Climate Policy Under Trump
The impact of Trump on domestic and global climate policy and private investment
As I write this, COP29 is convening in Baku, Azerbaijan, where the delegations are focused on the goal of developed countries contributing billions to trillions of dollars to developing countries’ climate transitions each year. Since the US has emitted more than any other country and is the highest per-capita emitter in the world, it should take the lead on global climate goals and commitments like this one. However, Trump’s upcoming presidency reduces the US’s credibility on climate and is a major setback in the progress of climate policy.
Climate Policy Under Trump’s First Term
During his first term, Trump reversed over 100 climate rules and regulations.
Trump replaced the Clean Power plan, which aimed to reduce GHG emissions from power plants by 32% by 2030, with the Affordable Clean Energy rule, which aimed to reduce GHG emissions from power plants by only 1% by 2030.
Trump reduced fuel economy improvement from 5% to 1.5% for 2021-2026 and revoked California’s ability to set its own standards.
Trump reduced regulation for venting, flaring, and reporting methane emissions in oil and gas production.
Trump provided permits for oil and gas exploration in the Arctic National Wildlife Refuge, national monuments, and coastal areas. He also approved the Keystone XL, Dakota Access, and Atlantic Coast pipelines.
Trump amended the National Environmental Policy Act to limit climate considerations in environmental reviews, shorten reviews to 2 years, and exempt certain projects from review.
Climate Policy Under Trump’s Upcoming Term
Biden has done more for climate than any other US president, with policies including the Bipartisan Infrastructure Law, CHIPS and Science Act, and Inflation Reduction Act. He set a new national goal to cut US carbon emissions by 50% by 2030 from 2005 levels and his policies set the US on track to reduce emissions by 40% by 2030.
Trump’s plans could add 4B more tons of carbon emissions by 2030 compared to Biden’s plans. This increase in emissions is the equivalent of the annual emissions of the EU and Japan combined, and it would cause climate damages worth over $900B.
The Bipartisan Infrastructure Law and the CHIPS and Science Act are unlikely to be repealed since infrastructure and semiconductors support the US economy and security.
Although Trump has tried to distance himself from Project 2025, it calls for a total dismantling of environmental policy, including of the National Weather Service, Federal Emergency Management Agency, and National Oceanic and Atmospheric Administration. Trump may also turn the Department of Energy back into an agency focused on supporting fossil fuel companies.
As well as reinstating policies from his first term, Trump plans to limit the EPA and the IRA and to withdraw from international climate agreements.
Environmental Protection Agency (EPA)
Since Trump’s last term, the Supreme Court overturned the Chevron doctrine, which required courts to uphold a federal agency’s reasonable interpretation of a statute when Congress had not directly addressed the issue. This decision limits the ability of agencies like the EPA to create environmental rules and regulations.
This week, Trump appointed Lee Zeldin to head the EPA. Zeldin, unlike Trump’s previous appointment, does not have a history in the fossil fuel industry, but he is a supporter of Trump’s plans to reduce regulation on emissions limits for cars and trucks as well as on the production of oil, gas, and coal. Although coal was competitive in Trump’s last term, it is no longer economically competitive compared to natural gas and most renewable energy sources. Zeldin backs approving more drilling, pipelines, refineries, power plants, reactors, and mineral extraction.
Inflation Reduction Act (IRA)
The IRA, which was passed in 2022, allocates over $370B in tax credits, grants, and other incentives to promote clean energy over 10 years. Congress needs to vote to repeal or amend the IRA.
Around 80% of the funds from the IRA have gone to Republican congressional districts, and some sectors like nuclear, carbon capture and storage, and domestic manufacturing credits have bipartisan support. Therefore, it is unlikely to be repealed, but some parts of it may be amended.
Tax credits for EVs ($7,500 off the cost of electric cars and trucks) expire by next year and Congress may not extend them, although Elon Musk’s close tie to Trump may help extend them.
Fees on methane emissions from wells, processing plants, and pipelines when they exceed certain thresholds may be removed.
Environmental justice grants and tax credits for projects that reduce pollution, provide affordable clean energy, and create jobs in low-income areas may be removed.
The reinstated Superfund excise tax on crude oil and petroleum products, which helps fund the cleanup of hazardous waste sites, may be removed.
Tax credits for solar panels, heat pumps, and energy efficiency projects may be removed.
International Climate Agreements
Trump will likely withdraw from the Paris Agreement, but he may also withdraw the US from the UN Framework Convention on Climate Change, the international body that created the Paris Agreement. This would be much more disruptive since rejoining could be challenging.
This week, the CEO of Exxon, Darren Woods, called on Trump not to leave the Paris Agreement.
Trump may also try to withdraw from the Kigali Amendment to the Montreal Protocol that seeks to reduce the production of hydrofluorocarbons, which are potent GHGs.
Without the US, China and the EU will likely take over as the main hubs for climate tech and policy. China has been building a clean energy industry for that last decade, and Trump’s plans will boost China’s clean energy exports and geopolitical power. Although Trump’s proposed blanket tariffs on Chinese imports will hurt China, China can export its products elsewhere.
To stop investing in renewable energy would create energy security risks in the US and strengthen countries like Iran, Russia, and Venezuela. For developing countries like Brazil and Nigeria, the focus on renewable energy projects may weaken, while oil and gas producers continue to prioritize oil and gas. In Latin America, far-right leaders may disregard environmental protection for resource exploitation, as seen in Brazil with Bolsonaro in 2018, who weakened environmental laws and allowed record-high deforestation in the Amazon.
Impact on State Policy
While the federal government’s climate policy weakens, the state governments will play key roles in strengthening it.
California
In California, the Advanced Clean Cars II regulations mandate that all new passenger cars and trucks sold in California be zero emissions by 2035.
The two largest pension funds in the US, The California Public Employees' Retirement System and the California State Teachers' Retirement System, managing $810B in total, aim to have net-zero portfolios by 2040.
California created a $10B bond for climate projects and aims to be carbon neutral by 2045.
Washington State
In Washington State, the Climate Commitment Act caps emissions from polluters and uses the funds for clean energy and environmental justice projects.
Washington State aims to be carbon neutral by 2050.
New York
New York aims for 70% renewable energy by 2030 and zero-emissions by 2040.
Northeast
The Regional Greenhouse Gas Initiative (RGGI) is a cap-and-trade system for states in the Northeast. It caps fossil fuel power plants 25MW or larger, and the cap decreases over time. The funds from the caps are used on clean energy projects. Between 2009 and 2020, the RGGI states reduced power sector emissions by over 45%.
Impact on Private Investment
With energy demand increases due to AI, companies like Microsoft, Amazon, and Google are investing in renewable energy, including solar and nuclear power.
The EU requires companies to disclose their Scope 1, 2, and 3 emissions, so US companies with operations in the EU will have to disclose all of their emissions regardless of US rules. Also, with its ambitious climate goals and regulations, the EU will likely attract more climate tech startups.
Although climate regulation speeds up trends, the market will continue to push for the clean energy transition even without the regulation to support it. As clean energy and other climate tech become cheaper, consumers and businesses will prefer the greener options. However, there are no strong market forces for protecting nature, biodiversity, water, and land.
The future of climate policy in the US is uncertain, but throughout my experience working and speaking with people in the climate space, I am so energized by their commitment to solving this crisis, and I know we will rise with the challenge. Now is the best time to do our work.