Thursday, June 30 2022 Sign In   |    Register

News Quick Search



Front Page
Power News
Today's News
Yesterday's News
Week of Jun 27
Week of Jun 20
Week of Jun 13
Week of Jun 06
Week of May 30
By Topic
By News Partner
Gas News
News Customization


Pro Plus(+)

Add on products to your professional subscription.
  • Energy Archive News

    Home > News > Power News > News Article

    Share by Email E-mail Printer Friendly Print

    United States Renewables Market Overview

    May 9, 2022 - Fitch Solutions Sector Intelligence


      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      United States Renewables Market Overview

      • 09 May 2022
      • United States
      • Project Developments

      The US is one of the world's largest emitters of greenhouse gases, surpassed only by China. While there is no federal target relating to the share of renewables in the US energy mix, the administration of President Joe Biden has set a target for reaching a carbon pollution-free electricity sector by 2035. Regulations adopted at state and city levels and strengthening wind and solar power targets by utilities will also provide significant support to non-hydro renewables growth over the coming decades.

      Emissions Targets

      Biden Rejoins Paris Climate Agreement, Sets Strengthened Emissions Reduction Target For 2030

      On January 20 2021, US President Joe Biden issued a statement on behalf of the US, which accepted the articles and clauses of the Paris Agreement on climate change. A new instrument of acceptance of the agreement was also submitted to UN Secretary-General António Guterres on the same day. As a result of Biden’s widely anticipated decision, the Paris Agreement, which aims to limit the warming of the global temperature to below 2°C and preferably to below 1.5°C in comparison to pre-industrial levels, entered into force for the US once again on February 19 2021. The US had previously withdrawn from the agreement under the administration of former president Donald Trump, with the Trump administration first announcing intentions to withdraw in May 2017 and finalising the US’s withdrawal on November 4 2020. The agreement was first adopted in December 2015 by 196 Parties, including the US, at the 21st Conference of the Parties (COP) of the UN Framework Convention on Climate Change in Paris, France.

      President Biden’s decision to rejoin the Paris Agreement provides a strong boost to efforts both internationally and within the US to combat climate change, given that the US is one of the world’s largest GHG emitters and was a leading actor in the creation of the legally binding international agreement in 2015 under the administration of then-president Barack Obama. Under the Paris Agreement, each country must commit to nationally determined contributions (NDCs) to lower GHG emissions in order to reach the 1.5-2°C goal, with the agreement working on a five-year cycle in which countries carry out increasingly ambitious goals.

      On April 22 2021 Biden announced a target for a 50-52% reduction in GHG emissions from 2005 levels by 2030. The new commitment, to be formally submitted to the UN Framework Convention on Climate Change as the country’s new nationally determined contribution or NDC for the Paris Agreement on climate change, builds on the Biden administration’s January 20 decision to rejoin the Paris Agreement. With US GHG emissions standing at 13% below 2005 levels in 2019, according to the US EPA, reaching the Biden administration’s target of a 50-52% reduction will require a significant increase in the pace of emissions reduction compared with that seen in recent years. This will rely on substantial policy changes and a sharp increase in investment in the development and deployment of clean energy technology over the coming decade. This new commitment aligns with our view that the updated target would be much stronger than the previous commitment of an emission reduction of 25-28% below 2005 levels by 2025.

      Commitment Implies Rapid Acceleration Of Emissions Reduction
      US - Greenhouse Gas Emissions, mn metric toness of CO2e (1990-2030)

      Source: US EPA’s Inventory of U.S. Greenhouse Gas Emissions And Sinks: 1990-2019, Fitch Solutions

      The Biden administration’s decision to set an NDC including such a sizeable reduction in GHG emissions strengthens our long-held view that the Biden administration will prioritise policies and investments aimed at reducing GHG emissions. Since coming into office, we have seen a number of steps by the administration in addition to the decision to rejoin the Paris Agreement and the announcement of a new NDC, which reflects a strong commitment to reducing GHG emissions. These include the announcement of new federal policies to promote respectively offshore wind development and the expansion of electric vehicle (EV) charging infrastructure, plans to restore the ability of states to enact stricter emissions standards than the national standard, and the cancellation of a presidential permit for the Keystone XL Pipeline project on January 20, bringing the construction of one of the largest oil pipeline projects under way in the country to a stop. Additionally, the Biden administration continues to work towards securing significant funding for the improvement and expansion of transmission and distribution infrastructure and support for robust renewables growth - particularly via an expansion and extension of clean energy tax credits (see the Subsidies section below for further details).

      By setting such a sizeable GHG emissions reduction target, the Biden administration is highlighting its commitment to reducing emissions, in turn pointing to a likely prioritization by the administration of these and similar policies and investments moving forward.

