Editorial comment
President-elect Donald Trump has declared that his election victory has given him an “unprecedented and powerful” mandate to govern. And it’s certainly true that Republican control of the White House, Senate and House of Representatives strengthens his new administration. To what extent he chooses to wield this power – or is allowed to do so by political and market pressures – will be fascinating to see. However, one thing seems certain: the implications for the energy sector will be significant, with drastic changes to climate policy, tariffs on imports, and international affairs imminent.
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While scrabbling around to find some certainty on what a Trump administration will mean for the downstream sector, the phrase “remains to be seen” appeared on more than one occasion. We can be confident that energy policy will see a move away from net zero targets. Trump is likely to remove the US from the Paris Agreement – a prospect that hung like a giant grey cloud over delegates at the COP29 conference in Baku, Azerbaijan, recently. However, Wood Mackenzie notes that while the US is also likely to see lighter standards on emissions regulations and more protectionist trade policies, the energy transition will not be completely derailed. Bi-partisan support for the Inflation Reduction Act in Congress, coupled with competitive economics for renewable power and net zero goals in the private sector, will mean that there may be some resistance to Trump’s sweeping agenda.1
Simon Flowers, Chairman and Chief Analyst, Wood Mackenzie, notes that the US’ LNG sector is likely to benefit the most from a Trump administration, with the scrapping of President Biden’s pause on new LNG export permits for sales to countries that do not have a Free-Trade Agreement with the US.2 But the consequences of Trump’s proposed import tariffs will be interesting to watch here. Could US LNG exports be a target for retaliation?
Quick out of the blocks, the American Petroleum Institute (API) has written an open letter to Trump, outlining a five-point policy roadmap to “secure American energy leadership and help reduce inflation.” The detailed letter sets out a path forward that would protect consumer choice, bolster the US’ geopolitical strength, leverage the country’s natural resources, reform its permitting system, and advance sensible tax policy. Suggestions include extending tax provisions for domestic infrastructure investment, reforming the National Environmental Protection Act (NEPA), repealing restrictive onshore leasing rules, and ensuring open access of US energy to global markets.
The API also calls for a repeal of the EPA’s tailpipe rules and the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy (CAFE) standards, as well as denial of the EPA’s waiver for California’s Advanced Clean Cars II rule. Exactly how such policies would go down with Trump’s ‘first buddy’ (and co-lead of the new department of government efficiency), Elon Musk, remains an intriguing anomaly.
As mentioned, a lot remains to be seen. As we bid farewell to the final weeks of 2024 and Joe Biden’s administration, we should all buckle-up for an interesting, if somewhat unpredictable, 2025 and beyond.
1. ‘Republican control will shift US energy policy away from net zero, but sweeping agenda faces roadblocks’, Wood Mackenzie, (18 November 2024).
2. FLOWERS, S., ‘A second Trump administration’, Wood Mackenzie, (7 November 2024).
