Industry Issues in Limbo - What to Watch in 2025

The change in Presidential Administrations this December-January season has left an unprecedented amount of issues open across the transition period, including a multitude that specifically affect the Energy and Transportation Industries. Truth be told, there are too many items up in the air to cover where we are on all of them in one update, so we will try our best and keep you posted as the news cycles turn.
For starters, let’s go over what items were left open before we dive into what Executive Orders were enacted, and which from the prior Administration have been cancelled that affect our industries.
Part 1! : Open Items
The 45Z Tax Credit & The Biodiesel Blender Tax Credit. Two parts on where we are on this particular item. The 45Z tax credit has yet to be truly clarified by the Treasury Department. There was some guidance on hydrogen, but not much else. The tax credit is supposed to be product neutral, but with no clarity on which fuels or sources count for what amount of credit, much of the domestic supply has slowed or ground to a halt. Producers are not able to properly valuate their product and price it for the market, particularly on outer months, sans clarity on 45Z, so we are all in a holding pattern there. The other half of the issue, the Biodiesel Blender Tax Credit (BTC) was allowed to expire 12/31/2024, and no extension has yet to be granted by the legislature, despite vociferous calls for an extension from multiple sitting members, as well as energy and transportation industry groups. This is a big issue in terms of pricing longer term especially, so one we should all be keeping a close eye on. (For a refresher on these credits and how the 45Z is supposed to work vs the BTC, go here: The Clean Fuel Production Credit )
Zero Emission Vehicle Regulations - California has stopped pursuing the waiver with the EPA that would allow them to enforce their Clean Truck rule, which would force fleets and truckers to move to zero emission trucks (although this does not affect the manufacturer portion of the rule - that is still in effect). This raises questions for Massachusetts and other States who adopted the CARB policies on clean transportation. Massachusetts has not enacted any waivers or position clarification on their timelines for both sides of the CARB inspired heavy duty emissions policy in the State, which took effect January 1, 2025. If California EPA waivers cease to be allowed to be in effect by the current Administration (which may or may not be possible, legally) it on the one hand removes the underpinning for other States who adopted the California rules, but technically since they are enacted State level they don’t necessarily rely upon California’s enforcement to remain in effect. The manufacturer portion still being in effect is a complicating factor too, as without the Clean Truck portion there is unlikely to be demand for the trucks they are now required to sell at the manufacturer level. It’s certainly a confusing issue from a legal and regulatory perspective, and if you ask ten people, you’ll get at least 9 answers on what the legal interpretation will ultimately be. This is definitely an item to keep an eye on, particularly here in Mass.
Tarriffs – President Trump has repeatedly discussed implementing tariffs on foreign-sourced items. The biggest item to note here is that while we haven’t gotten any specific plans on how large tariffs will be and if they will apply across the board, we HAVE gotten a repeated message that the tariffs the Administration plans to impose on Canada and Mexico will be 25%, and they intend to start enforcing that February 1, 2025. When asked, the indication was that oil would NOT be exempted from tariffs. The US sourced $92 billion dollars of Crude Oil from Canada in 2023, and $9 billion in Natural Gas. According to some news outlets, the Administration has seemed to indicate that the tariffs were a response to a perceived lack of border control on the part of Mexico and Canada, so there is an implication that should some agreement on those policies be reached, the tariff issue on neighbor countries may be reduced or include certain exemptions. Time will tell. If not, expect wild times on the oil markets, particularly here on the East Coast where refinery operations are primed for processing Canadian Crude (light sweet crude, versus “sour” WTI).
Executive Orders
In addition to these open items, day 1 saw 26 executive orders signed by the new President. While that number is a record high, it can be argued it is actually a wild low ball since the first order issued effectively cancelled around 75 prior Executive Orders that ran the gamut from oil & gas leasing moratoriums, to rescinding rules about succession planning for various departments in the government. No stone was left unturned, as they say, and we will have a run down on the more major industry related items as a follow-up to this soon.
Stay Tuned!