Donald Trump has begun his second presidency by making some sweeping reforms that have the potential to impact the global resources sector and energy transition.
One of his first acts was to levy tariffs of 25% on Canada and Mexico and 10% on China. According to the Mining Association of Canada, 52% of the country’s mineral exports are to the US. The tariffs have the potential to disrupt supply chains for critical and essential minerals in the energy transition. These supply chains are already struggling with potential shortfalls and may now also become even more expensive. Some industries have sought exemptions from the tariffs resulting in a reduction of the tariff on energy resources from Canada to 10%, but whether other allowances will be made is yet to be seen. In addition, retaliation against the US may add to the uncertainty and instability of the existing supply chains.
President Trump also issued an Executive Order to withdraw the Outer Continental Shelf from new or renewed wind energy leases. Government agencies are also not able to approve any new leases, rights of way, permits, leases or loans for onshore or offshore wind projects until a comprehensive review of federal wind leasing and permit practices has been completed. The Department of Interior Secretary must also review the ecological, economic and environmental necessity of terminating or amending any existing wind energy leases and identify any legal basis for their removal. Existing offshore wind leases will remain valid, but they are now at risk of termination or amendment. No timeline has been put in place for the required reviews to be completed leaving potential developments uncertain.
Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act 2022 were also revoked by an Executive Order. This included the establishment of the White House Office on Clean Energy Innovation and Implementation and directions for federal agencies to prioritise the construction of clean energy generation, storage and transmission. The Executive Order also pauses the distribution of funding from the Inflation Reduction Act supporting programs, projects or activities that may be implicated by policy concerns in the Executive Order pending reports on each agency’s processes and policies for each disbursing funds. In addition, President Biden’s electric vehicle mandate has come to an end and funding for electric vehicle charging stations paused.
A national energy emergency was also declared. This directs federal agencies to boost production of traditional energy including crude oil, natural gas and coal. The United States has also again withdrawn from a range of international climate agreements including the Paris Agreement. It is also believed that Trump has issued a memorandum to halt all pending environmental litigation. The impact of these orders on other energy initiatives is yet to be determined.
President Trump has also installed his choices to lead existing government agencies including Lee Zeldin, a former Republican Congressman, as the head of the Environmental Protection Agency and Chris Wright, a former CEO of Liberty Energy Inc to lead the Department of Energy.
It is expected that there will be further changes impacting the sector in the future, but we will have to wait and see what they include.