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E&E News: How Trump’s Executive Orders Could Tilt US Energy Markets

Posted by Benjamin Storrow on Jan 23, 2025

Several of President Trump's executive orders aim to bolster U.S. fossil fuel production, signaling a potential shift in investment from advanced energy to oil and gas. E&E News spoke with clean energy advocates, including United's Harry Godfrey, who emphasized that the majority of renewable energy projects receive funding through private investments, and even with direct legal impacts, altering market sentiment may determine where those funds flow. 

Petroleum industry executives and energy analysts who spent much of the last four years warning about under investment in the global oil and gas development have changed their tune with President Donald Trump’s return to the White House.

A flurry of Trump’s Day 1 executive orders intended to ease environmental permitting bottlenecks and boost U.S. fossil fuel production have the potential to redirect vast flows of money away from clean energy and toward traditional investments in oil and gas, analysts said.

“I would say it’s historic,” said Robert McNally, who tracks energy markets as the president of the Rapidan Energy Group and served as an energy adviser to President George W. Bush. “It will vastly improve the investment environment. It’ll reduce uncertainty and risk for the companies investing in the oil and gas sector.”

Trump’s orders are likely to have limited impact on their own, analysts said. Many will require congressional action or months, if not years, of painstaking regulatory procedure to implement. Legal challenges from environmentalists and congressional Democrats are nearly certain.

But taken together, they represent a powerful signal to global energy markets, which have witnessed a shift away from investments in oil and gas production toward clean energy technologies in recent years. Global investment in solar generation alone was $500 billion in 2024, nearly matching the $570 billion spent on oil and gas production, according to the International Energy Agency.

Spending on oil and gas production has fallen from a peak of almost $900 billion in 2014. The decline has come even as global demand has hit record levels.

That has prompted calls from oil industry leaders for more spending on new projects to keep pace with the world’s thirst for fossil fuels. In 2023, the secretary general of the Organization of the Petroleum Exporting Countries told CNN the lack of investment in oil was “dangerous” for energy security.

Trump’s orders are unlikely to lead to a sudden surge in U.S. oil and gas production, which is already at record levels. In a note to clients, Rystad Energy predicted oil producers are likely to prioritize profits overgrowth and noted the “speed of permit approvals has not been a material roadblock” to drilling on federal lands in New Mexico’s prolific oil fields in recent years.

But clean energy advocates worry Trump’s orders represent an opening act that could tilt global capital markets in favor of traditional fossil fuels.

“The vast majority of the dollars that are flowing into these projects, that are flowing into these programs, are private dollars. And so, what the vibes that the market sees and operates on determine where those dollars flow,” said Harrison Godfrey, managing director at Advanced Energy United, a trade group.

“If you change the vibes and you shift the market, you depress those projects, even if, at the end of the day, the actual technical legal effect is much more limited than what the market does.”

Trump’s orders cover the gamut of energy and climate policy. There is the directive to restart permitting reviews for liquefied natural gas export terminals and reopen the Arctic National Wildlife Refuge to oil drilling. There is the declaration of a national energy emergency, and a call for more oil, gas, coal, hydro and nuclear power to meet it. And there is the order to “immediately pause” spending under the Inflation Reduction Act, former President Joe Biden’s signature climate law, and a call to review the “continued applicability” of the Supreme Court’s endangerment finding for greenhouse gases, the legal underpinning for U.S. climate regulations.

Some orders face significant legal hurdles and will likely require congressional Republicans to use their narrow majorities to pass legislation to realize Trump’s objectives.

In a note to clients, Morgan Stanley said it believes Trump “cannot stop the disbursement of funds and allocation of tax credits under the IRA. We expect legal challenges to be filed and would expect courts to agree with these challenges and overturn this element of the Trump Executive Order.”

Read the full article here.

Topics: United In The News, Harrison Godfrey