New administration changes US energy and climate policy
30 January 2025
The new US administration led by president Donald Trump took office on January 20. In his inaugural address, president Trump laid out the principles of the new “America first” agenda, signaling a rapid departure from many policies pursued by the United States in the past.
On his first day in office, president Trump signed tens of executive orders and other presidential actions, reversing several key social and economic policies of the outgoing Biden administration. The key executive orders related to energy and climate policy include:
- The withdrawal from the Paris agreement—The order directs the US Ambassador to the United Nations to immediately submit formal written notification of the United States’ withdrawal from the Paris Agreement under the United Nations Framework Convention on Climate Change. It also terminates US involvement in all climate-related international agreements and financial commitments. The order effectively invalidates the US targets for GHG emission reductions adopted by the former administration.
- Executive order on energy, including a range of provisions intended to “unleash America’s affordable and reliable energy and natural resources”. The order starts processes for easing regulations on oil and gas extraction, scrapping appliance efficiency standards and changing regulations that encourage sales of electric vehicles—in particular, to eliminate the “electric vehicle (EV) mandate” by “removing regulatory barriers to motor vehicle access”, “terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles”, and “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs”. The order ends the Biden administration’s pause on approvals for new LNG export permits.
- Executive order declaring a national energy emergency, giving the administration more powers to expedite approvals for infrastructure for fossil fuels, biofuels, nuclear power, and critical minerals. Among other provisions, the order directs the Secretary of Energy to “consider issuing emergency fuel waivers to allow the year-round sale of E15 gasoline”.
- An order to lift restrictions on oil, gas and mineral production in Alaska, opening areas for development, including parts of the Arctic National Wildlife Refuge (ANWR), and supporting the state’s aspiration to revive its LNG industry.
- An emergency price relief mandate for government departments to look for ways to bring down prices for consumers, including scrapping climate policies that raise the cost of fuel and food.
- Restrictions on wind power development, which include a suspension of all new leasing for offshore wind projects. Following the presidential order, the Secretary of the interior has paused approvals for new renewable energy projects on public lands and in public waters.
On the top level, the new policy of the US administration aims at the deconstruction of the global international economic order and the global climate order. It is a policy of a great power in a world faced with natural resource limits—including limits on the master resource, energy—where the control over remaining resources is determined via competition between the most powerful players. Prof. Michael Hudson explains: “When Trump promised his voters that the United States must be the ‘winner’ in any international trade or financial agreement, he is declaring economic war on the rest of the world.” In the world of looming scarcity, there is no longer a promise—not even for US allies—to make other countries prosperous.
While the scope of the change is far-reaching, uncertainties linger over how it will be carried out and what would be the ultimate outcome. For starters, the two policy goals of increased oil output and low energy prices are mutually contradictory. Increased oil and gas output would require increased upstream investment, which is not justified by the current oil prices. On the contrary, oil majors are reducing investment (vide Chevron), while borrowing billions of dollars for dividend payments and stock buybacks to attract investors.
In the area of engine and vehicle regulations, the first targets of the new US administration will likely include fuel economy regulations, GHG emission standards, and zero-emission vehicle (ZEV) mandates. Newly appointed US Transportation Secretary Sean Duffy has already ordered a rewrite of more stringent US fuel economy rules. The memorandum Duffy signed in the first act after his swearing in January 28 directs the National Highway Traffic Safety Administration (NHTSA) to immediately review and reconsider all existing fuel economy standards for vehicles produced from the 2022 model year onward. He told NHTSA to propose rescinding or replacing the standards so that they’re in line with the administration’s fossil fuel-favoring energy policy.
Under the new administration, the Environmental Protection Agency can also be expected to review various emission standards for criteria pollutants in an attempt to slow down the increase in vehicle prices. Among the trucking industry, there is a strong opposition to the EPA 2027 emission standards, which could increase truck prices by as much as $25,000. Light-duty vehicle regulations that may be subject to review include the EPA Tier 4 emission standards (phased-in from 2027 through 2033) as well as the California Advanced Clean Cars II (ACC II) regulation.
Source: The White House | Wood MacKenzie