President Trump began his second term by issuing a barrage of executive orders, memoranda, and other directives, many of which targeted U.S. energy policy and the federal employees who implement it. Trump had campaigned on rolling back President Biden's signature clean energy initiatives. His inaugural directives give us the first glimpse of what those reversals may look like.
The directives read like a stump-speech-style checklist of Trump's priorities. They declare a "national energy emergency" based on our allegedly "inadequate and intermittent" energy supply, purport to "unleash American energy" by directing federal agencies to do everything they can to bolster (primarily) fossil fuels, freeze federal permitting for wind energy projects (onshore and offshore), halt all "disbursement" of funds appropriated under the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (otherwise known as the Bipartisan Infrastructure Law (BIL)) unless the Director of the White House Office of Management and Budget (OMB) approves, and initiate the U.S. withdrawal from the Paris Climate Agreement (for the second time).
These directives were anticipated, but their details and implications are nevertheless still being digested and understood by a broad swath of the American economy, including the clean and renewable energy sector. A January 21 Wall Street Journal article (subscription required) summed up the sense of whiplash: [T]he "blitz of executive orders and memos from President Trump left business leaders—some still in the tuxedos they wore to White House inaugural galas—scrambling to make sense of sweeping changes to tax, immigration, trade and energy policies." It's easy to see why. Trump's moves are reported to have put at risk $300 billion of potential federal infrastructure funding, with major implications for thousands of workers and local economies across the 50 states.
This post aims to help assess the orders and their potential effects on the U.S. clean and renewable energy sector. We identify key takeaways from several of Trump's energy-related orders and expected next steps regarding potential legal challenges and the impact of the orders on the future of clean energy investment in the United States.
Declaring a National Energy Emergency
Citing, among other things, "a precariously inadequate and intermittent energy supply, and an increasingly unreliable grid," this order declares a "national energy emergency" and directs the federal government to take responsive actions as follows.
- Emergency Approvals: Federal agencies are directed to identify and exercise any lawful emergency authorities to expedite the identification, leasing, production, transportation, refining, and generation of domestic energy resources. This includes the potential use of Federal eminent domain authorities and the Defense Production Act. Regarding "transportation" of energy, the order refers specifically to "pipelines."
- Expediting Infrastructure: Agencies are instructed to use all relevant lawful emergency authorities to expedite the completion of authorized and appropriated infrastructure, energy, environmental, and natural resources projects.
- Environmental and Regulatory Adjustments: The order calls for the use of emergency regulations and nationwide permits and permits by rule under the Clean Water Act and other statutes to facilitate energy supply. It also mandates emergency consultations under the Endangered Species Act to streamline energy projects.
Notably, the order defines "energy" and "energy resources" to mean fossil fuels as well as other resources, some of which are low carbon: "crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals."
References to biofuels, nuclear energy, hydropower, and critical minerals appear in the Unleashing American Energy order as well, suggesting that the Trump administration may support these industries, many of which were boosted by Biden's energy incentives.
Unleashing American Energy
This order dovetails with the energy emergency declaration and directs the federal government to take several steps to bolster the domestic production of fossil fuels and other energy resources. The order refers to America's "abundance of energy and natural resources," in particular, natural gas, coal, hydropower, biofuels, critical minerals, and nuclear energy. Of course, it omits other abundant American energy resources, most notably wind and solar. Key provisions include:
- Setting U.S. Energy Policy: The order states that it is the policy of the United States to, among other things, encourage energy exploration and production on Federal lands and waters, establish the United States as a leader in producing and processing non-fuel minerals, eliminate the "electric vehicle (EV) mandate" and ensure a "level regulatory playing field" for "consumer choice in vehicles," support the "American people's freedom" of choice concerning "lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads," and separate the "global effects" of regulatory actions from their "domestic costs and benefits." That last priority hints at changing how agencies engage in cost-benefit analyses for actions with climate benefits.
- Immediate Review of Existing Agency Actions: All heads of agencies are directed to review existing regulations, orders, guidance, policies, and other agency actions to identify any actions that impose "an undue burden" on developing domestic energy resources, particularly the resources listed above. Heads of agencies must then develop and implement action plans to suspend, revise, or rescind the "burdensome" agency actions they identify. This provision could broadly include the many sets of final rules the Biden administration recently issued. Those include Treasury regulations implementing the Inflation Reduction Act's energy investment and production tax credits, hydrogen tax credits, advanced manufacturing tax credits, and more.
