President Trump’s energy agenda’s strongly positive rhetoric around boosting oil and gas production and revitalizing the coal industry will only go so far, as economics in both industries play a larger role. Despite Trump’s political agenda, his actual influence will have an overall moderate impact in the U.S. energy landscape.
In an examination of Trump’s America First Energy Plan, we determined how the Trump administration may impact domestic energy in five segments of the energy landscape – oil and gas, renewable fuels, coal, renewables and storage, and offshore wind.
- Relaxed restrictions on oil and gas barely move the needle. Lessening hurdles and restrictions for domestic exploration present minor near-term opportunities. However, in the face of low oil prices, several oil and gas companies have already begun efforts to optimize their existing assets rather than explore for new ones. Internet of things (IoT) and automation technologies for the digital oilfield will continue to be the most often deployed and highest potential opportunities in the space, despite favorable policies for exploration.
- Renewable fuels are most vulnerable to Trump’s agenda. Concerns began to build over the status and future of the Renewable Fuel Standard the day Trump took office. With uncertainty looming and the administration continuing to consider oil-and gas-friendly policies, Trump’s decision to remove the renewable fuel obligation could alter a decade-old ethanol industry. Renewable fuel producers are likely to adopt novel technologies in an attempt to supplement the missing income from renewable credits.
- Coal is unlikely to experience a revival. The decline of the coal industry was the result of the boom in shale gas production and has little to do with the environmental regulations that Trump seeks to roll back. Furthermore, Trump’s rhetoric around carbon capture, the “clean” part of “clean coal,” is meaningless, as exceptionally high costs and a lack of supportive policies will cause the technology platform to fade into irrelevance.
- Renewables and energy storage will continue to see strong growth. Although renewables and energy storage have been largely ignored in Trump’s energy vision, the president’s ability to impact their deployment is minimal, as deployment has been driven primarily by state-level policies. Thus, even Trump’s recent decision to withdraw from the Paris Agreement and the abolishment of the federally imposed Clean Power Plan will have a negligible impact on renewables deployment; funding for early-stage research will be Trump’s primary area of influence.
- Offshore wind may emerge as a rare renewables winner. While the administration’s emphasis in offshore development is centered on conventional oil and gas, offshore wind will likely benefit, continuing the growth in offshore wind leases that began during the Obama administration. The president’s planned relaxation of environmental regulations could accelerate the deployment of large-scale offshore wind projects in the U.S. This opening of the market bodes well for several oil and gas players that have strategically shifted focus away from their core business.
Combined with the decision to exit the Paris Agreement, Trump’s policies follow the overarching themes of reviving fossil fuels and achieving energy independence. However, these policies do not mean an end to U.S. opportunities beyond fossil fuels as much is yet unknown about the future policies of the Trump administration; the U.S. is not monolithic, and energy technologies have global markets.
By: Yuan-Sheng Yu