The surprise election of Donald Trump has caused a flurry of research to discover, and often reconcile, Trump’s policy proposals. Other than relatively broad platitudes, Trump’s plans for many sectors of the economy are unclear and at times inconsistent. There are several observations about Trump proposals for energy, mining and infrastructure.
A Trump Administration promises to be very favorable to hydrocarbons, both in the exploration and production of hydrocarbons and in hydrocarbon use by American industry. Trump has called for an “America First” plan of increased exploitation of U.S. reserves in order to be energy independent from foreign supplies. Trump’s plans call for increased shale gas and oil production, relaxing restrictions on accessing federal lands, and reducing regulations that reduce exploration. Of course, increased production is likely to mean lower prices but Trump has also called for increasing use of natural gas to boost the economy and stabilize prices. Although short on details, Trump policies are very likely to favor U.S. energy companies.
The outlook for renewable energy is uncertain. Although Trump has made some unfavorable comments about renewable energy, he has not released any concrete policies for his administration. As part of corporate income tax reform, Trump has called for eliminating corporate tax breaks, which could include key renewable energy incentives such as the production tax credit and the investment tax credit. Comprehensive corporate tax reform could affect many important tax incentives and the outlook for renewables is not clear. However, the renewable energy business has bipartisan support among influential lawmakers because it creates American jobs in key geographic areas of the country.
There is debate about to what extent Trump could affect the renewable energy industry. Renewable energy is tied in many places to state government policies and has been a reliable source of jobs throughout the country. Currently 29 states have renewable energy portfolio standards that require utilities to use power from renewable sources. There is no evidence that states are moving away from renewables. In fact, New York recently required half of the state’s electricity to come from renewable sources by 2030. Additionally, many corporations have found that it is in their best interest to maintain a corporate sustainability policy. These policies go beyond the benefits of having a ‘green’ reputation among consumers; many companies found that sustainability is a more profitable way to do business.
Any U.S. progress on climate change seems very unlikely under a Trump administration. In addition to backing out of the Paris Climate Change accords, Trump wants to cut regulation of methane gas and scrap regulatory analysis that considers the social cost of climate change.
One of Donald Trump’s early attacks on Clinton centered on her abandonment of coal miners, with the promise that Trump would bring back coal mining jobs. Although Trump blamed the Obama Administration’s anti-coal policies, the fact is that declining worldwide coal demand has damaged the industry. In order to bring back coal mining jobs it will be necessary to increase the use of coal in industry and power generation. The Obama “Clean Power Plan” package of environmental regulations that threatened to cause significant retirements of older coal-fired power plants may now be at risk. While it may be difficult to roll back those regulations, it is likely the case that a Trump EPA will seek to undermine the regulations and encourage both power generation and industrial coal use. There are several possibilities for the Clean Power Plan. Currently the Plan is tied up in litigation in the DC Circuit, with analysts predicting it will end up in the Supreme Court. Congress could pass legislation to repeal it entirely, but if not, the rule will have to be rewritten; a potentially multi-year process.
Trump has not focused on other resources production but if his policies for other resources production are consistent with coal, gas and oil, it is likely that U.S. policy will shift to promote the exploration and production of all U.S. resources if it creates American jobs.
Trump has big plans for U.S. infrastructure under his “America’s Infrastructure First” policy. From roads and bridges, to airports and terminals, to pipelines and export facilities, Trump has promised significant spending and infrastructure-friendly regulators. As an area of agreement among Trump and the political establishment, a new Trump administration may focus on infrastructure spending as an early win on an issue that unifies all sides. Several key Democrats have said that they would work with Trump to create an infrastructure plan, which Trump estimates to be a 1 trillion dollar investment. Several days ago, a key Trump advisor said that the Trump administration was considering creating an infrastructure bank as a funding mechanism, and several have guessed that he plans on relying heavily on public private partnerships. As other policy positions, there are no details or priorities, so it is not clear which sector will benefit from early infrastructure spending.
There are “Buy American” provisions in some of the existing US infrastructure procurement programs and precedent structures that could limit non-US participation in the Trump infrastructure spending plans. Likely, non-US participation will depend upon the specific infrastructure project and goods and services.