- "Terminating the Green New Deal": All agencies are directed to "immediately pause the disbursement of funds" appropriated through the IRA and BIL. The order specifically refers to funds for EV charging stations under the National Electric Vehicle Infrastructure (NEVI) Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program. This provision seems geared at IRA and BIL funding via grants rather than on IRA tax credits. However, the order isn't clear on that distinction. On January 22, 2025, OMB released a short memorandum (dated the prior day) purporting to clarify that this specific provision applies only to programs that relate to the energy policies specified in the order (which are broad and amorphous). This memo is intended to let the Director of OMB determine which funds may continue to be disbursed under the IRA and BIL, depending upon the Director's determination of consistency with the policy expressed in the order.
- "Efficient Permitting": This provision targets the National Environmental Policy Act, the federal law governing environmental reviews of projects subject to federal funding or permitting requirements. It also directs agencies to "eliminate all delays within their respective permitting processes." The order focuses, in particular, on promoting the construction of "interstate energy transportation and other critical energy infrastructure, including, but not limited to, pipelines."
- Threatening to Eliminate the Social Cost of Carbon and Rescind the Endangerment Finding: The order disbands the Interagency Working Group on the Social Cost of Greenhouse Gases. It directs EPA to issue guidance addressing the social cost of carbon, including "consideration of eliminating" it "from any Federal permitting or regulatory decision." This will also affect how agencies engage in climate-related cost-benefit considerations when regulating. EPA is further directed to submit a report on the "legality and continuing applicability of" the Endangerment Finding, which was issued in response to the decision in Massachusetts v. EPA and which underpins many recent regulatory efforts to reign in greenhouse gas emissions from power plants and other sources under the Clean Air Act.
President Trump issued a separate order focused specifically on "unleashing" Alaska's "resource potential." That order looks to rescind restrictions on oil, gas, and other natural resource extraction in that state.
Temporary Withdrawal of All Areas on Outer Continental Shelf from Offshore Wind Leasing
This memorandum purports to withdraw areas on the Outer Continental Shelf from offshore wind leasing, pending a review of federal leasing and permitting practices for wind projects. It also prevents federal agencies from issuing new or renewed approvals, rights of way, permits, leases, and loans for both onshore and offshore wind projects until the Department of the Interior completes an assessment of "the environmental impact of onshore and offshore wind projects" and the "economic costs associated with the intermittent generation of electricity and the effect of subsidies on the viability of the wind industry."
President Trump has long railed against "windmills," and reporting before the inauguration suggested an offshore wind order was in the works. Onshore wind wasn't specifically mentioned in those efforts but is nonetheless included in the order. The pause on federal approvals or permits may have significant implications even for onshore wind projects that are primarily subject to state permitting requirements but, nevertheless, to reach commercial operation, generally require certain approvals and permits from U.S. Army Corps of Engineers, EPA, and the Federal Aviation Administration (FAA).
Putting America First in International Environmental Agreements
This order mandates that steps be taken to initiate the U.S. withdrawal (again) from the Paris Climate Agreement. This will be the second time the United States has exited the Paris Climate Agreement. The first time occurred during Trump's first term. President Biden issued an order on his first day in office back in 2021 requiring that the United States rejoin the Agreement.
The Agreement requires participating states to set national goals to reduce greenhouse gas emissions referred to as "nationally determined contributions" or NDCs. Under President Biden, the United States committed to reducing its emissions by over 60 percent below 2005 levels in 2035. This commitment put the United States on a path toward achieving net zero emissions by 2050. Presumably, Trump will ignore the U.S. commitment.
The Paris Climate Agreement also established mechanisms to fund developing nations' efforts to transition to renewable energy and implement other climate mitigation and adaptation strategies. President Trump's order, however, purports to revoke any financial commitments the United States has made in support of those efforts.
Next Steps
The future remains uncertain, to say the least. Some of the orders could face legal challenges, particularly if interpreted to require the federal government to breach contracts or otherwise interfere with sufficiently vested rights in certain federal funding or other benefits supporting clean energy projects. We expect more memoranda and guidance from agencies, in which the administration will detail how it intends to implement the orders' broad directives. Some of the orders could also be interpreted as requiring agencies to engage in arbitrary and capricious decision-making with respect to funds appropriated by Congress, which is prohibited by a collection of federal laws, including the Constitution itself, the Administrative Procedure Act, the Impoundment Control Act, and federal court case law.
Regardless, the orders signal a sea change in U.S. energy policy. President Biden sought to position the United States as a leader in clean energy, and it appeared to be working, with the onshoring of jobs and innovation, and a bolstering of our national security. President Trump's orders suggest a willingness to cede this ground to Europe, China, and other regions and countries likely to focus intently on expanding clean energy development. Global and domestic market forces could play a significant role in maintaining the energy transition's momentum here at home. In the coming months, much may ride on Trump's approach to the IRA tax credits. However, if these orders give any clues, we shouldn't expect those market forces to find much federal support in Trump's second term. Stay tuned.
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