Trump’s regulatory assault could leave the U.S. further behind

Former President Donald Trump’s decisive victory in the presidential election is expected to lead to full-throated support for the oil and gas industry and serious backsliding on climate policy. However, experts warn that attempting to turn back the clock on the energy transition will be self-defeating, harming the U.S.’ competitive position in an array of key industries at a time when the rest of the world is moving forward.

Trump has made no secret of his plans for energy and climate policy, and his second term will likely look a lot like his first, except that he will have vastly fewer guardrails.

After his first term, Trump had rolled back more than 125 environmental regulations and policies. But he had initially entered the White House with half-baked plans, a lack of key personnel, and a court system that imposed checks on slipshod policymaking. Those obstacles no longer exist. He remade the Supreme Court to his liking, and lower levels of the federal court system are also stacked with his appointees.

Importantly, he will also resume his position in the White House with a detailed set of policy ideas and an army of far-right political operatives determined to implement an extreme agenda.

One oil industry lobbying outfit has drawn up a detailed plan of executive orders that it has prepared for President Trump to quickly implement in January, as The Washington Post recently reported.

On his first day in office, President Trump is expected to once again pull the U.S. out of the Paris Climate agreement, and immediately lift the “pause” on permitting of new LNG export terminals.

“We have more liquid gold than any country in the world,” Trump said during his victory speech, referring to U.S. crude oil reserves. He is expected to quickly ease restrictions on drilling on public lands.

Trump has also threatened to kill off the offshore wind industry in his first days in office. “I hate wind,” Trump reportedly said during a private dinner with oil and gas executives earlier this year, where he solicited donations from them. He asked for $1 billion in donations from the oil and gas industry to help secure his presidential victory, and he promised to reverse environmental regulations.

The deregulatory agenda is aggressive, but much of it will take time to play out because regulatory rollbacks must go through an official process. Still, Trump wants to “kill” federal regulations that tighten fuel efficiency on cars and trucks, aimed at speeding up the transition to electric vehicles. His administration is also expected to scrap the Environmental Protection Agency’s landmark regulation on power plants, which would have forced the closure of coal plants over the next decade and a half and make it much more difficult to build new gas-fired power plants.

He is expected to water down regulations on methane emissions from the oil and gas industry, and jettison a fee imposed on drillers with high methane leaks.

Conservative activists also want to abolish the Loan Program’s Office, a programme within the Department of Energy that issues billions of dollars’ worth of loans to clean tech companies. Even if the Trump administration can’t kill the agency entirely, it will likely go dormant again, as it did during his first term.

The oil industry celebrated his victory. “Energy was on the ballot, and voters sent a clear signal that they want choices, not mandates, and an all-of-the-above approach that harnesses our nation’s resources and builds on the successes of his first term,” Mike Sommers, CEO of the American Petroleum Institute, the largest oil industry lobby, said in a statement.

One of the big uncertainties is how far the Trump administration will go to roll back the Inflation Reduction Act, the signature achievement of the Biden administration. The IRA, as it is known, funnels an estimated $390 billion into solar, wind, batteries, electric vehicles, clean energy manufacturing, and a long list of other energy and environmental programmes. But because the programmes do not have dollar limits, the actual amount of investment is expected to be far higher.

Trump has called the IRA a “green new scam,” and has vowed to undo it. However, as much as 80 percent of the investments stemming from the law are occurring in Republican-controlled states, and some Republican members of Congress now support those projects, which include battery and solar manufacturing facilities.

In August, a group of 18 Republicans in the House of Representatives wrote a letter to Republican leadership in favour of keeping many of the clean energy tax incentives in the IRA. Despite that support, other subsidies for consumers, such as tax credits to buy electric vehicles and heat pumps, are in a more vulnerable position.

Meanwhile, Trump has also been linked to Project 2025, an extreme deregulatory programme put together by a far-right think tank, the Heritage Foundation. The document, written by some former Trump staffers and others in the right-wing movement, represents a detailed agenda to weaken parts of the federal government, as Gas Outlook reported over the summer. In addition to mass deportation, a top priority for Trump, it also offers prescriptions on energy and climate policy. It aims to privatise the National Weather Service, which would knee-cap the government’s ability to predict and respond to natural disasters. It also calls for breaking up the National Oceanic and Atmospheric Administration to gut basic climate science.

Trump allies also want him to weaken labour protections for tens of thousands of federal employees to make it easier to sack them. That would allow Trump to hollow out many federal agencies, including EPA, the Department of Interior, and the Department of Energy.

Altogether, the impacts could be profound. One study from earlier this year from Carbon Brief estimates that Trump’s return to the White House could add 4 billion tonnes of U.S. emissions by 2030 compared to a continuation of the Biden administration’s plans. That is equivalent to combined annual emissions of the EU and Japan, and could result in economic damages worth more than $900 billion.

Trump’s agenda could backfire

Before he even takes office, his election will reverberate. With COP29 talks set to kick off in a few days’ time, Trump’s election threatens to swiftly undercut international momentum. The international negotiations now face severe headwinds and diminished expectations.

Going forward, international efforts may now increasingly fall on the European Union and China.

“The fact remains that existing policies aren’t enough to help the United States meet its 2030 goal to cut emissions in half below 2005 levels, let alone deliver additional reductions by 2035,” Rachel Cleetus, policy director for the climate and energy programme at the Union of Concerned Scientists, a Washington-based environmental group, said in a statement. “And with U.S. federal climate action expected to be derailed for the next four years, other nations, U.S. subnational governments and businesses will need to fill the void as much as possible.”

Even though the Trump administration has aggressive plans for deregulation, there are limits to what he may be able to achieve. Decisions on oil and gas drilling will be made by the companies themselves, and trends within the industry have shifted towards a focus on profits and cash flow, which tends to lead to some restraint on new drilling. At the same time, the economics of clean energy are much more favourable than they were during Trump’s last term.

“We neither expect energy transition to collapse (even if it slows down) nor oil production to skyrocket (despite expanded access to federal lands): the former could be sustained by fundamentals and subnational policy reactions, and the latter seems likely to be constrained by fundamentals, and maybe new trade frictions, too,” ClearView Energy Partners, a Washington-based energy consulting firm, wrote in a note to clients.

At the same time, climate action could pick up at the state level, as it did during Trump’s first term. For instance, immediately after the election, California Governor Gavin Newsom called a special session of the state legislature in order to plan to defend a variety of state priorities from the forthcoming Trump onslaught, including the watering down of fuel efficiency standards for cars and trucks.

And in Washington State, voters decided to uphold the state’s landmark “cap-and-invest” programme, which imposes emissions limits on major polluters, and uses proceeds from a cap-and-trade scheme to fund environmental restoration. Democratic-led states could step up their ambition in response to the Trump administration’s actions.

Many experts say that while Trump can slow the energy transition, he cannot derail it. And, importantly, the harm from Trump’s policies would be self-defeating, affecting the U.S. first and foremost, many critics say.

Roughly $2 trillion annually is flowing into clean energy, twice as much as the fossil fuel industry. Withdrawing from the clean energy race would worsen American economic prospects, ceding entire industries — industries with enormous growth prospects — to other countries. China is already producing superior electric vehicles at a lower cost, and U.S. deregulation will weaken American automakers even more. The same is true for many other clean tech sectors.

“Standing with oil and gas is the same as falling behind in a fast moving world,” said Christiana Figueres, Former Executive Director, UNFCCC. “Clean energy technologies will continue to outcompete fossil fuels, not just because they are healthier, faster, cleaner and more abundant, but because they undercut fossil fuels where they are at their weakest: their unsolvable volatility and inefficiency.”