Trump’s Election Will Reset the US Energy Sector, the Question Is How?

WASHINGTON — The Associated Press called the 2024 race for the White House at 5:34 a.m. last Wednesday morning, and almost immediately, word of Donald Trump’s election victory ignited a sell off of renewable energy stocks.

As the stock market as a whole rallied, having its best overall day since 2022, stocks exposed to the wind and solar energy sectors cratered.

The primary reason for this was the widely held belief that tariffs and other policies Trump touted on the campaign trail would drive up the prices of renewable energy development and rein in the sector’s growth.

Other analysts saw this as an overreaction, noting that while superficial tweaks might be made, the bulk of President Joe Biden’s Inflation Reduction Act will likely stay in place, thanks to the investment it has spurred in red states.

A few weeks ago, for example, a group of 18 House Republicans sent a letter to House Speaker Mike Johnson, R-La., urging him to use caution when and if it comes to trimming incentive provisions of the bill, because of the jobs and business activity they’ve created in their districts.

Then there’s the part where it gets personal. According to a recent report from Reuters, a number of people in Trump’s inner circle, including his son-in-law Jared Kushner and Howard Lutnick, the Cantor Fitzgerald CEO who currently serves as co-chair of Trump’s transition team, have done quite nicely, investmentwise, thanks to the IRA.

“Both Republican-led and Democratic-led states are seeing the benefits of wind, solar and battery manufacturing and deployment thanks to the billions of dollars of investments unleashed by the bipartisan infrastructure law and the Inflation Reduction Act,” said Dan Lashof, U.S. director of the World Resources Institute, in a written statement.

“Governors and representatives in Congress on both sides of the aisle have come to recognize that clean energy is a huge moneymaker and a job creator. President Trump will face a bipartisan wall of opposition if he attempts to rip away clean energy incentives now,” the head of the Washington, D.C.-based research institution said.

More of a concern is Trump’s threat to impose a 60% tariff on goods from China — and a tariff of up to 20% on everything else the United States imports.

Trump has said he sees tariffs as a way to create more factory jobs and shrink the federal deficit.

“Tariffs are the greatest thing ever invented,’’ Trump told supporters while campaigning in battleground states like Michigan and Pennsylvania.

Such a move, analysts agree, would definitely have an inflationary effect on imported solar panels, batteries and other renewables-related products until U.S. manufacturers grow the capacity to keep up with surging demand here.

The upside, in the near term at least, is that developers in the renewable energy space will likely begin to ramp up efforts to close what pending deals they can before Trump is inaugurated on Jan. 20.

When it comes to fossil fuels, there’s a much clearer picture of where the president wants to go.

One of his first acts once he returns to the Oval Office will likely be to once again withdraw the United States from the Paris climate agreement and open up federal lands in the west for mining and drilling.

Trump’s energy and environment transition team, it’s said, has already prepared executive orders that would redraw the boundaries of the Bears Ears and Grand Staircase-Escalante national monuments in southern Utah, scaling them back in size to allow more oil and gas development around them. 

Trump has said reducing the size of the monuments would “give that power back to the states and to the people where it belongs.”

By then — in fact any day now — he will have appointed an “energy czar,” who’ll lead efforts to promote oil, gas and coal production.

Energy was on the ballot, and voters sent a clear signal that they want choices, not mandates, and an all-of-the-above approach that harnesses our nation’s resources and builds on the successes of his first term,” said Mike Sommers, president and CEO of the American Petroleum Institute, in a written statement.

Trump is also expected to terminate the Biden administration’s permit pause on new natural gas export terminals and a waiver allowing states, such as California, to set pollution standards more stringent than those imposed by the federal government. 

“There is no denying that another Trump presidency will stall national efforts to tackle the climate crisis and protect the environment, but most U.S. state, local and private sector leaders are committed to charging ahead,” Lashof said.

In short, Lashof continued in his written statement, the reelection of Trump will be far from the death knell for clean energy and climate initiatives that some are expecting.

“From Appalachia to the Gulf Coast to the Mountain West, Americans are reeling from devastating climate-fueled disasters,” he explained. “Turning a blind eye to the climate crisis that is costing billions of dollars in damage and killing hundreds of people would be irresponsible and immoral. 

“Polls show most Americans want the federal government to take action to address climate change and protect the air we breathe and the water we drink. President Trump has a responsibility to heed their calls with not just rhetoric, but real policies that improve Americans’ lives,” he said.

Lashof also said that there are important bipartisan opportunities to take climate action that most lawmakers can agree on.

These include harnessing the power of geothermal energy, which would add dramatically to the nation’s energy portfolio, decarbonizing heavy industry and investing in international supply chains to keep the United States competitive and secure. 

“These actions would be a win for U.S. manufacturing, national security and the climate,” he said.

Among those looking at the bright side of the situation is Jason Grumet, CEO of the American Clean Power Association, a trade group based in Washington, who said he is looking forward to working with the Trump-Vance administration to “unleash American-made energy, deliver reliable power to the grid, grow the economy and enhance our national security.”

“Domestically produced clean power is vital to meeting our nation’s surging electricity demand. Our industry grew by double digits each year under the first Trump administration and has accelerated this rate of progress since,” Grumet said in a written statement. 

“Private sector clean energy investment is bringing jobs and economic opportunity to small towns and rural communities across the nation, while hundreds of new factories have come online in states that have seen far too many good jobs move overseas,” he continued.

“Harnessing America’s diverse energy resources is essential to our national security and global power. By combining the strengths of all domestic energy resources, the Trump administration can advance an economy that is dynamic, secure and clean. We are committed to working with the Trump-Vance administration and the new Congress to continue this great American success story,” he said.

Dan can be reached at [email protected] and @DanMcCue