits were extended again in the fall of 2006 through the end of 2008. I was working at the Geothermal Energy Association at the time. The industry was excited by the news. Projects were moving forward.
I transitioned to working for a development company in early 2007. I found that utilities were hungry for new projects and were eager to sign contracts. State policies were embracing renewable energy. Thirteen states had a Renewable Portfolio Standard (RPS) as of 2004. That would increase to 21 states by 2008. Things were picking up in the U.S. and abroad. This was a good time to be developing renewable energy projects.
Even when the financial crisis hit in the fall of 2008, legislation designed to address the crisis extended tax credits yet again. After President Obama was elected he made renewable energy a priority. His support for the industry clearly made an impact on where we are today. However, all things considered, the 2nd term of the Bush Administration wasn’t all that bad for the renewable energy industry.
Granted things are different now. In 2004, oil prices were rising rapidly – reaching record highs in 2005. That same year, domestic oil production plummeted to the lowest it had been since 1950. Meanwhile, natural gas prices were volatile. The fracking boom had yet to take place. Today, oil and natural gas production are way up which has driven prices down.
At the end of 2004, renewable energy technologies made up a small industry, not just in the U.S. but worldwide. Costs to generate power were way higher. There were more skeptics because the technology had not proven to be competitive. Today, the renewable energy industry is far more powerful, with support from large corporations, electric utilities, and investment banks. Prices are far more competitive. Tax credits have long-term extensions which have widespread support.
Granted some states have seen so much growth from renewable energy that the market for new projects is slowing down, while other states are increasing investment. The U.S. wind and solar industry should still expect robust growth through the rest of the decade. However, the geothermal industry is on the decline. Tax credits for geothermal projects expire at the end of 2016 and are unlikely to be re-instated. The same situation affects the biomass and small hydro industries.
Energy storage projects may have a clearer path to receiving tax credits because the industry is politically neutral; connected more to advanced technology than to green energy or climate. Projects are sprouting up even without tax credits.
As I wrote before the election discussing what a Clinton or Trump presidency may mean for renewable energy (see Part 1 and Part 2), history is on the side of renewable energy. Federal policies regarding renewable energy have tended to be more of a reaction to market demand than a contributor to it. The renewable energy industry won’t get a boost from climate-driven policies like the Clean Power Plan (CPP), just as the industry didn’t benefit from climate-related policies proposed before and after the 2004 election. However, the last time the Republican Party had as much power as they do now, they supported renewable energy. And now that they have the power again, I am hopeful they will do the same. If not, they will have to contend with a cacophony of advocates far stronger and louder than existed after the 2004 election.