A U.S. Clean Energy Transition and the Trump Administration

Abstract

The Obama administration undertook several steps giving the US federal government a leadership role in a clean energy transition. Among other actions, the administration develop a Climate Action Plan, successfully negotiated higher fuel vehicle standards with car manufacturers, passed the Clean Power Plan, and signed the Paris Climate Agreement. Although the United States had been party to other international climate agreements and was a signatory to the Rio Declaration, other federal efforts were lax at best.

During his election campaign, Donald Trump promised his supporters to eliminate the Clean Power Plan, withdraw from the Paris Agreement, curtail the Environmental Protection Agency, bring back coal jobs, promote fossil fuels, and reduce environmental restrictions among other efforts. All of these actions are significant and nullify a federal leadership role in a clean energy transition. Regardless of the significance of these actions and the withdrawal of federal leadership, a clean energy transition is and will continue to take place for two important and, at this time, irreversible reasons. First, private sector investments continue to be made, new utility business models are developing, and new energy technologies and new energy markets are opening. Second, state regulators play an active role in supporting private sector activities pushing forward with a clean energy transition. This paper will briefly discuss private sector initiatives and then address, in detail, the role that state regulators play encouraging investment in clean power and in nudging the development of new utility business models.

Keywords: clean energy, climate, clean power, Paris Climate Agreement

JEL Classification: K2, K20, K23