Coming off a brutal Trumpcare defeat, delivered by members of his own party no less, Trump has decided to return to a strategy of progressing his policy initiatives through executive order. As such, later today President Trump is set to sign a sweeping new “Energy Independence” executive order aimed at promoting domestic oil, coal and natural gas production by reversing much of Obama’s efforts to address climate change via his “Clean Power Plan”.
Obama’s Clean Power Plan was designed to cut carbon dioxide emissions from electricity by 32% by 2030 compared to 2005 levels and resulted in the collapse of the coal industry, including several large bankruptcies. That said, the initiative has been in legal limbo since the Supreme Court stayed it while it was reviewed by a federal appeals court. The Trump administration now is expected ask that court to put the matter on hold to allow it time to revise or undo the measure — an action environmentalists have vowed to challenge.
Here is a summary of what Trump’s EO will seek to accomplish, via Axios:
- Begin undoing the EPA Clean Power Plan than mandates cuts in carbon emissions from coal-fired power plants.
- Undo several policies that wove climate change into federal decision-making, such as the Obama administration’s tally of a metric called the social cost of carbon, and a White House directive that agencies factor climate change into a range of permitting decisions.
- Direct the Interior Department to end its moratorium on coal leasing on federal lands.
- Direct EPA and Interior to review rules that govern oil and natural gas development, including EPA’s methane emissions rules for new sources and Interior’s rules that govern fracking on federal lands.
- Scuttle a White House directive that required agencies to consider climate change when reviewing energy, infrastructure and other proposed projects under the National Environmental Policy Act.
- Require federal agencies to broadly review existing rules and policies that might thwart energy development. They have 180 days to craft recommendations to address the problems.
- Rescind several of Obama’s policy memos and orders on tackling climate policy broadly, such as the broad 2013 strategy document.
Speaking with George Stephanopoulos over the weekend, EPA Chief Scott Pruitt said that, among other things, Trump’s forthcoming executive order would “address the past administration’s effort to kill jobs across this country through the clean power plan.”
“This is about making sure we have a pro-growth and pro-environment approach to how we do regulation in this country. For too long, over the last several years, we’ve accepted the narrative that if you’re pro-growth, pro-jobs you’re anti-environment and that’s just not where we’ve been in the country. And the executive order is going to address the past administration’s effort to kill jobs across this country through the clean power plan.”
So who are the winners and losers from today’s EO? Domestic oil and gas production could get a long-term boost to the extent prices recovery but for now it’s limited by economic fundamentals rather than regulations. Coal, on the other hand, could get a boost as the Trump EO would extend the useful life of certain coal plants that were slated to be decommissioned under Obama’s rules.
Oil and gas production: These changes are unlikely to have an outsized effect, but could influence drilling and production decisions a little. Easing regulations matters much less than fundamentals. While lots of Washington is paying attention today, a date that matters way more is May 25, when OPEC meets to decide whether to extend production cuts that have helped prices rebound from the dumps of 2015 and 2016 and helped put the U.S. oil boom back in motion.
Infrastructure.: This matters. Industry is more bullish here about a meaningful change from the Obama era — especially if the early moves on Keystone and Dakota Access are replicated more broadly. “Of all those things, the one that might matter the most, just because it might pull (oil) production forward a little quicker, is the whole permitting issue around infrastructure,” veteran oil analyst Bobby Tudor said on a podcast released Monday from the Columbia University Center on Global Energy Policy.
Coal: Coal stocks could get a bump from the order, just like they did when Trump won in November. Trump may slightly alter the rate and trajectory of the industry’s long-term projected decline in the U.S., where mining and power generation faces headwinds from inexpensive natural gas, earlier air pollution rules, renewables and other factors. But he probably can’t really turn things around. Let’s turn it over to the consulting firm ClearView Energy Partners: “[W]e see few policy levers available to either Congress or the Trump Administration sufficient to offset organic, power-sector coal displacement by modestly priced natural gas,” they said in a recent research note.
Renewables: Killing the Clean Power Plan (which has already been frozen by the Supreme Court) doesn’t help renewables, but probably doesn’t hurt much either, at least not for a while, thanks to other forces like tax credits that were extended for five years in late 2015, state green energy mandates, and falling costs. “We expect there to be a relatively, strong continuing build of renewables over the next several years regardless of what happens with the CPP,” Ethan Zindler, a senior analyst with Bloomberg New Energy Finance, tells Axios.
So what happens next? As Axios points out simply: a whole lot of “bureaucracy and lawsuits.”
- Some of the policies that the order targets, such as the White House guidance on factoring climate change into National Environmental Policy Act reviews, can be largely undone pretty fast.
- But final regulations like the Clean Power Plan will take a long time, perhaps years, to formally unwind under the detailed requirements of administrative procedure. Look for environmental groups to battle the outcome in court.
Meanwhile environmental groups are already out promising long, expensive court battles.
“These actions are an assault on American values and they endanger the health, safety and prosperity of every American,” said billionaire environmental activist Tom Steyer, the head of activist group NextGen Climate.
Green group Earthjustice said it will fight the order both in and out of court. “This order ignores the law and scientific reality,” said the group’s president Trip Van Noppen.
The end of a long journey from 2012 from Trump…
The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.
— Donald J. Trump (@realDonaldTrump) November 6, 2012