Torys' Canadian and New York offices will be providing regular briefs on the legal ramifications of the proposed tariffs and other cross-border policy developments on the horizon.
Initial indicators suggest domestic expansion likely
Trump's presidency has begun with a strong emphasis on domestic American energy. The declaration of a "national energy emergency" on inauguration day was designed to give the executive power to expedite approvals for energy infrastructure, primarily gas-fired generation but also nuclear power.
The Trump Administration has emphasized the expansion of domestic energy generation as a method to secure American energy sovereignty. By increasing domestic energy production, the President hopes to:
- reduce the cost of living for Americans, and
- meet the enormous demand for power required to support the rapid growth of AI data centers
The first Trump Administration struggled to exit the Paris climate agreement. This time, President Trump exited the Paris Agreement immediately, signaling a shift in climate politics and an increased capability for executive action.
President Trump has been clear that renewable energy will not be part of the Administration's energy development plans. The President has already ordered a halt to federal funding for renewable programs (a move that is being challenged in the courts).
It is clear that gas-fired generation will be a significant focus for the Administration. However, it is likely that President Trump will support increasing domestic nuclear-generating capacity.
President Trump's pick to head the U.S. Energy Department, Chris Wright, has said he sees nuclear power as part of the domestic energy strategy.
Three areas to watch
1. Project approvals
One of President Trump's priorities has been to increase regulatory efficiency. The Nuclear Regulatory Commission (NRC) will have to develop a process for addressing the review and permitting process for new nuclear generation assets to address that mandate.
New "energy emergency" executive powers will allow for expedited approvals for new projects. However, details have not been released yet. We anticipate the Trump Administration will approach new nuclear projects based on scale and the technology involved:
- Small modular reactors (SMRs) can provide large amounts of around-the-clock, reliable power and may be a strong candidate to support AI data centers. SMR projects could see faster timelines to approval under the new energy mandate.
- For large megawatt nuclear generation projects, the NRC has indicated that proponents should expect more streamlined and efficient licensing review processes in response to a call from Congress that the NRC not "limit the benefits of nuclear energy to society".
2. Government incentives
President Trump has been clear he will end government incentives for renewable energy projects.
Given the President's emphasis on rapid expansion of the domestic energy supply, government incentives will be necessary to stimulate the construction of power generation assets needed to bring down consumer energy costs and meet the high-power needs of AI data centers.
It remains to be seen whether money earmarked under the Biden Administration will be redirected toward new energy projects and, if so, how that money will be made available to new nuclear power projects.
3. Tariff impacts
The focus is on energy sovereignty means that executive action is likely to prioritize "made in America" projects.
Nevertheless, American allies possess significant nuclear expertise (including new technologies, such as SMRs) and related expertise. The Administration will need to consider whether it will exempt nuclear-related services (such as engineering and design) from any tariffs imposed (e.g., on Canada and the European Union) to support a faster timeline for nuclear projects.
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