S&P Global Ratings’ Michael Ferguson explains US energy winners and losers in the age of Trump

Alternative_Energies[1].jpgThe US executive office is soon to have a leader with environmental aims significantly different from those of his predecessor. While the Obama Administration’s energy policies strived to address global warming, President-elect Trump has presented himself as agnostic to the idea of climate change.

In Business Green, S&P Global Ratings’ Michael Ferguson details how energy generators may both positively and negatively fare given Trump’s potential energy agenda.
Trump has notably promised to revive the coal industry, which suffered employment loss throughout the Obama years. However, Ferguson notes that declining coal employment is due to competing gas prices, rather than federal policy – and suggests that while coal may perform better than it would have done under an environmentally stricter Clinton Administration, it is unlikely that Trump will cut gas production to allow coal to compete.

Ferguson also explains that, until the Trump Administration outlines a more defined energy policy, energy producers that would benefit from greater carbon regulation, like nuclear and renewables are expected to fare worse in terms of credit quality and profitability.

Ferguson adds that, although renewables investment is safe in the short-term, renewable developers could face cash-flow issues in the longer term – that is, should Congress renew federal Investment Tax Credit (ITC) and Production Tax Credit (PTC) incentives as they wear off past 2020.  Such tax credits were once considered the ‘bridge’ to the Clean Power Plan (CPP), the federal policy that aims to reduce energy generators’ carbon emissions; the CPP itself remains to be ratified by the Supreme Court and depends on whom Trump will elect as Supreme Court Justice after the passing of Justice Antonin Scalia.

The full article can be read here (a subscription is required).

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