In January 2017, the world will see a significantly different energy policy set in place from the one instituted by President Obama. In a new report released shortly after the election, S&P Global Ratings’ Head of U.S. Energy Infrastructure, Michael Ferguson, analyses what a Trump Administration might mean for U.S. energy generators and their credit ratings.
In the comprehensive review, ‘Trump & Energy: The Credit Implications Of The 2016 Election’, Ferguson suggests that the coal industry may fare less well than Trump has implied in his campaign – due to the fact that coal’s decline is more an effect of low gas prices and increased fracking, rather than simple federal regulations set in place by Obama. Ferguson also notes that Trump’s choice of Federal Supreme Court Justice will ultimately determine the fate of the Clean Power Plan (CPP) – a policy proposed by the Obama Administration which aims to lower the nation’s carbon emissions. Without this plan, Ferguson explains, fulfilling the nation’s commitment to reduce its carbon emissions by 26-28% under the Paris Agreement will more than likely be unreachable by 2025.
The renewables industry, meanwhile, may see more substantial change in the long-term, as Trump has promised to roll back environmental regulations and incentives, such as the Investment Tax Credit (ITC) and Production Tax Credit (PTC) subsidies that aim to enhance states’ renewable standards. Ferguson shows that, unless these are renewed past 2020, renewable developers could experience longer-term cash flow issues.