Trump changes US energy policy: How it will affect the world
Photo: Donald Trump (Getty Images)
Within hours of his inauguration, US President Donald Trump issued a series of executive orders designed to increase the country's already record high oil and gas production and roll back former President Joe Biden's climate agenda, Reuters reports.
Energy emergency
Trump has declared an energy emergency, which should give him the authority to reduce environmental restrictions on energy infrastructure and projects, as well as to simplify the issuance of permits for the construction of new transmission infrastructure and pipelines.
“It allows you to do whatever you’ve got to do to get ahead of that problem,” Trump told reporters as he signed the order. “And we do have that kind of an emergency."
Earlier that day, he explained the reason for his statement: “The inflation crisis was caused by massive overspending and escalating energy prices, and that is why today I will also declare a national energy emergency. We will drill baby, drill.”
Earlier, he said that the growing demand for electricity from the technology industry, mainly for the needs of artificial intelligence, requires a large-scale modernization of the grid.
LNG permits
Trump has ordered the US to resume processing export permit applications from new liquefied natural gas projects supplying gas to Asia and Europe, effectively postponing the pause Biden set in early 2024 to study the environmental and economic impacts of booming exports.
US exports of ultra-cooled fuel set a record in 2023, and the country is the world's largest exporter of the product. However, a pause in the issuance of new export permits has created uncertainty for many projects under development.
Plants in Louisiana awaiting approval include Commonwealth LNG, CP2 Venture Global, Cheniere Energy (LNG.N), the expansion of its Sabine Pass facility, and Energy Transfer (ET.N), the Lake Charles Terminal. In Texas, a second phase of Sempra's (SRE.N), Port Arthur LNG project is awaiting approval.
Goodbye Paris
Trump has ordered the United States to withdraw from the Paris Climate Agreement, an international agreement to combat climate change, repeating a move he made during his first term.
Trump has called climate change a hoax and said the agreement puts the United States at a disadvantage compared to geopolitical rivals such as China.
"I'm immediately withdrawing from the unfair, one-sided Paris climate accord rip off," he said. "The United States will not sabotage our own industries while China pollutes with impunity."
Offshore wind
Trump has suspended leases for new federal wind farms pending environmental and economic review, saying the windmills are ugly, expensive, and harmful to wildlife.
“We're not going to do the wind thing,” he said.
The White House press release says that Trump has issued an executive order to suspend offshore wind leases in all areas of the US outer continental shelf until the environmental and economic review is completed.
This order is not expected to affect existing offshore wind projects in the US, which are being implemented by companies such as Orsted, Avangrid, Copenhagen Infrastructure Partners, and Dominion.
Biden saw wind power as a crucial part of his strategy to decarbonize the energy sector.
Electric cars
Trump has attacked electric cars, reversing a 2021 executive order signed by Biden that would have ensured that half of all new cars sold in the United States would be electric by 2030.
Biden's 50% goal, which was not legally binding, was supported by American and foreign automakers.
Trump said in his executive order that he was suspending the distribution of unspent government funds for vehicle charging stations from a $5 billion fund, called for the abolition of state exemptions from the obligation to adopt rules for zero-emission vehicles by 2035, and said his administration would consider eliminating tax incentives for electric vehicles.
Drilling
According to the White House, Trump signed an executive order reversing Biden's attempts to block oil drilling in the Arctic and along large areas of the US coast.
The White House announced that Trump had also rescinded a 2023 memorandum that banned oil drilling on an area of approximately 16 million acres (6.5 million hectares) in the Arctic.
It is unclear whether these steps will be enough to attract major drillers, who have avoided the region in recent years due to relatively high development costs.
This month, Biden banned new offshore oil and gas development along most US coasts ahead of Trump's inauguration.
Replenishment of reserves
Trump has stated that he intends to replenish strategic reserves “right to the top.”
This is likely a reference to the US Strategic Petroleum Reserve, the country's stockpile of crude oil created as a buffer against supply disruptions.
Since Russia invaded Ukraine in 2022, Biden has sold more than 180 million barrels of crude oil from the reserve, a record amount.
The sales helped keep gasoline prices down but pushed reserves to their lowest level in 40 years.
“We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world,” Trump said.
He is likely to ask Republican lawmakers in the coming weeks to allocate money for oil purchases.
On his first day in office, January 20, Donald Trump signed a series of decrees related to energy, immigration policy, national security, and reversing many decisions of the Joe Biden administration. These documents do not require congressional approval, so they can be implemented quickly.
