Trump will test energy transition — at home and abroad
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Donald Trump's win brings headwinds for low-carbon energy and will test whether a president can meaningfully speed up U.S. oil and gas output growth.
Why it matters: His victory means a U-turn on Biden-era climate and energy policies that are incomplete or under court challenge.
- Think abandoning EPA climate regulations and trying to pare back the massive 2022 climate law.
Here's a quick tour of what I'm watching...
Money. Trump has vowed to rescind funds under the Inflation Reduction Act, which provides unprecedented support for low-carbon energy.
- It's not clear exactly how far he'll get, though at the very least, developers face new uncertainty as plenty of grant and loan funding remains unspent.
- Congress probably won't completely gut the IRA — especially with cash flowing into red districts. But as my colleague Emily Peck reports, Trump could use executive levers to impede grants.
- And his Treasury Department could make it harder to access tens of billions of dollars in tax breaks. In sum, Trump will likely slow — but not stop — growth of climate-friendly sources.
Bargaining. Let's stick with the IRA for a moment. The 2025 expiration of some Trump-era tax credits could bring Capitol Hill dealmaking that affects the law.
- The GOP won back control of the Senate last night, which strengthens Republicans' hand in trying to pare back the law.
- As my Axios Pro: Energy Policy colleagues write, efforts like limiting some currently uncapped tax credits could be in play.
- So could attempts to kill the IRA's fee on oil and gas industry methane emissions.
Paris Agreement. On the international front, Trump's campaign has signaled he'd again withdraw the U.S. from the Paris climate agreement.
- Trump's also unlikely to support new U.S. money to help developing nations, even as finance plays an increasingly vital role in UN climate talks.
Drilling. The president-elect has vowed to "drill, baby, drill" and "unleash" U.S. oil and gas production (already the world's largest).
- The idea is that record output could be far larger still, providing an economic and geopolitical boost.
- OK, yes, paring back regulations could have some effect. But policy is just one of many variables that sway company production decisions, so who knows if Trump can change the trajectory anytime soon.
- The bigger influence could be far down the road. Look for Trump to expand leasing in the Gulf of Mexico — where projects take many years to develop — and other areas.
- There's also connective tissue to the IRA. Weakening incentives for EVs and other tech could boost the resilience of U.S. oil demand.
Industry. One dynamic to watch is how the oil and gas industry interacts with Trump officials.
- The sector supports many Trump goals, like ending the pause on LNG export licenses, and wider oil and gas leasing.
- But companies are also keen to tap IRA tax credits for carbon capture and hydrogen. They could also face higher project costs if Trump makes good on massive new import tariffs.
