The US President, Barack Obama just released his most ambitious climate policy yet, the Clean Power Plan which targets a 32% reduction in carbon emissions from 2005 levels by 2030. Under the plan each US State will have until September 2018 to submit final plans on how they will hit their carbon targets. The possible pathways to meeting these goals include lowering power plant emissions, decreasing power demand, increasing energy efficiency, or adopting renewables such as solar and wind. The question is how big a deal is the Clean Power Plan? The answer is very big.

The Clean Power Plan is likely to transform the US power industry just as the 2007 “20-20-20” targets have radically changed the European energy landscape. That climate and energy package sets three objectives for 2020: a 20% reduction in EU greenhouse gas emissions from 1990 levels; raising the share of EU energy consumption produced from renewable resources to 20%, and a 20% improvement in the EU’s energy efficiency. And as with the Clean Power Plan each member state in the EU was given the power to hit those goals in whatever way they thought most appropriate.

And what can the European path tell us about what will happen in the US?

There will be a massive move away from fossil fuel generating technologies to renewables. This will not be a smooth transition and we may see asset writeoffs and massive restructuring by slow to move energy companies and their service providers. Given the fact that technologies such as solar are highly competitive these changes may happen faster than it did in Europe.

This will not be a smooth transition and we may see asset writeoffs and massive restructuring by slow to move energy companies and their service providers. Given the fact that technologies such as solar are highly competitive these changes may happen faster than it did in Europe. Energy prices are likely to fall. In Europe the push towards zero marginal cost renewables as well as weak demand due to energy efficiency has pushed wholesale power prices to the lowest levels in a decade. The same is likely to happen in the US noting that technologies such as solar and LEDs are now much cheaper than what they were.

In Europe the push towards zero marginal cost renewables as well as weak demand due to energy efficiency has pushed wholesale power prices to the lowest levels in a decade. The same is likely to happen in the US noting that technologies such as solar and LEDs are now much cheaper than what they were. Nuclear may be clean but it will not be a winner. Fukushima may have made all the headlines and pushed Germany to move out of nuclear but the economic reality is that nuclear technology is too expensive to build and decommission, especially in comparison to increasing cost competitive renewable technologies.

Fukushima may have made all the headlines and pushed Germany to move out of nuclear but the economic reality is that nuclear technology is too expensive to build and decommission, especially in comparison to increasing cost competitive renewable technologies. Resistance buys time but will not help companies and regions in developing sustainable strategies. Most European utilities have spent the last decade campaigning against change rather than embracing new technologies and business models and as a result their very existence are under threat.

Most European utilities have spent the last decade campaigning against change rather than embracing new technologies and business models and as a result their very existence are under threat. Different states will move at different paces. Some will move very fast (think Germany and California) while some will stall and resist (think Poland and Virginia).

Some will move very fast (think Germany and California) while some will stall and resist (think Poland and Virginia). It will be a bumpy road ahead. We will see a concerted media, PR, legal and political campaign against the Clean Power Plan. It will range from “coal is good” to “wind is bad for the birds” and it will include legal challenges and political and regulatory backlashes all of which will make investing in the energy area a more tricky place to operate.

We will see a concerted media, PR, legal and political campaign against the Clean Power Plan. It will range from “coal is good” to “wind is bad for the birds” and it will include legal challenges and political and regulatory backlashes all of which will make investing in the energy area a more tricky place to operate. Exciting new businesses will come our way. Out of the European renewable boom has come a whole range of new and exciting global leaders such as Vestas in wind, SMA in solar, PSI in grid, and EDPR and Enel Green Power in the utility area. We are already seeing the starting of this in the US with businesses such as SolarCity and SunEdison but more will come as momentum begins to build.

Out of the European renewable boom has come a whole range of new and exciting global leaders such as Vestas in wind, SMA in solar, PSI in grid, and EDPR and Enel Green Power in the utility area. We are already seeing the starting of this in the US with businesses such as SolarCity and SunEdison but more will come as momentum begins to build. Other new technologies will come quicker to market. The coming clean energy boom in the US will enable storage technologies such as batteries to significantly reduce costs and it may help other nascent technologies such as fuel cells to come quicker to market. These technologies will have a significant impact not only on the US but the global energy market

In a nutshell, we have invigorating and inspiring times ahead!