Late last month, President Trump signed an Executive Order (EO) directing all executive departments and agencies to “immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.” The EO goes on to further define “domestic energy resources” as oil, natural gas, coal, and nuclear energy resources.

Key Details

• The EO named several regulations that were created during the previous administration that should be immediately reviewed, including the Clean Power Plan, the Federal Land Coal Leasing Moratorium, and several regulations on domestic oil and gas production (specifically relating to the use of hydraulic fracturing techniques on federal and Native American land)
• The EO also disbanded the Interagency Working Group on Social Cost of Greenhouse Gases and stated that any documents and/or work papers created by the group “shall be withdrawn as no longer representative of government policy”
• Heads of executive agencies will be responsible for developing and finalizing a report with specific recommendations that “could alleviate or eliminate aspects of agency actions that burden domestic energy production” within 180 days of the order

Implications

Though the EO signed by the President fulfills one of his campaign promises to rescind regulations on the energy sector that he believes are “overly burdensome and impact job creation,” the electricity industry is expected to continue down the path toward decarbonization. According to a Utility Dive survey conducted in early 2017, “utilities expect to source more power from renewables, distributed resources, and natural gas in the coming years, while coal will continue to decline.” Though there is still much uncertainty about what the EO will mean for the domestic energy sector, one likely outcome is that whatever actions are taken by the current administration will be challenged in the courts. These challenges will add another layer of policy uncertainty on an industry that relies upon a stable policy environment when making capital investment decisions.

More information:

The White House: Presidential Executive Order on Promoting Energy Independence and Economic Growth

Utility Dive: Why utilities don’t think Trump will stop the clean energy transition

The Wall Street Journal: Despite Trump Move on Climate Change, Utilities’ Shift from Coal Is Set to Continue

This report is part of ScottMadden’s Regulatory Minute series. To view all featured Regulatory Minutes, please click here.

Additional Contributing Author: Rizwan Aslam