Donald Trump’s victory in the 2024 elections will shake climate policy in the US and internationally. Overall uncertainty and volatility will increase. There is likely going to be a lot of litigation and concerns raised by states, companies and NGOs against regulatory rollbacks. Trump’s second term is likely to slow down US emission reductions, but based on history and already agreed action, a complete halt is not expected to happen.
The business environment differs significantly from Trump’s first term. Unlike in 2016-2020, a possible reversal of the US climate policy is counteracted by market dynamics, reduced costs in clean technology and overall technological and manufacturing competition with China, which is another key policy objective for the administration.
In the short term, oil and gas seems to be the main beneficiary since the incoming administration has promised to cut regulations and ease permitting for the industry. How much that will increase production is an open question. US oil and gas production has already reached historic highs, and the black and white rhetoric of the campaign will be counteracted by how much additional demand for oil and gas exists in the global economy. The risk of oversupply and downward pressure in prices is real.
“Trump’s second term is likely to slow down US emission reductions, but based on history and already agreed action, a complete halt is not expected to happen. “
At the moment, policies at most risk under the new administration are likely to be related to offshore wind and international climate diplomacy, since both are under direct executive action. Trump will likely halt offshore wind permitting and leases and step out of the Paris agreement. The immediate effect of the latter would be that the US no longer needs to submit new climate commitments (NDCs). The broader and longer-term impacts on diplomacy are very difficult to evaluate at this stage. COP29 in Baku will be the first indicator of how other countries react.
It’s worth noting the difference between policy rhetoric and reality here: during Trump’s first term, more wind power capacity was added than under any president, many US states and corporations decided to stick to Paris targets and we are already witnessing major US corporates asking Trump to remain in the Agreement because uncertainty and change in direction every four years is not good for business.
The key issue for domestic policy is what happens with the Inflation Reduction Act, which currently drives US climate investments (over $400 billion and counting), mostly into Republican states. Many Republicans already defend the IRA as it brings investments, lower corporate taxes and jobs to states. The combination of political support and the sticky nature of tax credits implies that the most likely scenario is tweaking rather than dismantling the IRA.
“It’s worth noting the difference between policy rhetoric and reality here: during Trump’s first term, more wind power capacity was added than under any president.”
For future warming, emissions matter. What does all this mean for US emissions? While still early estimates, analysis by Carbon Brief suggests that Trump’s influence on emissions could be significant, with approximately 4 billion tons of more CO2 by 2030. US emissions are very likely continuing their long-term decline, but at a slower pace. Even with current actions, achieving the targets was unlikely, and now there’s an even greater risk of further slowdown. So Trump’s agenda will likely put current US 2030 climate targets out of reach but will also reverberate to international efforts to cut emissions by 2030 aligned with long-term ambition to net-zero. But a president can only do so much in four years. US emissions have been declining steadily since 2005, driven changes in economic structure, improvements in energy efficiency and zero-emission technology costs, and the switch from coal to natural gas. These underlying drivers have only grown stronger in the past few years.
The 2nd Trump administration will come to power in 2025 with a long list of sweeping changes and reversals in climate and energy policy. Black and white campaign promises are much more difficult to turn into consistent implementation. That has been evident both under Republican and Democratic presidencies. How much will stick and how consistent policies are across sectors and against conflicting policy objectives remains to be seen. A likely outcome is a middle scenario between the highest and lowest emissions estimates. The next four years will be crucial not just for the US but also global efforts to pursue net-zero by 2050. Both physical and transition risks will increase in the coming years and will have to be addressed one way or the other regardless of which party is in power.