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Defining Dominance
With Donald Trump’s pledge to return to “energy dominance” if re-elected, the energy industry may find itself caught between his fossil fuel-heavy agenda and its growing commitment to diversified, cleaner energy solutions, not to mention a backlash from state and local officials.
This Week's Trend In Brief:
Trump is pledging “energy dominance” if he returns to The White House, and many in the energy industry see this policy shift as beneficial, but their idea of energy dominance may not match Trump’s as well as they think.
Driven by investor interests, market preferences, and regulatory pressures at various levels of government, the energy industry has embraced an all-of-the-above approach to the energy fuel mix – finding ways to reduce the carbon intensity of fossil fuels, capture carbon emissions, and leverage renewables where they make sense.
Yet Trump and many Republicans view energy dominance as fossil fuel boosting at the expense of renewables, which has the potential to complicate industry’s priorities and investments, particularly if they make good on repealing some or all of the Inflation Reduction Act.
Plus, in politics, every action has an unequal and opposite reaction, as we saw at the state and local levels during Trump’s first term, when blue states and cities pushed back hard on pro-fossil fuel policies flowing from Washington and activists aggressively challenged federal rules and permits in court.
Energy industry public affairs professionals must set the right expectations for their companies should Trump return to office and prepare for skepticism of their net zero initiatives alongside countervailing pressures from Democrats in other jurisdictions than Washington.
Digging Deeper:
Donald Trump’s pledge to return to “energy dominance” should he win back The White House gives hope to many in the energy sector, but they may find themselves at odds with some of the policy agenda that follows. On the surface, Trump’s policy vision appears to align with the industry’s drive for more robust energy production. His last term was marked by support for deregulation, traditional energy, and streamlined environmental oversight, a stark contrast to the Biden Administration’s “unprecedented” record of taking the most aggressive actions on climate policy. However, a closer look reveals potential divergences between Trump’s definition of energy dominance and the energy industry’s evolving priorities. While Trump’s approach focuses mostly on fossil fuels, the industry’s view of dominance includes a broader, more diversified energy mix—something that may not align as well as some might hope.
Driven by investor interests and market preferences, the energy industry has embraced an all-of-the-above approach to the energy fuel mix – finding ways to reduce the carbon intensity of fossil fuels, capture carbon, and leverage renewables where they make sense. Companies are seeking to balance energy production with sustainability in ways that maintain investor confidence and respond to the increasing demand for cleaner energy solutions. This pragmatic approach has led to a more nuanced understanding of what it means to be energy dominant in today’s market, with renewable energy and new technologies complementing traditional energy sources like oil and gas. Energy firms across the U.S. like Exxon, Chevron, ConocoPhillips, and others have bet big on these low-carbon technologies “in their bid to slash greenhouse gas emissions to achieve net-zero goals.” Other companies across a wide range of industries have also embraced these technologies in pursuit of net-zero emissions such as Google and Microsoft, hoping to please consumers, satisfy investors, and meet the expectations of other stakeholders. At a time when a majority of consumers say they want green electricity, these technologies have been embraced as key tools necessary for the future of clean energy.
Yet Trump and Republican control of Washington view energy dominance as fossil fuel boosting and remain skeptical of renewables and other clean energy technologies, potentially complicating the industry’s priorities and investments, particularly if they repeal some or all of the Inflation Reduction Act (IRA). While a Trump Administration could excite some industry members by reversing policies such as stricter methane regulations, halting lease auctions, and the LNG pause, many in the industry have already adapted to these challenges. For example, more stringent methane rules are seen as beneficial for the long-term future of energy companies, and EV adoption has presented new opportunities for U.S. manufacturers. However, Trump’s platform includes rolling back key elements of the IRA, a cornerstone of recent federal support for clean energy initiatives, which House Republicans have already voted to repeal 51 times. This repeal could create tensions between the energy sector’s efforts to adopt more diverse energy sources and Trump’s “drill, baby, drill” plan. Trump has also vowed to halt offshore wind projects on “day one” of his presidency, another action that could hurt future investments in burgeoning sectors. Professionals across the energy industry must understand what a return to office for Trump may look like and make sure to manage expectations. Some industry members have already pledged to fight back against any attempts by Trump to curtail investments in green technologies, while others are attempting to shore up support in states they think will be spared from those efforts.
What happens in Washington doesn’t stay in Washington -- as we saw at the state and local levels during Trump’s first term, blue states and cities brought countervailing pressures on Trump’s pro-fossil fuel policies. In politics, every action has an unequal and opposite reaction. During Trump’s first term, many states and cities took strong stands against the administration’s deregulatory and pro-fossil fuel policies. More than a dozen states moved “to strengthen environmental protections to combat a range of issues from climate change to water pollution” in response to “the Trump administration’s deregulatory agenda,” while states like California implemented ambitious clean energy goals and regulations to counter federal actions. Even now, California is “readying an army of bureaucrats to defend the state’s nation-leading climate policies against a potential second Trump administration.” Indeed, if Trump returns to office, we could witness similar pushback, with progressive jurisdictions doubling down on renewable energy commitments, further complicating the landscape for energy companies that operate nationwide. Climate activists are already preparing for a second Trump Administration, and companies across the energy industry must do the same to avoid getting caught flat-footed.
With an election likely to come down to a photo finish, energy industry public affairs professionals must prepare for a rapidly shifting policy environment and set the right expectations for their companies regardless of which candidate takes the Oval Office. Public affairs professionals must ensure their companies understand that what may seem on the surface to be a more energy-friendly policy agenda could be more complicated than expected. A Trump win means balancing the potential benefits of policies boosting U.S. fossil fuel production with the likely resurgence of state and local opposition and increased skepticism around companies’ net-zero initiatives. Navigating these complexities will require a careful, strategic approach to ensure companies can thrive regardless of the political winds, and a proven playbook that leverages an in-depth understanding of the full range of stakeholders ensures you can anticipate their moves and mitigate their impact. Companies will need to consider the different regulatory landscapes they face at various levels of government—federal, state, and local—and ensure they remain adaptable to the complex political and policy landscape.
Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.
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