The Trends, Effectiveness and Impacts of the Energy and Climate Policies of the Trump administration

Summary: The strategic motivation of the Trump administration's policy of vigorously developing fossil energy is to reduce the energy costs and inflation in the United States, attract manufacturing industries to return, lower the living costs of residents, provide sufficient power support for the artificial intelligence industry, and consolidate the United States' dominant position in energy through encouraging the export of fossil energy. The Trump administration's energy and climate policy will increase global oil and gas supply, consolidate the United States' dominant position in energy, and hinder the development of renewable energy. The Trump administration's energy policy presents both opportunities and challenges for China. The opportunity lies in promoting the diversification of China's energy import channels and enhancing China's negotiating power; the challenge is manifested in the rising geopolitical risks of crude oil imports, greater resistance to trade and investment cooperation in renewable energy between China and the United States, and intensified competition and in key mineral fields for energy transformation between China and the United States.

After being re-elected as the president of the United States, Trump's campaign slogan was "Make America Great Again", and achieving this goal requires "bringing manufacturing back to the United States". Regardless of the outcome, his series of policy propositions in the economic field seem to be logically consistent: in foreign trade, by increasing the import tariff rate, weakening the competitiveness of foreign products; in energy issues, by increasing the production of fossil energy, lowering domestic energy prices, and increasing the energy cost advantage for enterprises; in environmental issues, by withdrawing from the Paris Agreement again to relax environmental regulations and increase the environmental cost advantage for enterprises. Trump seems to always focus on the "cost" issue, attempting to create another comparative advantage through policy means to achieve manufacturing return and increase American job opportunities. Trump sees no environmental issues, only cost issues, which is the logical starting point of all the policies of the Trump administration.

From the perspective of Trump's first term, the Trump in the office and the Trump in the campaign have no essential difference. Based on his campaign platform, public statements, and the initial actions of his second term, it is possible to roughly judge the trend of future energy and environmental policies in the United States. However, Trump's consistent style of action is "taking the best, getting the middle". His promises and propositions may not be fully "implemented". The series of executive orders issued by the Trump administration repeatedly invoke "emergency powers", but many policies still need to be formally formulated in accordance with the Administrative Procedure Act, inevitably triggering a large number of lawsuits, which adds more uncertainty to the future market. The final outcome of the game will depend on the attitude of the Republicans on energy and environmental issues, the economic interests of Republican constituencies, countermeasures from other countries against the United States, and whether the policies conform to market laws and other real constraints. These constraints undoubtedly will affect the effectiveness of the Trump administration's energy and climate policies. It is certain that although there will be a gap between Trump's "goals" and "results", his policies hide his strategic intentions and containment of China's development. Therefore, it is necessary to predict Trump's next move and make corresponding responses accordingly.

 I. Trends in Energy and Climate Policies of the Trump Administration

The Trump administration, through measures such as declaring a national energy emergency, issuing the "Release American Energy" executive order, establishing the National Energy Leadership Council, simplifying the approval process and relaxing regulations, encouraged investment and development of fossil energy in the United States and its export, providing low-cost electricity for the country's manufacturing and artificial intelligence industries. At the same time, it opposed the climate agenda of the Biden administration, partially withdrew support policies for renewable energy and electric vehicles, reduced subsidies for new energy, withdrew from the Paris Agreement, and cut international climate financing. These actions reflect the overall energy and environmental framework and policy trends of the Trump administration over the next four years.

 (1) Dominance of Fossil Fuels

During his campaign, Trump consistently emphasized the need to "return" to the dominance of fossil fuels, criticizing the Biden administration for "wastefully" depleting strategic petroleum reserves, and claiming that "renewable energy is unreliable" and "costly, driving up inflation". This proposition was continued and strengthened in the Trump 2.0 era.

