Trump’s New Energy Plan: A Giant Step Backward?

David Fessler By David Fessler, Energy and Infrastructure Strategist, The Oxford Club

Oil & Gas

There’s a new sheriff in town. His name is Donald Trump.

As you might expect, I’ve been eager for details of his new energy plan. I’m particularly interested in what it’s going to mean for investors.

Last Friday, shortly after his inauguration, the White House website had the new Trump “America First Energy Plan.” When I clicked on it, I was expecting a document detailing specifics regarding all forms of energy and his plans for them.

I was greatly disappointed. The America First Energy Plan is a 366-word, one-page document.

You can read it yourself by clicking here. The plan talks about eliminating burdensome regulations on the energy industry.

Like most of us, I’m all for less regulation. Many American business owners feel the same way.

So I’m okay with the spirit of Trump’s plan. What concerns me, however, is where it talks about “eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule.”

I’m not sure how Obama’s Climate Action Plan (a 21-page comprehensive document on the impacts of climate change and the U.S. plan to reduce greenhouse gas emissions) is harmful.

On the other hand, the Waters of the U.S. rule is a printer-busting 297 pages of technical rules and regulations governing which rivers, lakes, streams and marshes fall under EPA and Army Corps of Engineers jurisdiction. Congress passed it back in May 2015. It was already under siege in the House and Senate, so I’m not surprised that it’s getting the boot.

The biggest red flag, in my view, is that Trump’s new energy plan doesn’t even mention solar or wind generation. His entire focus is on expanding fossil fuel energy supplies. Part of that is support of clean coal power generation.

Right now, we can’t live without fossil fuels. However, clean coal power generation technology isn’t mainstream by any measure.

There are only a handful of “clean coal” power generation projects in existence, and they are relatively small in scale. Scaling up carbon capture and sequestration (CCS) technology is no walk in the park.

Check out the cost of three CCS plants…

It’s downright expensive to burn coal cleanly. And there’s a host of other pollution controls needed too.

Truth is, we need all forms of energy that we currently have. But as “technology marches on,” the forms of energy that will become more important are the ones that are carbon-free.

Sure, there were (and still are) government incentives to develop clean energy sources like wind and solar. But we won’t need those financial incentives by the time they expire in just a few years.

By then, solar and wind power are going to be as cheap as – or cheaper than – fossil fuel-powered generating plants. In fact, solar energy and wind energy are already the same price as or cheaper than fossil fuels in more than 30 countries. That’s why utilities are already making the shift to renewables.

And a massive, nearly 1,000-mile-long electric transmission line just received final approval from the Bureau of Land Management. It will carry renewable wind energy from Wyoming to Idaho.

The line, dubbed the Gateway West Transmission Line Project, will carry up to 1.5 gigawatts to power-hungry customers from Utah to the state of Washington.

Regardless of Trump’s energy plan, it’s just a matter of time before solar and wind are more commonplace energy sources than fossil fuels.

That said, there will be investment opportunities in oil and gas. But you can forget about coal, clean or otherwise.

Thanks to all the developments in solar and wind power, investments in coal companies are nonstarters, in spite of Trump’s plan.

Good investing,

Dave

P.S. What do you think of Trump’s new energy plan? I’d like to hear your thoughts on his plan or on anything else. Join the discussion here.