The current U.S. administration marks a substantial regression in US climate policy, particularly in the energy sector. Federal energy policy is expected to return to a pro-fossil fuel stance, reverting the progress toward a net zero economy made under the Biden Administration. The new administration has already withdrawn from the Paris Agreement, declaring a national energy emergency to boost American oil and natural gas production. Nonetheless, simultaneously, states across the U.S. have renewed their climate commitments implementing a variety of decarbonization policies.
Why It Matters
Fossil Fuel Resurgence: Federal energy policy is expected to shift towards promoting fossil fuels and set back climate action by withdrawing from international climate agreements and rolling back emission regulations.
State-Level Decarbonization: States are currently continuing green efforts, with efforts to integrate renewables into electrical grids, new emission regulations, and investment into cap-and-trade carbon markets across the U.S.
Grid Modernization: The Federal Energy Regulatory Commission issued their first reform to transmission policy in the past decade, mandating 20-year regional planning to improve grid reliability as billions are being invested to improve power transfer capabilities.
Details
The new administration has signaled its intent to prioritize fossil fuels, notably requesting to roll back Biden-era climate regulations.
The new administration’s proposed cabinet includes climate change skeptics and most notably includes a Department of Energy nominee who is openly hostile to the notion that climate change even exists. Chris Wright, Trump’s nominee, is the CEO of a fracking company and unsurprisingly, is against renewable energy. If confirmed, Wright has the power to limit renewable developments and increase fossil fuel commitments.
Underneath Biden, unprecedented climate legislation, including the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), committed over $350 billion to investment in energy security and climate programs over the next decade. EnerKnol Research highlights that these funds are largely expected to be repurposed or rolled back by the new administration. Federal land and offshore leases for renewable energy are also likely to be reduced, jeopardizing the over 15 gigawatts of offshore wind production approved by Biden. Additionally, the pause of LNG export applications underneath Biden is in-line to be rolled back.
Yet, the new administration is unlikely to completely eliminate progress as the Treasury Department implemented rules to protect the investment tax credit for renewables. Investment commitments connected to infrastructure and manufacturing may also be difficult to reduce.
The EPA is also under threat. The new administration has ordered federal agencies to reduce environmental protections and is expected to slash EPA funding and reducing staff. This includes possibly rolling back emission standards for fossil fuels and greenhouse gas regulations. EnerKnol reports that over 100 environmental regulations were rolled back in Trump’s first term, and it appears likely that this trend will repeat.
States have continued the Biden-era push towards renewables and are poised to continue, despite federal policy. Colorado, Illinois, Maryland, Massachusetts, North Carolina, Oregon, Rhode Island, and Washington have all adopted strict emissions goals, and nine states have plans for offshore wind energy.
Decarbonization efforts in the grid have continued at the state-level, with several states implementing plans to address natural gas usage. Vermont has proposed a Clean Heat Standard rude that would require greenhouse gas emission reductions in heat-generation. Minnesota regulators have implemented gas resource planning with major state-level energy providers, and California has implemented long-term plans to decarbonize.
Despite tumultuous federal activity, the U.S. grid continues to modernize in response to increased renewable integration and heightened energy demands. In November, the Federal Energy Regulatory Commission issued Order No. 1920-A, mandating grid operators to perform long-term transmission planning with an emphasis on grid reliability. Simultaneously, operators are investing billions to expand power transfer capacity with the Southwest Power Pool investing $7.7 billion and the Midcontinent Independent System Operator advancing a $21.8 billion dollar investment portfolio.
It's unavoidable that climate change will be deprioritized at a federal level, despite unpopularity among voters and the increasing global urgency. The burden of environmental protection has increasingly fallen on states and corporations themselves. Despite regulatory rollback, environmental protection remains a fiduciary duty of multinational companies, and consumers will continue to reward sustainability initiatives.
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