For different fossil fuels, the specific action directions of the Trump administration are as follows: First, increase oil production and development efforts. Trump vowed to increase domestic oil production in the United States, refill the strategic petroleum reserve, and claim that by increasing oil production, the oil price could be halved. Additionally, Trump hoped to make the United States the world's main energy producer and break away from reliance on foreign fuels. Second, restart the approval of liquefied natural gas exports. The Biden administration suspended the approval of liquefied natural gas exports, and during his campaign, Trump promised to revoke the Biden administration's decision. After taking office, Trump fulfilled his promise and through the "Release American Energy" executive order, restarted the export of liquefied natural gas from the United States. Moreover, Trump also planned to simplify the approval process for new oil and gas infrastructure projects, such as accelerating the approval of natural gas pipelines. The Trump administration mainly focused on two aspects: increasing infrastructure construction and relaxing administrative regulations to encourage and expand the export of liquefied natural gas from the United States. Third, open more federal lands for oil and gas exploration. During his campaign, Trump promised to increase the supply of federal lands, increase the frequency of auctions, and accelerate the approval process through measures such as expanding the supply of federal lands. The "Release American Energy" executive order also mentioned that the government would promote energy development in Alaska and lift restrictions on the development of some wildlife reserves. Between environmental protection and economic interests, Trump clearly chose the latter again. Fourth, attach importance to the development of the coal industry. Besides oil and gas, Trump also publicly expressed his emphasis on the coal industry on social media. He believed that the U.S. coal industry had been "controlled by environmental extremists, lunatics, radicals, and thugs" for many years, allowing other countries to gain greater economic advantages by building more coal-fired power plants. Although no clear policies have been introduced yet, coal has undoubtedly been included in the "Release American Energy" category by the Trump administration. Fifth, accelerate energy structure transformation through relaxed regulation. Trump claimed to significantly reduce consumer energy costs, promised to abolish energy efficiency standards for household appliances and vehicle energy efficiency regulations, planned to revoke mandatory regulations on fuel and emission standards, and at the same time provide tax breaks for the oil, gas, and coal industries. It is foreseeable that in his second term, Trump will further relax energy environmental regulations to accelerate the realization of his "dominance of fossil fuels" goal.

(2) Elevating key minerals to the level of national security

Key minerals are essential components of wind turbines, solar panels, electric vehicle batteries, and electric motors. Several key minerals bills have received bipartisan support. Among them, the "Inflation Reduction Act" passed during the Biden administration also established detailed intervention or restriction measures for "key minerals" required for new energy. From Trump's recent actions, it can be seen that he has no intention of overturning the constraints on key minerals in the "Inflation Reduction Act". Even on this basis, the "Release American Energy" executive order further elevated key minerals to the level of national security. This executive order particularly emphasized that "the United States Trade Representative, as well as the Department of Commerce, Department of Defense, and Department of Homeland Security, must review whether foreign government-funded mineral projects violate U.S. laws or harm U.S. business, and whether the reliance on mineral imports poses a threat to national security. The Department of Defense must also further assess its inventory of key minerals for energy transformation and formulate plans to ensure adequate supply in the event of trade disruptions. The U.S. Geological Survey must consider whether to update its list of key minerals, including uranium". The Trump administration believed that the United States needed reliable, diverse, and reasonably priced energy supplies to promote the development of its manufacturing, transportation, agriculture, and defense industries, and to meet the basic needs of modern life and military equipment.

(3) Withdraw most of the renewable energy support policies of the Biden administration

