By Jason Utton
As the 2024 presidential election approaches, the energy industry faces a period of uncertainty, with the outcome poised to shape the future of domestic energy policy and international relations. Whether the next administration prioritizes renewable energy, fossil fuels, or energy infrastructure, its decisions will have profound implications for the industry’s direction and the country’s role in the global energy landscape.
Possible impacts to fossil fuels and deregulation
The speed and direction of the energy industry will depend heavily on the election’s outcome. If Donald Trump is re-elected, expect a shift toward policies that favor fossil fuels, deregulation, and a focus on U.S. energy independence. Trump has been a vocal critic of climate initiatives and would likely pull the U.S. out of the Paris Agreement once again, while also aiming to reverse efforts like the Securities and Exchange Commission’s (SEC) push for corporate climate risk reporting. His administration would likely backtrack on domestic climate goals, prioritizing economic growth over emissions reductions.
A key pillar of Trump’s energy plan would be to expand drilling locations for natural gas on federal land and lift restrictions on liquefied natural gas (LNG) exports. He is also expected to pursue heavy tariffs on imports, particularly energy-related imports, which could trigger a trade war with key international partners. While such tariffs could boost domestic production, they also pose risks of increasing consumer costs and long-term volatility, particularly if major energy exporters retaliate.
Despite Trump’s ambitions to reshape energy policy, any substantial legislative changes would require bipartisan support. Divided government remains the most likely scenario, with projections showing the GOP likely to benefit from a favorable 2024 Senate map, while Democrats are expected to regain a narrow majority in the House. Even if Republicans secure control of Congress, sweeping changes – like a full rollback of the Inflation Reduction Act (IRA) –would be difficult to achieve without cross-party compromise due to the slim governing margins.
The Inflation Reduction Act: Strong bipartisan roots
Certain provisions within the IRA, such as tax credits for carbon capture and storage (45Q), hydrogen production (45V), clean fuel production (45Z), and manufacturing incentives (45X and 48C), have bipartisan support, particularly in rural and industrial communities. For example, most wind farms and solar facilities are in Republican-leaning rural districts, where these initiatives have created jobs and economic benefits. These factors make a complete repeal of the IRA unlikely, even under a second Trump administration.
If Kamala Harris is elected, her administration would likely continue the current trajectory set by the Biden administration, focusing on expanding clean energy initiatives and strengthening the implementation of the IRA. The Harris administration would prioritize distributing IRA funds to local communities, supporting renewable energy projects, and promoting grid modernization. However, even if Democrats win a governing trifecta, enacting sweeping changes requiring congressional action would likely result from intraparty compromises.
In contrast, a Trump administration would focus on leveraging domestic energy resources, such as expanding drilling and natural gas production, while also emphasizing trade policies that protect U.S. energy industries. This approach could create tension with global trade partners, potentially limiting international energy cooperation, but it would prioritize the expansion of U.S. energy dominance. Balancing these domestic opportunities with the risk of international isolationism would be a central challenge for a second Trump term.
The role of Congress: Bipartisan challenges ahead
Regardless of who occupies the White House, the makeup of Congress will play a significant role in in shaping energy policy. Experts believe that policy changes requiring congressional approval will hinge on bipartisan negotiation, driven by narrow governing margins.
One of the most pressing fiscal issues in 2025 will be the expiration of several tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) – approximately $5 trillion in tax cuts passed by President Trump. Extending these cuts will require substantial revenue offsets, and some lawmakers may argue for repealing portions of the IRA to cover the costs. However, such a move could face strong opposition from both Democrats and Republicans who support the job-creating provisions in the IRA.
As energy infrastructure projects require long-term investments and planning, a cooperative bipartisan approach will be critical to ensure progress continues amid political transitions.
Grid modernization: A shared priority
One area where both parties may find common ground is the need for significant improvements to the nation’s aging power grid. Over 70% of the U.S. grid is older than 25 years old, and as renewable energy projects come online and electricity demands rise, modernizing the grid will be crucial to meeting future energy needs. Upgrades will require building new transmission infrastructure, expanding interconnection capacity, and ensuring that renewable energy can be delivered efficiently to customers.
The growing role of datacenters, artificial intelligence, and advanced manufacturing will further drive electricity demand, adding urgency to the need for a more reliable and resilient grid. Both Republican and Democratic administrations recognize these challenges, and federal support will be essential to streamline permitting processes, fund large-scale infrastructure projects, and ensure grid stability in the years ahead.
Final thoughts
The 2024 presidential election is a key variable in determining the future of U.S. energy policy and its impact on both domestic markets and global geopolitics. Most projections suggest that divided government remains the most likely scenario, with narrow majorities in both the House and Senate. Even if either party gains full control of the government, enacting sweeping changes to federal energy policy will be a challenge due to the complexities of the legislative process.
While the Trump administration would likely prioritize fossil fuel expansion and trade protectionism, and the Harris administration would focus on continuing clean energy investments, one thing is certain: energy policy will remain a central issue in U.S. political discourse. Regardless of which administration is in power, renewables and energy storage are expected to dominate the energy transition due to their lower costs and faster speed to market, positioning the U.S. as a leader in the global energy transformation.
