WoodMac analysts expect a second Trump administration to have a number of effects in key U.S. energy sectors, including a return to emphasizing hydrocarbons. (Source: Shutterstock)
Republican control of the U.S. government is likely to bring an easing of emissions regulations, more protections on trade and departure from the Paris Agreement, Wood Mackenzie analysts said.
However, renewable power should keep advancing thanks to its strong economics and the momentum generated by the Inflation Reduction Act.
“The IRA has supported over $220 billion in manufacturing investment, and much of this has been concentrated in Republican-led states,” said David Brown, director of energy transition service at WoodMac. “The likelihood of a full IRA repeal is low."
WoodMac analysts expect a second Trump administration to have a number of effects in key U.S. energy sectors, including a return to emphasizing hydrocarbons.
The Environmental Protection Agency’s (EPA) greenhouse gas standards aren’t likely to survive legal challenges and an EPA led by appointees of President-elect Donald Trump. Also, demand growth from data centers and manufacturing will require significant new investment in generation.
And, Trump is likely to remove the pause on non-FTA permits. Wood Mackenzie expects 50 million metric tons per year (mtpy) of U.S. projects to reach FID in 2025 to 2027, up from 30 mtpy in the previous forecast.
Trump’s tariff plan could lower global economic growth by 0.5% in 2025 and by 0.8% in 2026, WoodMac analysts said, lowering crude demand by 1.1 MMbbl/d in 2026.
Upstream, only marginal shifts are expected, as public E&Ps are already budgeting for lower crude prices. WoodMac forecasts U.S. oil production of 13.2 MMbbl/d in 2024 and 13.6 MMbbl/d in 2025.
Despite Trump’s return to unbridled oil and gas, the renewables sector is likely to continue increasing, said WoodMac analysts.
Customer demand for distributed solar projects is expected to grow, and almost 100 gigawatts (GW) of capacity are in the pipeline. Expect flat installation growth in the next few years, WoodMac said.
Wind projects under development are likely to be completed over the next 10 years, though the Trump administration could slow future growth.
Energy storage should keep growing rapidly with the IRA in place and incentives for carbon capture and storage are likely to remain in place. Wood Mac’s base case calls for CCUS capacity to reach 80 mt by 2030.
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