With a new presidential administration and team at Energy and the USEPA soon to be sworn in, it is assumed that the US will repeal many current environmental rules, attempt to develop more of its own fossil fuels, and walk away from Paris climate change commitments. However, there are strong economic, global, and non-political factors that will move the US away from these actions or prove that they are actually harmful for the companies that the new Administration wishes to benefit the most.

Here are six reasons:

1. Economic forces are stronger than repealing a few rules. Right now, there is a glut of oil relative to demand, as many nations are only slowly recovering from the Great Recession or are entering a new slowdown themselves (i.e., China). Should the US succeed in greater exploration of coal or crude oil or invest in improving pipelines to move the oil, this will be a “dump” in the market, pushing down prices more and reducing profit margins of coal and oil companies. This would be true even if this growth were to take a few years, as futures markets will react.

Further, if the Trump Administration gets its wish to relax or repeal many environmental rules, which they believe is “holding back” energy companies, economic forces will make coal, oil, etc. more inexpensive. Other oil and coal producers (Russia, Iran, Venezuela, Middle East, etc.) are all desperate for revenue to keep their regimes going and populations happy, and are likely to dump as much energy supply on the market as possible. The US will just add to that. Despite OPEC agreements to hold back putting oil on the market, countries will want to maximize needed revenue. Economic forces are greater than loosening some environmental rules.

2. The effort to get fossil fuel supplies. Even with a “green light” from Energy or the Interior, as time goes on, it will get harder for companies to drill for or mine oil, natural gas, or coal. Companies naturally look for the easiest and cheapest sources. In the future, companies will need to dig deeper or in further away places than years ago, raising the baseline cost. Because of oversupply the price of a gallon of crude oil or coal may not be worth the cost to produce it – even if environmental regulations were to be relaxed (if this is even allowed).

3. Improved technology favors clean sources of energy. Another economic force that even the Trump Administration cannot stop is technology. Improved technologies are being invented and successfully implemented all the time to make renewable energy more effective, practical, and affordable. New wind farms in west Texas can be built for as little as $22/MW, and solar farms in the desert for about $40/MW. In contrast, the cost to build a new natural gas-burning power plant is estimated to be about $52/MW and for coal about $65/MW. Even if environmental controls do not need to be included, there will still be a gap and that gap will climb as renewable technology improves more. There is also the crucial issue of time. Renewable power plants can be up and running in a matter of months; for a fossil fuel plant to begin operation, it’s years.

While causing GHG emissions, natural gas will also be favored because it is lower in GHG emissions compared to oil or coal and can be shipped overseas as LNG much more conveniently and cheaper than oil or coal.

There is also forecasted progress in battery storage capabilities. Thus, it is likely that eventually, all forms of transportation will be able to operate using electric power, lessening the need for gasoline or diesel oil combustion, resulting in lower GHG emissions and saving money, too. It is not an accident that major oil & gas companies are all investing in energy storage, LNG, and renewable energy.

4. Growing understanding of the impacts of “dirty” fuels. Another factor favoring clean energy is the strength of the problems and growing understanding about the impacts of “dirty” energy. There is much worldwide publicity about the air pollution issues in China with pictures shown worldwide of filthy vistas and people walking around in masks. Asthma and other lung diseases have risen dramatically, and the Chinese now realize that environmental issues are high impact economic issues, too, affecting future growth. Many other locations worldwide are learning this, too. So even if the Trump Administration tries to repeal many environmental and public health rules, it will not succeed because of the risk of such scenes becoming common in the US and that world markets, with the biggest component, China, in the lead, will move away from dirty fuels and toward renewables over the next few decades.

5. The power of the States. While those picked to run national environmental and energy policies have historically fought to repeal many regulations, the States have considerable sway in their energy mix. More than half of US states have laws requiring utilities to incorporate a minimum percentage of renewable energy into their generation mix. Some such rules are in force in states considered conservative politically. Some states have very aggressive goals. These will force utilities to contract for or build plants for renewable power in the near future, independent of who is President.

In addition, some states administer GHG emission rules that have been determined to be effective in getting utilities to move away from coal toward renewable power. The Regional Greenhouse Gas Initiative (RGGI) is a cap and trade system for GHG emissions from large power plants in 9 Northeastern states, and is considered a success as it met GHG reduction goals ahead of schedule at a relatively low cost to the regulated utilities. California has aggressive rules it is enforcing. Other states are considering similar rules to encourage renewable power in their states.

6. The power of the private sector. In addition to the States, some major corporations have thrown in their lot to move toward a heavy reliance for renewable power, including Wal-Mart, Microsoft, and Google. It is in their long-term plans to maximize renewable power as their source of electricity for a variety of reasons, including reliability of supply (the sun will always shine, while there could be an embargo or shortage of oil or coal). For the most part, these companies have succeeded and saved energy costs, as well. Other companies are likely to see the success and authorize their own programs to catch up and obtain the benefits.

While there is much to worry about in terms of our future work in the environmental and energy sectors, these factors, beyond the control of the upcoming Administration, should ensure that there is much progress in the future for clean energy, environmental safeguards, and renewable powers.

CCES has the experts to help your company assess impacts of future environmental or energy rules. We can provide you technical advice to help you determine your current status and determine strategies in the future to put yourself in a better place. Contact us today at 914-584-6720 or at karell@CCESworld.com.