Climate change and renewable energy under the new U.S. administration – two FST energy experts “look into their crystal ball”
“Drill, baby, drill!” Those three words from the lips of Donald Trump sum up the direction of the current U.S. energy policy. The new President of the United States is largely turning to the fossil energy sources – especially oil and gas – that abound beneath the surface of the USA. The battle against climate change through the use of renewable energy is not on his agenda – or at least not very high on it. This can be deduced from his first executive orders and his withdrawal from the Paris Agreement on climate change upon entering office. One of his orders put an agreement for new leasing contracts for offshore wind power on hold. But subsidies already approved by the Department of Energy (DOE) are still expected to flow.
Adapting the Efforts
What does this new orientation in U.S. energy policy mean for Freudenberg-NOK Sealing Technologies (FNST), which has many innovative sealing solutions for renewable energy in its portfolio? Marcel Schreiner, Global Segment Director Energy, and Scott Sharpless, Global Key Account Manager Energy in the U.S., make the case for a businesslike, unbiased, and differentiated approach that is adapted to the particular situation.
FST’s long-term global strategy in the energy sector is not affected by the change in administration. On one hand, the process from the approval of the drilling license to the extraction of the first drop of crude oil can take several years. On the other hand, the United States has not been a global pioneer in renewables so far. FST has a special agenda in the energy sector for every country or global region. “A potential slowdown in the pace of growth in one region can be offset by the speed of the expansion in another, such as China, India or Australia,” Schreiner said. “We are going to observe the U.S. market closely and carefully. What are the political leaders doing? How are customers reacting, especially our partners with global operations, the key accounts? We will continue to monitor our strategy on this basis.”
All-time-highs Contrast with Policies
Schreiner and Sharpless point out that there were never more wind power facilities connecting with the grid than when Republican President Trump’s term was coming to a close. And oil production in the United States reached its all-time-highs during the term of Democratic President Joe Biden. In other words: “It is a good idea to differentiate between high-profile announcements and the actual consequences in real life,” Schreiner said. “We should wait 100 days, until the dust settles,” Sharpless said. Then it will become clear which presidential orders will endure.
The Role of the Private Sector
The private sector in the United States has already invested heavily in renewable energy, including in the expansion of local production, according to the two FST experts. Assuming stable, predictable conditions, large companies are likely to continue along this path even without financial support from the federal government, they said. They are assuming that already initiated plans, including offshore wind parks, will be completed. Too much money would be lost otherwise. Schreiner put it this way: “Donald Trump is a businessman. Will he shut down promising projects that are creating jobs in America?” Individual states could also continue to provide financial support.
Local for Local
Both experts are pinning their hopes on the expected expansion and modernization of the American energy network; it is not one of the world’s most stable grids currently. The Trump administration also plans to expand artificial intelligence (AI) – a technology that requires data transfers and electrical energy at an unprecedented scale. FST also offers a range of products for the expansion of network infrastructure. If the components for them are to be produced in the United States, FST has a trump card: It can manufacture its products locally in its plants in the United States, avoiding the tariff debate entirely. “This could even allow us to improve our competitive position,” Sharpless said.
Scott Sharpless, Global Key Account Manager ENergy
“This could even allow us to improve our competitive position!”
Fuel Cells and Electrolyzers
On the hydrogen economy: Neither FST expert sees a fundamental push for fuel cell technology in the United States or in Europe at this time. The situation is different for hydrogen production, however. Supported by the Biden administration’s Inflation Reduction Act, numerous U.S. companies have invested in electrolyzer technologies. The “oil state” of Texas has developed into the country’s “Hydrogen Valley.” Countless new jobs are being created throughout the country due to the renewables boom. It is hardly likely that the government will now dismantle them. The veritable “rainbow” of processes used to produce hydrogen is meanwhile becoming more colorful. Aside from the “green” hydrogen produced from renewable energy, “pink” hydrogen from nuclear energy is expected to become more important. The extraction of natural hydrogen reserves could offer even more potential. The technology is in its infancy at the moment, but the U.S. has large subterranean reservoirs of what is known as “white” hydrogen.
Stay Curious
“The political conditions in the U.S. are changing fast right now. Much is still unclear and can’t be predicted,” Schreiner said. “But the picture is not just black and white. Many a political decision can open up opportunities that we never suspected, such as the reduction in the bureaucracy that President Trump announced. Stay open-minded and curious. Seize the opportunities that arise. That is our mindset in the energy sector and at Freudenberg in general. There’s no reason to look at the dark side.”