Trump opposed most of the clean energy policies, claiming that renewable energy was unreliable and costly. He called the Biden administration's power policy "killing the industry, killing jobs, pro-Chinese and anti-American". It can be predicted that the Trump administration will withdraw a large number of regulations, and the energy emergency status is just the beginning of this process. However, Trump did not hold a completely negative attitude towards renewable energy. He only opposed wind energy and solar energy, but supported nuclear energy and geothermal energy development. After taking office, he quickly took action, announcing the suspension of offshore wind energy leasing in all areas of the continental shelf and claiming to review the federal government's wind power projects. On the other hand, nuclear energy, a low-carbon energy source, received widespread support from both parties of the US government. The Trump administration's stance on nuclear energy was similar to that of the Biden administration, supporting the continuation of existing nuclear reactors and the development of small modular reactors. The Inflation Reduction Act passed during the Biden administration was the largest climate and energy investment plan in US history, with an estimated investment of 369 billion US dollars for clean energy and renewable energy production, carbon reduction, and tax incentives for individuals and families for energy efficiency renovations. Trump strongly opposed the Inflation Reduction Act, arguing that this law and other measures related to climate change restricted energy development and increased costs. Trump returned to office and demanded that all government agencies immediately suspend the relevant funding of the Inflation Reduction Act, including the financial grants related to the "Electric Vehicle Mandate" and the green funds in the Inflation Reduction Act. Trump emphasized that the US interests should be placed first in international environmental agreements, claiming to withdraw from the Paris Agreement, withdraw from any other agreements reached under the United Nations Framework Convention on Climate Change, withdraw any financial commitments under the United Nations Framework Convention on Climate Change, and withdraw the US international climate financing plan. This move will make the US no longer participate in global climate negotiations and make it more difficult for future US governments to rejoin the Paris Agreement. The Paris Agreement is an administrative regulation, and withdrawal does not require Senate approval. The United Nations Framework Convention on Climate Change is a treaty approved by the Senate (with a two-thirds majority vote). If Trump wants to withdraw from the United Nations Framework Convention on Climate Change, he must also obtain Senate approval.

(4) Establish a national energy dominance council to promote fossil energy development

The newly established National Energy Dominance Council is led by Interior Secretary Bergum, with Energy Secretary Wright as the deputy. The new council will provide specific policy recommendations to Trump, coordinate the energy policies of federal agencies, and simplify the licensing, production, and wholesale of oil, natural gas, electricity, and other energy resources. Trump will restructure federal government agencies and dissolve or cancel the specific budgets, personnel, and plans of environmental protection-related institutions. In the future, the National Oceanic and Atmospheric Administration and the Environmental Protection Agency, among others, will become the special targets of government efficiency departments due to their work in climate change and extensive regulatory policies. At the same time, Trump vowed to promote energy development through reforming the approval process, and in his campaign, he said he would "eliminate all red tape that has stalled oil and gas projects, including speeding up the approval of natural gas pipelines to Pennsylvania, West Virginia, and Marcellus Shale area in New York State", and "stop the senseless lawsuits initiated by environmental extremists. The Trump administration may simplify the approval process for these projects through amendments to the National Environmental Policy Act."

II. The strategic plan of the Trump administration to vigorously develop the fossil energy industry

The strategic motivation of the Trump administration to vigorously develop the fossil energy industry is twofold. On one hand, it aims to reduce the energy costs and inflation in the United States, attract manufacturing industries to return, provide sufficient power support for the artificial intelligence industry, and counteract the inflationary effect of tariffs, thereby reducing the cost of residents' living. On the other hand, it encourages the export of fossil energy and consolidates the dominant position of the United States in energy while reducing the fiscal deficit by cutting subsidies for new energy.

First, fulfill the campaign promise and promote the return of manufacturing to the United States. The cost of using new energy in the United States is much higher than that of fossil energy and nuclear energy. The gross power generation cost of solar energy and natural gas is nearly five times that of natural gas. The increase in energy prices has led to an increase in daily living expenses and transportation costs for residents, as well as an increase in production costs for enterprises, weakening residents' consumption capacity and enterprises' willingness to expand investment. The increase in energy costs will also partially offset the effect of Trump's tax reduction policy, which is not conducive to attracting large enterprises to return and re-industrialization in the United States. Therefore, an important goal of "releasing American energy" is to reduce energy costs and attract the return of manufacturing jobs. The Trump administration believes that relaxing restrictions on the development of fossil energy will have a significant promoting effect on the US economy and employment. It is expected that the United States can create an additional $100 billion in GDP and 500,000 industrial jobs each year in the next 7 years, and workers' income will increase by $30 billion annually.

