New administration expected to roll back EV incentives and expand drilling on federal lands
Donald Trump’s recent election win is set to reshape US energy and environmental policy with broad implications for oil production, offshore wind development, and electric vehicle (EV) sales, as reported by Financial Post.
Trump’s victory offers him the opportunity to pursue campaign promises aimed at dismantling climate policies he referred to as the “green new scam” and refocusing the federal government on expanding crude oil production and building new power plants.
While some of these moves may face obstacles in Congress — where many Republicans may resist a full repeal of the Inflation Reduction Act (IRA) energy and manufacturing tax credits — Trump could use executive authority to enact certain changes.
The oil and gas industry stands to gain the most from these anticipated shifts.
Dan Eberhart, CEO of oilfield services company Canary LLC, anticipates an administration-wide “‘drill baby drill’ philosophy.”
He notes, “You are going to see offshore lease sales, you are going to see pipelines move much quicker, you are going to see fracking on federal lands and a mindset that is focused on lowering energy costs for consumers.”
Electric Vehicles (EVs)
Trump has voiced intentions to eliminate federal policies supporting EV sales, with regulatory changes expected as early as his first day in office.
His administration could target a key Environmental Protection Agency (EPA) regulation on vehicle emissions, which currently compels automakers to increase their EV and plug-in hybrid offerings.
Former Trump advisers and energy lobbyists have prepared language for an executive order that would direct the EPA to revisit this rule. They are also strategizing on eliminating Clean Air Act waivers that allow California to enforce stricter car pollution standards.
Oil-refining advocates are pressing for modifications to current tax credits, aiming to restrict which EVs qualify and to revise a so-called ‘leasing loophole’ that exempts commercial EV fleets from certain restrictions.
Oil and Gas Development
Trump’s pledge to ‘unleash American energy’ signals a shift from President Joe Biden’s policies limiting fossil-fuel extraction on public lands and waters.
Biden’s administration had rolled out a minimal plan for offshore oil and gas leases, with only three scheduled auctions over five years, and imposed a regulation preventing drilling across more than half of the National Petroleum Reserve in Alaska.
Trump’s team could revise these policies through the Interior Department, potentially increasing offshore lease sales and drilling access on federal lands, though completing necessary environmental reviews may take up to two years.
Oil companies like ConocoPhillips, Santos Ltd., Repsol SA, and Armstrong Oil & Gas Inc. could see expanded opportunities under these policy shifts.
Liquefied Natural Gas (LNG) Exports
The Trump administration may also reverse a Biden-imposed pause on new permits for LNG exports. Trump has pledged to lift this restriction on his “very first day back.”
This change could prompt the Energy Department to resume reviews for pending LNG export applications, benefiting companies like Venture Global LNG Inc., Energy Transfer LP, and Commonwealth LNG with projects awaiting approval.
Offshore Wind Industry
Though Trump has not explicitly outlined a policy for offshore wind, he has consistently criticized the sector, raising concerns about its environmental impact on birds and whales. At a New Jersey rally, he vowed ‘day one’ action against offshore wind projects.
Trump’s administration may push for a moratorium on new offshore wind permits or leases, potentially stalling an industry that has seen major investments along the US East Coast.
Wind industry advocates, aware of this possibility, are preparing to work with Republican lawmakers from districts benefiting economically from offshore wind projects, such as those involved in shipbuilding and steelmaking.
Trump’s victory brings uncertainty for IRA-backed clean energy tax credits. Congress is unlikely to retract unspent IRA funding or fully repeal its energy and manufacturing tax credits.
However, some lawmakers may seek to reduce certain incentives as part of a broader plan to fund extensions for the 2017 Trump-era tax cuts, which expire next year.
A Trump-led Treasury Department may revise eligibility criteria, making credits more difficult to obtain or more favourable for fossil fuel projects.
Oil companies have shown particular interest in changing a tax credit supporting green hydrogen, while other proposals may restrict companies with ties to China from accessing the IRA’s energy manufacturing credits.
Loan Programs Office
Trump’s stance also threatens the Department of Energy’s Loan Programs Office, which has received expanded funding under the IRA for clean-tech projects. Previously, Trump had proposed ending the program, questioning the government’s role in picking winners in the market.
The program’s funding has increased substantially, making it a potential target for cuts. However, advocates argue that the program generates billions in interest for the government and could be redirected to support natural gas, carbon capture, and nuclear projects instead of green technology.
Power Plants and Energy Demand
Trump’s policies for power plants are likely to prioritize maintaining and even expanding coal and gas generation facilities.
He has frequently criticized EPA rules that curb emissions from these plants, arguing that rising demand from artificial intelligence and manufacturing sectors necessitates more electricity generation.
“We’ll need twice the amount of electricity currently supplied,” Trump said in August. An EPA rule limiting emissions from coal plants and new gas-fired units may face revision, with utilities and certain states already challenging the rule in court.
Trump’s EPA could pause work on further greenhouse gas limits for gas-fired plants, giving coal and gas plants a longer operational timeline.
As Trump prepares to enter office, these expected policy changes signal a broad departure from current US energy and environmental directions, with the market and industry awaiting the specific actions and timelines of these shifts.
