Executive Orders - Energy Policies Impacted
First - a reminder - Tariffs are (as of writing) still set to kick in this weekend on all imports from Mexico and Canada, and thus far they do not exempt oil imports from Canada, which could impact New England over the next several weeks, barring updates. We won't know what, if any, impacts there will be until early next week, most likely. Petitions are pending to exempt oil imports from the tariffs but there has not been any publicly confirmed change on that by the Administration as of Friday afternoon. Additionally, there are looming questions about price impacts on electricity in Northern New England that is Canadian sourced and whether that would be subject to the same 25% tariff.
Some of the finer details on that policy should shake out as it begins to make impacts next week and we will keep you informed of any tangible impacts.
Now onto Part 2!! - Executive Orders - a total of 26 Executive Orders were signed by Trump on Day 1 (plus more since) several of which are directly aimed at the Energy industry, or related subjects. The main ones to look at are the following, which we will cover in more detail but a quick rundown on them is below:
Trump Admin revocation of Federal Incentives for Electric Vehicles – this order will cancel the $7500 Federal Tax Credit for Electric Vehicles, obviously a direct hit at the EV market. This EO strikes at some of the more contested portions of the Inflation Reduction Act that Trump had vowed to overturn whilst on the campaign trail, specifically the portion removing the cap on EV credits for manufacturers, which was intended to spur sales of EV at the consumer level by making production and sale more advantageous for manufacturers. (For a refresher go here: Inflation Reduction Act - Relevant Industry Item Snapshot ). This cancellation at the manufacturer level will disincentivize EV sales, which along with a general alignment with the Trump Administrations approach to electrification, is also a blow of sorts to the contested EPA waiver allowing California (and States who would like to follow suit) legislating combustion engines out of their State. This waiver was granted in the waning days of the Biden Admin and is expected to be fought in courts across the country. If manufacturers no longer have an incentive to produce and push the sale of EV vehicles (or like Ford, take a loss with each sale), there very quickly can become a supply and demand issue that sweeps the legs out from the California goal of full EV adoption.
Trump Admin withdrawal from Paris Climate initiative and UN Climate Agreements – Déjà vu on withdrawal from Paris, the first Trump term saw the US withdraw from the Paris Climate Accords, followed by us rejoining by Executive Order upon the Biden Admin taking office… and once again leaving as Trump returned. The Paris initiative and the follow-up UN and multinational Climate Agreements (COP28 Summit recap - COP28: Takeaways from Dubai) set standards for emissions and climate actions on the part of the countries ratifying the agreements. It also established a fund to help offset the burden of the clean energy transition for developing nations via the Green Climate Fund, which as of this order, the US will also not be participating in. In 2024, as part of the US Climate finance plan set up by President Biden, the US contributed approximately $11 billion, which was the largest contribution, but also a far cry from the amount considered its “fair share” by other participants, given its status as the top emitter of greenhouse gasses historically. The withdrawal from Paris and UN Agreements (COP28 & 29) means withdrawal from any and all associated Climate agreements, and there is a looming question globally on who, if anyone, steps in to fill America’s shoes in terms of funding.
Trump Admin pauses new offshore wind permits. This executive order suspends the sale or lease of new wind projects pending environmental and economic review. This order has caused a lot of questions locally, as it’s not entirely clear what, if any, impacts will occur on pending projects in the New England region. It currently looks like wind farms with preapproved federal permitting will not be affected, like Vineyard Wind, which is currently underway. SouthCoast Wind, which will also be offshore of Nantucket and Martha’s Vineyard, received federal approval days before Biden left office and they should be in the clear as well, though there is some confusion on whether the initial permitting covers them, or if the additional smaller approvals they will need may be halted and thus not allow the project to continue. It gets even more complicated with Vineyard Wind in particular – phase one of the project is completely permitted and underway and therefore exempt from the new order, but that is not necessarily the case for the Vineyard2 project. This is one to watch as the major offshore wind projects have been East Coast and New England projects – the three large scale projects currently running are in Virginia, Rhode Island, and Massachusetts, with others planned for RI & MA as well that may or may not ultimately come online based on the Executive Order. Wind generated power provides approximately 10% of electricity generated in the States as of 2024, which makes it the leading renewable energy source, and environmental groups are critical of the downstream effect of halting wind, which they see as prioritizing “dirtier” energy sources like natural gas.
Possibly the most comprehensive order touching on the industry is the Order declaring an “Energy Emergency” which definitely needs its own article if we want to keep this non-book length, and we will go into next week.
Stay Tuned!