Second, counteract the domestic inflationary pressure caused by tariff policies. The Trump administration's actions on tariffs will not stop. The trade friction between the United States and China, the European Union will continue for the next four years. Tariff barriers create a price advantage for American products while also inevitably pushing up domestic prices in the United States. Therefore, Trump urgently needs to counteract the inflationary pressure caused by tariffs through another means. At this time, releasing energy production capacity and lowering domestic energy prices becomes an inevitable choice. Trump claims to increase tax incentives for the shale oil and gas industry, halve oil prices by increasing oil production, and plan to increase US daily oil and gas production by 3 million barrels of oil equivalent. Whether this goal can be achieved or not, reducing energy costs is a natural choice to offset the cost of tariffs.

Third, cut subsidies for new energy to reduce the government's fiscal burden. One negative effect of the Biden administration's clean energy policy is that the cost of government subsidies for new energy is too high. The new energy industry has received far more subsidies than conventional energy. The unit power generation subsidy for new energy is hundreds of times that of conventional energy, and the unit power generation subsidy for solar energy is 375 times that of coal. Against the backdrop of tax cuts and increased infrastructure investment, the Trump administration significantly reduced subsidies for the development of new energy, aiming to reduce the US fiscal burden.

Fourth, accelerate the realization of energy independence and energy dominance. Trump criticized the Biden administration's clean energy policies, claiming that they led to the loss of energy dominance in the United States. During his campaign, he promised to refill the strategic petroleum reserves of the United States and hoped to make the United States the world's leading energy producer, thereby significantly reducing its reliance on foreign energy. Energy independence and energy dominance were the primary goals of the Trump administration's energy policy. Based on energy independence, Trump also set the goal of energy dominance, hoping to leverage the United States' fossil energy endowment advantages to strengthen its leadership in global energy and turn energy into a new pillar of the United States' economic hegemony. Through expanding oil and gas exports, the Trump administration aimed to obtain new wealth and power. The specific plan was to increase oil and gas production, enhance the energy export capacity while maintaining the United States' energy advantages, and use it as an important means to achieve economic benefits and geopolitical goals. The Trump administration encouraged investment in oil and gas infrastructure, regarded energy exports as an important engine for economic growth and job creation in the United States, and further consolidated the United States' dominant position in the global oil supply pattern.

Fifth, seize the market opportunity in the field of artificial intelligence. With the rapid development of AI data centers, the electricity demand in the United States is also constantly increasing, but the limited power supply capacity of the United States has become a bottleneck. Under this background, the Trump administration announced the establishment of the National Energy Dominance Council to promote power development, in order to help the United States win the AI competition over China. After taking office, Trump clearly stated that he would supply power for all AI data centers in the United States, and at least needed to double the current power capacity. It is predicted that the annual energy consumption of American data centers may range from 74 gigawatt-hours to 132 gigawatt-hours, equivalent to 6.7% to 12% of the United States' total electricity consumption. Therefore, providing low-cost electricity for AI is also one of the goals of Trump's energy policy. The Trump administration announced that it would accelerate the approval process for power plants through a national energy emergency declaration and suggested that power plants use coal as an emergency backup power source.

III. Evaluation of the Effectiveness of the Trump Administration's Energy and Climate Policies

With the advantage of the Republican Party's control of the Congress, the Trump administration had the opportunity to implement all of its energy and environmental policy proposals during its second term, such as supporting domestic fossil fuel production and opposing the environmental and climate agenda of the Biden administration, and these policies would be combined with significant relaxation of federal regulations and reduction of fiscal expenditures. The challenges that the Trump administration's energy and climate policies might face include market reactions, effective utilization of executive power, maintaining the unity of the Republican Party in legislation, and resolving policy differences between the White House and the Republican members of Congress.

