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Big Oil got its wish: Donald Trump is heading back to the White House, promising to turbocharge American fossil fuels by slashing red tape.
As oil lobbyists eagerly game out how to dismantle regulation, the clean energy industry is bracing for trouble ahead. Trump has promised to roll back support for clean energy and stop the wind power boom dead in its tracks.
The shifting fortunes of Big Oil and clean energy underscore how the change in power in Washington could have a lasting and significant impact on the broader energy landscape.
In the oil industry, there is excitement about Trump’s drill-baby-drill ethos. There’s also a sense that a bullet has been dodged, as Big Oil feared Democrats’ willingness to impose tough restrictions.
“A knife heading towards the throat of the industry has been kicked away,” said Bob McNally, president of consulting firm Rapidan Energy Group and a former White House adviser to President George W. Bush.
President Joe Biden’s pause on exports of liquefied natural gas rattled fossil fuel executives and raised concerns about a permanent ban and further restraints, according to McNally.
“Trump’s win means a lot of bad stuff is not going to happen,” he said.
Trump has held up the oil industry as a centerpiece of his broader economic mission: Attacking the cost of living.
The president-elect hasn’t just promised to ease the inflation rate (how fast prices go up), he’s vowed to make prices outright drop. (Mainstream economists say economy-wide price drops, known as deflation, are unlikely without a recession and undesirable because the situation can turn into a doom loop that’s hard to escape.)
And Trump sees energy as the way to bring about lower prices for consumers.
“It’s always hard to bring down prices,” Trump said during a press conference at Mar-a-Lago earlier this month. “But we’ll bring them down, we’ll get them down. Energy is going to bring down prices. We’re going to have a lot of energy.”
While Trump has promised to turbocharge domestic oil production, analysts are skeptical because the United States is already producing more oil than any nation in world history.
It’s not clear that US output can go dramatically higher. Besides, if production goes too high, it could crash the oil market with a supply glut.
Oil executives are not signaling they’re willing to shell out the big bucks required to spike oil production. They remain laser-focused on heeding investor demands to return excess profits to shareholders through fat dividends and generous share buybacks.
Just 14% of oil and gas executives plan to significantly increase capital spending this year, according to a Federal Reserve Bank of Dallas survey of 132 firms. More executives say they plan to cut spending than ramp it up.
Even after Trump’s victory, two-thirds (66%) of the executives said they don’t plan to increase investment relative to before the election.
A lot has changed in the oil patch since Trump’s first victory, in 2016. Today, it’s the oil giants, not the independent frackers, calling the shots on production. Big Oil has gobbled up countless smaller drillers following years of consolidation.
That’s why McNally, the Rapidan Energy executive, did not dramatically increase his forecast for US oil production growth after Trump won.
“We’re expecting a decent increase, but nothing gangbusters,” McNally said.
Still, the oil industry hasn’t been shy about detailing exactly how it wants Trump to dismantle regulation.
The American Petroleum Institute, the most powerful oil lobby, outlined 70 policy actions it is seeking from Republicans, including lifting the LNG export permitting pause, issuing a new 5-year offshore leasing program, passing permitting reform and repealing environmental standards on vehicle emissions.
“We have this incredible American energy opportunity,” API CEO Mike Sommers told in a phone interview. “If we get the policies right, we can continue to be the world leader in energy production.”
Sommers argued there is a “desperate need” to get more energy to power the artificial intelligence boom, which will require vast amounts of power.
But Big Oil has at least one concern when it comes to the Trump agenda: Massive tariffs.
Sommers cautioned that the oil industry relies on the free flow of commodities and warned that tariffs on Canadian oil could lift prices at the pump especially for consumers in the Midwest, which relies most heavily on Canadian oil supply.
“We would be concerned about what tariffs mean for American consumers. I think the president shares that concern,” Sommers said.
The mood is much darker in the clean energy industry, especially among wind power executives.
Trump has promised to yank federal support for clean energy and repeal the Inflation Reduction Act, Biden’s signature climate bill.
“The industry is bracing for hostile policy and uncertainty, possibly for the entire administrative term until January 2029,” analysts at BloombergNEF warned in a report after the election.
Trump has raged against wind energy for years.
That rage hit a crescendo earlier this month when Trump threatened to completely stop windmills from being built in the United States. Trump even blamed windmills for killing whales even though the federal government says there is “no scientific evidence” to support that.
“That’s false. It doesn’t make any sense,” Ben Backwell, CEO of the Global Wind Energy Council, an international trade group, told in a phone interview. “Are we concerned? Of course we are. I’m concerned when anyone comes out and says negative things about our industry and I’m concerned when disinformation is allowed to spread.”
Republican New Jersey Rep. Jeff Van Drew said earlier this week that Trump’s team is drafting an executive order that would temporarily halt offshore wind turbine activities on the East Coast and seek more lasting roadblocks.
Analysts are skeptical that Trump can completely ban new wind turbines. While Trump will wield significant power to issue leases required to build wind turbines on federal lands and waters, he has less discretion on private land.
“It doesn’t seem plausible to me that he could ban all wind development in the United States,” said Derrick Flakoll, North American policy associate at BloombergNEF.
Still, after Trump’s election, BloombergNEF slashed its 2035 forecast for US offshore wind capacity by 29% to reflect the “negative policy environment.” Wind power is still expected to grow rapidly just not by as much, now that Trump is returning to power.
Leading wind power generation companies like GE Vernova, Orsted and Total Energies have already signaled plans to dial back or reconsider offshore wind projects.
Clean energy boomed under Biden and Trump
Yet some clean energy executives are expressing hope that Trump will see how clean energy fits well within his themes of energy dominance, US manufacturing and energy security.
“Politicians campaign in rhetoric, but when they make decisions about policy it tends to be more nuanced,” said Frank Macchiarola, chief policy officer at the American Clean Power Association, which represents wind, solar, clean hydrogen and other clean energy companies.
The clean power industry points out that it has enjoyed explosive growth over the past decade, under both the Biden and Trump administrations.
Wind, solar and battery storage installations increased at a compound annual rate of 14% during Trump’s first term in office, according to the American Clean Power Association. The industry group said those projects represented $130 billion of investment and supported 420,000 US jobs.
One new headache clean energy didn’t have to grapple with during the last Trump administration: High interest rates.
Wind, solar and other clean energy projects are very capital sensitive, making them vulnerable to periods of high borrowing costs like today. Market interest rates have climbed sharply since Trump’s election, for a variety of reasons including concerns about the Trump agenda fanning inflation.
There is one area of agreement between the oil industry and clean energy: Neither want to see the IRA, Biden’s signature climate law, fully repealed.
Sommers, the oil trade group CEO, said the oil industry is “united” in its support for keeping alive key tax credits in the IRA that incentivize carbon capture and hydrogen.
Of course, the oil industry is unlikely to protest if other parts of the IRA are repealed, including tax incentives that primarily benefit solar, wind and renewables broadly.
Yet some states that Trump won, including Nevada, Wyoming, Kentucky and Georgia, have enjoyed the most clean energy investment as a percentage of GDP, according to researchers.
“A lot of that money is going to red districts,” said Sagatom Saha, adjunct research scholar at Columbia University’s Center on Global Energy Policy.
As Washington debates how much to fund clean energy, climate scientists continue to warn time is running out to slash planet-warming emissions.
Saha, who worked as a climate official in the Biden administration fears there will be a missed opportunity to address the climate crisis.
“This could be a sustained leadership loss on climate, one that will palpably matter,” he said.
