Energy Liberation day??

On a SNOW day in Texas, the snow is settling on the next 4 years of US Administration.

One major rule I abide by in life is to never engage in debates around politics. I quite frankly cannot see how ‘arguments’ at a very local level can impact or change anything other than causing upset and ill feeling. So in this spirit and with the phrase ‘it is what it is’, I thought I would tread a fine line and muse about the impacts that may be over the coming 4 years.

I am PRO Energy, I believe we need a mix of energy sources in order to keep humanity moving forward over the coming years and quite honestly am extremely bullish about the opportunities going forward, specifically in this space. It is a fact that due to the general long term nature of projects to both extract or exploit natural resources, companies cannot and should not be thinking quarterly or even in line with political cycles. This said, whilst one USA administration will remove roadblocks, others will place them in the way therefore we all must have a slice of realism when we start to think about the shape of the industry over the coming years.

The new administration’s approach emphasizes the expansion of fossil fuel production and a rollback of previous climate initiatives, that I believe is well stated and reported however is this all bad for humanity?

Firstly Fossil Fuels….

On his first day in office, President Trump declared a national energy emergency aimed at substantially increasing oil and gas production. This initiative is designed to provide Americans with lower heating and fuel costs and includes plans to export American energy globally, with a particular focus on Alaska. Trump criticised the European Union for unequal trade practices and suggested the implementation of tariffs to promote American energy exports. I come back to something I have long thought….this is a play to unlock LNG to the world and therefore bring revenue back into the USA, this is all about GAS.

One question that remains unanswered is the impact this will have on global oil and gas pricing as a lot of commentators and energy CEO’s are starting to talk about a ‘surplus’ market which will you would think drive global prices down….will be interesting to see how other global energy powers react to this, I hope we are not returning to the era of low Brent and WTI prices as right now I think we are in a sweet place.

Next Regulatory Changes and Climate Agreements….

In alignment with his focus on fossil fuels, President Trump signed an executive order halting offshore wind lease sales in federal waters and pausing permits for both onshore and offshore wind projects. The order directs the Interior Secretary to review the environmental, economic, and subsidy impacts of these projects, aiming to bolster fossil fuel development and reduce energy costs. This move contrasts sharply with the previous administration’s efforts to promote renewable energy as a climate solution.

Let’s maybe unpack this a little further…..this is all about value for money I think. Current governmental support for renewables is at an all time high (I think) and as it relates to energy pricing, is the consumer, when taking into account the tax advantages and subsidies placed on renewable sources, getting a good deal? If so then crack on, if not, maybe this forces innovation and different thinking to drive the economics harder? Maybe we are seeing a wind back in the UK with the now government all in on offshore wind but now ‘consulting’ with the oil and gas industry. This could be one of two things….political pressure from the US or maybe just a realisation that a mix is needed??

I have long said to numerous people that the Energy Transition is an economic problem. How can we drive a mix of energy at lower costs or comparable costs to what we have today?

Additionally, President Trump announced the withdrawal (again) of the United States from the 2015 Paris climate agreement, isolating the country from global efforts to combat climate change.

Does this mean that the USA is abandoning its drive for a cleaner molecule? I don’t think so, back to an earlier comment, I think it just focuses the attention on return on investment. For example, if we leak methane (natural gas) to the atmosphere, why would you not focus on keeping it in the system? Therefore how can we economically replace infrastructure to prevent this?

Finally, Implications for the Energy Transition

Despite the federal shift toward fossil fuels, the momentum for renewable energy continues. In 2024, solar photovoltaic installations increased by 35%, wind installations by 5%, energy storage installations by 76%, and electric vehicle sales by 26%. These trends indicate a robust clean energy sector that may persist irrespective of federal policies.

State governments are also expected to play a crucial role in advancing renewable energy initiatives. With the federal government’s focus shifting, states may need to take up the mantle of moving the country forward on renewable energy, electric transportation, and related issues. This dynamic mirrors previous periods when state-level actions were pivotal in driving clean energy progress.

So, the new U.S. administration’s policies represent a significant pivot from prior climate and energy strategies, emphasizing fossil fuel development and scaling back renewable energy initiatives. While these changes may slow the national energy transition, ongoing advancements in clean energy technologies and proactive state policies could sustain progress toward a more sustainable energy future.

Thoughts?

John