Following the November 5th U.S. Presidential election, Donald Trump was named President for a second, non-consecutive, term. There has been great debate in recent weeks over what Trump or Harris’s leadership would mean for U.S. energy, with no clear path ahead. Energy CEOs at some of the biggest oil and gas companies have recently called for greater clarity and consistency in energy policy going forward. Meanwhile, environmentalists are concerned about a potential U-turn on the Biden administration’s green transition. So, what can we expect to see in U.S. energy over the next four years?
What Trump’s Election Platform Says About Energy
The new Republican platform was released in July, highlighting some of his main aims for the next four years under Trump’s leadership. Although this is not an exact guide for the new government to follow, it does outline some of the party’s main intentions in several key areas.
The platform introduces its plans for the energy sector with:
“We will DRILL, BABY, DRILL and we will become Energy Independent, and even Dominant again. The United States has more liquid gold under our feet than any other Nation, and it’s not even close. The Republican Party will harness that potential to power our future.”
In Chapter One of the platform, entitled ‘Defeat Inflation and Quickly Bring Down All Prices”, the Party states:
- Unleash American Energy
Under President Trump, the U.S. became the Number One Producer of Oil and Natural Gas in the World — and we will soon be again by lifting restrictions on American Energy Production and terminating the Socialist Green New Deal. Republicans will unleash Energy Production from all sources, including nuclear, to immediately slash Inflation and power American homes, cars, and factories with reliable, abundant, and affordable Energy.
In Chapter Three – Build the Greatest Economy in History, it says:
- Reliable and Abundant Low-Cost Energy
Republicans will increase Energy Production across the board, streamline permitting, and end market-distorting restrictions on Oil, Natural Gas, and Coal. The Republican Party will once again make America Energy Independent, and then Energy Dominant, lowering Energy prices even below the record lows achieved during President Trump’s first term.
Overall, the platform suggests that Trump’s government will continue to support fossil fuel production and lift any restrictions on exploration and production. It also states that the government will bring an end to what Trump called Biden’s “Green New Deal”, which could halt progress in green energy and clean tech. However, it does state the Party’s support for nuclear power. Trump also commits to making the U.S. energy independent and reducing consumer energy costs, supported by a reduction in inflation levels.
Trump’s Past Performance on Energy
During Trump’s first term in office, he rolled back over 100 environmental rules and withdrew the U.S. from the Paris climate agreement, which it initially joined in 2015. He also sought to open up more opportunities for new drilling on federally owned lands, as well as offshore drilling.
Breaking Down Trump’s Energy Pledges
Oil and gas production increased to record highs under the Biden administration, despite his push for a green transition. While the opening up of more federal land for drilling could encourage oil companies to expand operations, Trump has no means of expanding oil production at the federal level.
“Production is pretty much independent from whoever sits in the White House. It’s much more dependent on oil prices and decisions that were made long ago,” Claudio Galimberti, the chief economist and global director of market analysis at Rystad Energy, stated.
In terms of climate policy, the U.S. rejoined the Paris Agreement under President Biden in 2021 on his first day in office. However, on the campaign trail, Trump pledged to once again pull the country out of the accord.
Trump has repeatedly stated his intention to halt programs and funding from the Inflation Reduction Act (IRA), the most far-reaching climate policy to date, which was introduced by the Biden administration in August 2022. “My plan will terminate the Green New Deal, which I call the Green New Scam. Greatest scam in history, probably,” Trump said in a September speech. He also stated his aim to overturn Biden administration regulations on vehicles, power plants, and household appliances.
It may be possible for Trump to reduce the powers of the IRA, but it is unlikely that he will bring an end to the funding initiative altogether. The IRA is estimated to provide tax cuts that could total as much as $1.2 trillion over the law’s 10-year lifespan, according to a 2023 estimate from Goldman Sachs. Many energy and industry experts believe that the IRA is too lucrative to the U.S. for Trump to upend it entirely.
What the Energy Market Wants
In recent months, several Big Oil executives have called for greater clarity and consistency in U.S. energy policy in the coming years. In October, Mike Wirth, the CEO of the U.S. oil major Chevron, stated, “What really matters is consistent and coherent energy policy.” Wirth added, “Affordable and reliable energy is essential to keeping inflation at a level that economies can handle – and that’s why we need investments, and we need stable policy to encourage that investment.”
In terms of the green transition currently taking place in the U.S., despite several attempts to repeal parts of the IRA, many Republicans have come to support the law due to its positive impact on the economy and the job market. In 2023, the IRA financed over $300 billion in clean energy investments across the country, and it has created over 300,000 clean energy jobs since its launch.
Many energy experts now believe that the investment potential created by the IRA is too important for Republicans to overlook, as it has supported the creation of tens of thousands of jobs in Republican districts, such as Indiana and Texas, as well as helped the U.S. become one of the most competitive world powers in green energy and clean technology, attracting billions in investment.
In August, 18 House Republicans wrote to Speaker Mike Johnson, warning him against fully gutting IRA incentives as the Republican Party worked to repeal the law. Many lawmakers believe the IRA is “deeply flawed,” but suggest that eliminating its tax credits could upend energy projects already under development and threaten billions of dollars of investments.
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