First, the Trump administration's policies had a limited impact on the production and prices of oil and gas in the United States. Relaxing regulations and encouraging exploration would clearly help increase the production of oil and gas in the United States. The U.S. Energy Information Administration's report released in March 2025 raised the forecast value of U.S. oil production in 2025 to 13.61 million barrels per day, an increase of 200,000 barrels per day compared to the previous month. However, oil and gas companies are private enterprises, and the oil and gas market is a highly competitive market. Although the U.S. president can influence the market and change the expectations and investment behaviors of energy companies, he cannot directly intervene in the oil and gas production decisions of energy companies. U.S. oil and gas companies are usually price takers, increasing production when prices rise and reducing production when prices fall. Moreover, the short-term supply elasticity of oil and gas is small, and oil and gas companies usually operate at full capacity, subject to capacity constraints. An increase in oil prices does not immediately lead to an increase in production but requires additional investment in drilling and other equipment, which takes at least one or two years. The policy changes of the Trump administration in energy and the environment did indeed make it easier and less costly for oil exploration in the United States, but this does not guarantee a significant increase in oil production. Because the United States' oil production is already at a historical high, global oil demand has stagnated due to Trump's tariffs, and if U.S. oil production significantly increases, it will lead to a significant drop in oil prices, which is not conducive to the interests of oil companies and thus makes energy companies lack the motivation to increase production. Therefore, Trump's claimed targets of increasing oil production and halving prices are difficult to achieve. Additionally, U.S. local governments have significant influence over the investment decisions and development directions of the fossil and renewable energy industries in the United States, especially in some states of the Democratic Party's governance, which will form a certain counterbalance to Trump's energy and climate policies. For example, although Trump was relentless in supporting the development of fossil energy during his first term, the carbon emissions in the United States still showed a continuous downward trend; the Biden administration attempted to accelerate the transition to clean energy, but during his term, U.S. oil production reached a new high.

Second, the Trump administration's energy and environmental policies have potential conflicts with the mainstream policy positions of the Republican Party. The mainstream policy position of the Republican Party on energy is to adopt an "all-round energy" policy. The so-called "all-round energy" refers to a series of policies supporting oil and gas and all other domestic energy forms (including solar energy, wind energy, geothermal energy, and nuclear energy). However, after taking office, Trump excluded solar and wind energy from the energy category, which conflicts with the mainstream policy position of the Republican Party. Moreover, many Republican members of Congress expressed support for the Biden administration's policy initiatives on renewable energy and clean technology, as they brought economic benefits to their constituencies. For example, wind and solar energy have become large industries in red states such as Texas, Oklahoma, and North Dakota, which to some extent changed their political positions. This potential conflict may affect the future direction of U.S. energy and environmental policies. It can be predicted that the provisions in the Inflation Reduction Act and the Infrastructure Investment and Jobs Act that benefit Republican states are likely to be retained. 

Thirdly, the energy and climate policies of the Trump administration will trigger numerous lawsuits within the United States. During his campaign, Trump vowed to restart his aggressive deregulation campaign. According to Trump's style of governance during his first term, he will still take astonishing actions both domestically and internationally in the second term, thereby causing legal disputes. For instance, can the president, without the action of Congress, require independent federal regulatory agencies such as the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission to modify the relevant provisions of the National Environmental Policy Act? Although the Republicans hold a majority in both the House and the Senate, it is by no means easy to simply revoke or amend existing laws. Firstly, to abolish the law requires a majority vote in both the House and the Senate. Secondly, modifying the law also involves mechanisms within the legal framework. Amending or abolishing existing regulations requires following the Administrative Procedure Act. Usually, the process of revoking a regulation must be consistent with its establishment process. If a regulation is established through the notice and comment process, then the agency needs to follow the same lengthy process. According to the established procedure, stakeholders need to participate, information collection and technical analysis are required, and it may take several years to complete. This uncertainty will obviously undermine the Trump administration's energy and environmental policies.

