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Trump vows to change climate, energy policies

11 Nov 2016 19:24 GMT
Trump vows to change climate, energy policies

President-elect Donald Trump is expected to remove what he sees as the onerous regulatory burden' on US oil and gas producers

Washington, 11 November (Argus) — Donald Trump's victory in the presidential election alters the trajectory of US energy and climate policy. The president-elect, backed by Republican majorities in both chambers of the US Congress, has outlined policies that will uproot the legacy that President Barack Obama has spent nearly eight years building.

Trump, who lost the popular vote to Democratic candidate Hillary Clinton but won enough states to claim the White House, has offered few details of how he hopes to accomplish his "America first" energy policy at the same time as achieving energy independence. His message to the industry is simple: "You are going to like Donald Trump." His statements chime with the views of oil and gas industry insiders, who saw Obama's policies as an attempt to squeeze out fossil fuels to promote his environmental agenda, despite strong growth in US output.

The Republicans will control the executive and legislative branches for the first time since 2006, which will spark a surge of legislative action on energy and environmental issues to remove what they described as an onerous regulatory burden on fossil fuel producers. The Republicans will push to dismantle the Dodd-Frank financial reform law. The Trump administration could try to weaken light-duty fuel economy standards that apply from 2022-25 during a mid-term review that starts next year.

Trump plans to gut the Clean Power Plan for reducing CO2 emissions from power generation, Obama's signature effort to address climate change. He has vowed to pull the US out of the UN Paris climate agreement to cut greenhouse gases (GHGs). His transition team says the Trump administration will encourage the production of fossil fuel resources by opening onshore and offshore leasing on federal lands and waters and leasing additional public land to coal mining.

The president-elect wants to revamp a permitting process he says has become a "disaster" for energy infrastructure. This could benefit midstream firm TransCanada's hopes of reviving the 830,000 b/d Keystone XL crude pipeline project, which Obama refused to permit. Trump says he will approve the project but adds that the US should get a "significant piece of the profits" from it — a remark that puzzles and worries industry insiders. The biofuels industry is left guessing the direction of Trump's policies, because he vowed to protect the Renewable Fuel Standard programme and criticised it as an example of government overreach.

Trump's boldest claim is to make the US energy independent, because this contradicts projections of US oil production and consumption. US crude production could rebound to the 2015 high of 9.4mn b/d by 2020, projections from governemnt agency the EIA show. But even then it would barely meet half of US oil demand.

Trump promises to relieve the US coal industry from years of increasing regulation under Obama. But the coal industry has suffered as a result of intense competition from natural gas. And Trump promises to support continued shale exploration, as the US is poised to emerge as a net gas exporter next year.

The unusual suspects

The dearth of high-profile Republicans supporting Trump during his campaign makes it hard to guess his administration choices. Possible energy and interior secretary candidates include Continental Resources chief executive Harold Hamm and former Alaska governor and vice-presidential nominee Sarah Palin.

Trump's pick to lead the transition for the US Environmental Protection Agency (EPA) is climate change sceptic Myron Ebell. Trump himself is sceptical that GHG emissions from human activity are the leading driver of climate change. His team promises to "refocus the EPA on its core mission of ensuring clean air, and clean, safe drinking water".


US crude production scenarios

US gas production scenarios