Since the election, I have felt a palpable shift in sentiment and optimism in the business climate.
Of course, it’s all about new leadership in our government, so I thought it appropriate to share some thoughts about Donald Trump’s second term and the significant shift coming in U.S. energy policy.
As Donald Trump prepares for his second term, the energy sector celebrates the anticipated decisive shift. His administration’s approach promises to undo many of President Biden’s policies while championing traditional energy sources and recalibrating federal priorities.
Trump’s likely focus includes rolling back climate-driven regulations, reshaping energy policy and boosting fossil fuel production.
First, reversing the climate bureaucracy
Trump’s first term halted many of President Obama’s energy policies, but I would argue that the changes were short-lived because they were built on fragile executive orders rather than legislative action.
The climate bureaucracy, which is rooted in regulations like the EPA’s 2009 Endangerment Finding and the Paris Agreement, remained intact. To ensure lasting change, Trump needs a more systemic approach this time around. By submitting the Paris Agreement to the Senate for rejection and revising the Clean Air Act to exclude GHGs as pollutants, Trump could disentangle U.S. energy policy from global climate objectives, which would restore the energy policy focus on affordability, abundance and reliability.
Another way Trump might roll back regulations is through something called "confessing error." Confessing error is a new concept for me. As you know, many others and I have accused the Biden administration of stretching regulatory authority to enforce climate goals, oftentimes by using pretextual justifications. Agencies are prohibited from giving false reasons for implementing a regulation, a principle known as the rule against pretext. Chris Horner, a Washington attorney and former senior fellow at the Competitive Enterprise Institute, suggested in a Wall Street Journal opinion piece that Trump could counteract this through a strategy known as "confessing error." By reviewing agency records and identifying instances of regulatory overreach, his administration could swiftly reverse rules without protracted litigation. This approach would allow Trump to undo many of the newer regulations that undermine energy production before they achieve their intended outcomes.
Personnel choices are central to Trump’s energy strategy. His picks of Chris Wright as energy secretary and Doug Burgum as interior secretary underline his administration’s commitment to boosting energy production across the board.
Wright, the CEO of energy industry service provider, Liberty Energy, has been a vocal advocate for fossil fuels and innovation. Burgum, North Dakota’s governor, has championed CCS alongside increased O&G production. Together, they undoubtedly will aim to foster innovation, streamline permitting processes and prioritize private-sector investment.
While low-carbon sectors may face challenges under the new administration, some technologies, such as advanced geothermal and modular nuclear reactors, could see support. Burgum’s leadership on CCS, backed by North Dakota’s vast subsurface storage potential, could align with Trump’s broader goals for energy independence while addressing carbon emissions in a manner consistent with his priorities.
Renewable energy sectors face potential headwinds under a second Trump administration. The Inflation Reduction Act, which has supported wind, solar and storage projects, may be scaled back or eliminated, especially with input from the newly formed Department of Government Efficiency that President-elect Trump has tasked Vivek Ramaswamy and Elon Musk to lead. This could result in a significant drop in renewable energy installations over the next decade. However, Trump’s commitment to permitting reform could mitigate some of these challenges, making it easier for all energy projects — fossil and renewable alike — to secure necessary approvals.
Impacts on energy prices and supply
Trump’s policies could create a mixed picture for energy costs. While aiming to lower prices through expanded production, increased demand from LNG exports and gas-fired power generation could drive prices higher. A recent Wood Mackenzie report notes that while government actions, such as accelerating pipeline investments, may help align supply with demand, production levels will ultimately be determined by market forces.
I believe the most significant change a Trump administration could bring might be returning the climate and energy policy debate to Congress. Critics of current climate policies argue that decision-making has been dominated by unelected regulators and global agreements, sidelining public and legislative input. By focusing on legislative reforms and eliminating international commitments like the Paris Agreement, Trump could reestablish Congressional authority over energy policy. This approach aligns with recent Supreme Court decisions affirming limits on agency authority.
Trump’s energy agenda prioritizes fossil fuels, deregulation and innovation while challenging the premise that climate change is the most urgent global threat. This is a fork in the road for U.S. energy. His administration’s actions could reshape not only U.S. energy policy but also global energy markets, especially if increased O&G production displaces supplies from authoritarian regimes.
However, the potential rollback of renewable energy subsidies and tax credits raises concerns about whether the U.S. can remain competitive in the global clean energy race. As the energy sector awaits the new administration’s next steps, one thing is clear: the Trump presidency will redefine the nation’s energy priorities for years to come.
I hope the content in this issue of BIC helps you take advantage of the changing business environment.