IV. The Impact of the Trump Administration's Energy and Climate Policies

The energy and climate policies of the Trump administration will undoubtedly increase the oil and gas production in the United States and consolidate the country's dominant position in the global fossil energy supply pattern. However, its negative attitude towards developing clean energy and addressing climate change will be detrimental to the development of the US's new energy industry, weaken the US's leadership in climate change issues, and increase the divergence between Europe and the US on energy transformation and carbon tariffs.

First, it strengthens the US's dominant position in oil and gas. The impact of the Trump administration's energy strategy on the global energy landscape mainly lies in: increasing oil and gas production and exports, enhancing the US's energy advantage, and further consolidating the US's dominant position in the global oil and gas supply pattern.

Second, it hinders the development of the US's new energy industry. This is reflected in: Firstly, due to political interference, the US government often lacks long-term stability and continuity when formulating clean energy policies. Changes in political parties and presidential replacements bring great uncertainty to the development of the US's new energy industry, and policy changes often lead to the stagnation or slowdown of the clean energy industry. Secondly, Trump does not consider climate issues but only costs. Only when the costs of decarbonization-related clean technologies significantly decrease and their performance is significantly improved, will Trump consider carbon reduction-related technologies. During his second term, he may encourage the development of those new technologies with high export potential, such as battery storage, carbon capture and storage, advanced nuclear reactors, and enhanced geothermal systems. Thirdly, it restricts the development of electric vehicles. Trump explicitly stated during his campaign that he would overturn the "Electric Vehicle Mandate" of the Biden administration. Currently, the financial grants related to the "Electric Vehicle Mandate" have been suspended, which will inevitably weaken the environmental advantages of new energy vehicles and thus affect consumers' choice of new energy vehicles.

Third, it weakens the US's international leadership in climate change. The core of the Biden administration's new energy policy is to vigorously develop clean energy and attempt to reshape the global leadership of clean energy. However, Trump has always been skeptical of climate issues and considers them a "conspiracy". Recently, the White House announced the withdrawal from the Paris Agreement and any other agreements and financial commitments reached under the framework of the United Nations Framework Convention on Climate Change, indicating that the US no longer has authority in global climate issues.

Fourth, the trade friction between the US and Europe over carbon tax issues has intensified. The EU's carbon border adjustment mechanism (CBAM) is set to come into effect in 2025. The EU may impose carbon taxes on US products based on the carbon border adjustment mechanism, unless these products have already been taxed the same carbon tax in the US. This will put pressure on the US to reach a "carbon price" agreement and may exacerbate the trade friction between the US and Europe. If the US does not reach an agreement with Europe, its products exported to the EU and the UK will face the risk of being subject to tariffs.

V. The Impact of the Trump Administration's Energy and Climate Policies on China

The policies of the Trump administration, which encourage fossil energy and suppress the development of renewable energy, present both opportunities and challenges for China. On one hand, as the largest energy importer, the explosive growth in shale oil and gas production and exports in the United States will help increase global oil and gas supply, promote the diversification of China's energy import channels, and enhance China's negotiating power. On the other hand, the strengthening of the United States' crude oil export sanctions against Iran and Venezuela poses a threat to China's crude oil import security. At the same time, the trade and investment cooperation between China and the United States in the field of renewable energy will face greater resistance, and the competition in the key mineral fields for energy transformation will intensify.

First, it is conducive to promoting the diversification of China's oil and gas import channels and enhancing China's bargaining power in the global oil and gas market. Second, it increases the geopolitical risks of oil and gas and key mineral imports, and climate cooperation will be difficult to play a role in buffering the relationship between China and the United States. Third, it will exacerbate the competition and conflict in key mineral fields for energy transformation. Fourth, the export of clean energy products to the United States will face greater resistance. Fifth, the investment of electric vehicle enterprises in the United States is subject to multiple uncertainties.(Author: Lu Yang, Researcher at the Institute of World Economics and Politics, CASS; Wang Yongzhong, Researcher at the Institute of World Economics and Politics, CASS)

（AI translation, with some omissions）