      Transport, Power Sectors Key To Emissions Reduction
      US - Percentage of Greenhouse Gas Emissions By Sector (2019)

      Source: US EPA’s Inventory of U.S. Greenhouse Gas Emissions And Sinks: 1990-2019, Fitch Solutions

      In our view the Biden administration’s efforts to US domestic GHG emissions will likely be focused on the power and transport sectors, with positive implications for investment. In the case of the power sector, the source of 25% of US emissions in 2019, according to the EPA, the Biden administration has set a goal of achieving a carbon pollution-free power sector by 2035, with the expansion of non-hydro renewables capacity set to be a key focus of the administration. Together with considerable support from numerous state governments for renewables development, the Biden administration’s efforts underpin our positive outlook for both renewables capacity growth and power infrastructure construction over the coming decade, with risks weighted significantly to the upside.

      Meeting Updated Paris Agreement And Power Sector Emissions Reduction Targets To Face Notable Challenges

      While we expect the Biden administration to prioritise GHG emissions reductions, progress towards the administration's targets will depend on the its ability to overcome opposition, potential judicial scrutiny of new policies and long-term policy continuity, particularly following the 2024 presidential election. The passage of new investments, such as those included in the most recent Biparisan Infrastructure Bill, will require support from Congress, a notable challenge given likely opposition from most Republicans to such spending proposals and the Democrats’ thin majorities in both the Senate and House of Representatives.

      This will present risks to the Biden administration’s efforts, particularly as Republicans in recent years have prioritised filling federal court openings with conservative justices who are sceptical of the government's ability to regulate commerce, in turn allowing business interest groups and conservative state governments to use judicial challenges to roll back regulations and reforms implemented by prior administrations. Most notably, these efforts resulted in a shift in the Supreme Court's ideological balance in favour of challenges to government regulations following the confirmation of Amy Coney Barrett in November 2020.

      In addition to these challenges, efforts to reduce GHG emissions will over the long term depend on policy continuity beyond the end of Biden’s current term in January 2025. A victory in the 2024 presidential election by a more conservative candidate would risk reversals in key policies aimed at reducing emissions, including the country's continued commitment in the future to the NDC announced by Biden as well as US support for the Paris Agreement.

      Renewables Policies

      State-Level Renewables Policies To Drive Robust Growth

      While federal-level support for renewable energy is on the rise under the Biden administration, we expect state-level policies will continue to play a key role in renewables capacity deployment. Following the US federal government’s decision to withdraw from the Paris Agreement, announced in June 2017, then-New York Governor Andrew Cuomo, Washington Governor Jay Inslee and then-California Governor Jerry Brown formed the US Climate Alliance to encourage coordinated state action that addresses climate change. As of October 2021, 24 states and Puerto Rico have joined the alliance and have agreed to promote clean energy deployment at the state and federal level - clean energy finance and power sector modernisation are two key priorities. Additionally, 11 states, the District of Columbia and Puerto Rico have taken their commitments a step further in 2019 and pledged 100% renewable energy targets. In April 2021, Rhode Island Governor Daniel McKee signed into law a climate bill that requires the state to reach net zero GHG emissions by 2050. Most recently in October 2021, Illinois Governor JB Pritzker signed into law the Climate and Equitable Jobs Act, or SB 2408. The law includes state-wide targets to achieve a zero-emissions power sector by 2045, and 100% clean energy by 2050, as well as a renewable energy standard to reach 40% non-hydro renewable energy by 2030 and 50% by 2040. Other recent significant state-level renewable energy announcements include the following:

      • In April 2021, Rhode Island Governor Daniel McKee signed into law a climate bill that requires the state to reach net zero GHG emissions by 2050.
      • In March 2021, Massachusetts Governor Charlie Baker signed a bipartisan bill into law which boosts the state’s offshore wind procurements through to 2027 by an additional 2.4GW. The state now aims to bring online 5.6GW of offshore wind capacity over the coming decade.
      • In January 2021, Minnesota Governor Tim Walz proposed policies for reaching 100% carbon-free electricity by 2040.
      • In October 2020, Arizona utility regulators voted 3-2 to approve a plan for utilities within the state to get 100% of their electricity from carbon-free sources by 2050. The regulations require the state's utilities to reach 50% carbon-free electricity by 2035.
      • In September 2020, Michigan Governor signed an executive order committing the state to carbon neutrality economy-wide by 2050, with renewables set to be a key avenue towards reaching the target.
      • In April 2020, Virginia Governor Ralph Northam signed the Vir


    Other Articles - International


       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2022 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.