WoodMac Sees $1 Trillion At Risk for Clean Energy Investments Under Trump

• WoodMac projects ~$7.7T in overall spending by the U.S. energy sector through 2050 under current policies.
• The overall spending on renewable energy could be cut by $1 trillion under a new Trump presidency.
• Analysts have predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030.

A second Trump presidency could place a huge part of renewable energy investments at risk, increase carbon emissions by 1 billion tonnes more by 2050 and delay peak fossil fuel demand by 10 years beyond current forecasts, energy analytics firm Wood Mackenzie has predicted.  

WoodMac projects ~$7.7T in overall spending by the U.S. energy sector through 2050 under current policies, a figure that could be cut by $1T under Trump through reduced policy support for low carbon energy and infrastructure improvements. 

Analysts have predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030.

WoodMac says that whereas Trump would lack the power to unilaterally repeal the Inflation Reduction Act enacted during the Biden presidency, he could bring changes to environmental rules and executive orders that would roll back many of Biden's environmental policies.The research firm also projects that the total number of EVs on U.S. roads in 2050 would be 50% lower than under current policies because automakers would likely favor the production of hybrid vehicles over pure electric cars. 

There’s a lot at stake here. The auto industry has unveiled more than $100 billion in EV investments, with potential to create 100,000 American jobs. 

Related: U.S. Crude Oil, Gasoline Inventories See Sizable Gains

Three years ago, the Biden administration signed the Infrastructure Investment and Jobs Act (IIJA), with the act authorizing $1.2 trillion in spending for transportation and infrastructure; $43 billion (not including loans and tax incentives) in flexible spending could be used for battery manufacturing, retooling auto industry facilities, retraining and rehiring existing auto workers and grid updates while more than $7.5 billion will support the buildout of EV infrastructure.

Wood Mackenzie has also noted the need to address U.S. debt, saying it could limit government spending in the future. The Congressional Budget Office has projected that U.S. national debt will climb from 97% of GDP in 2023 to 109% of GDP by 2030 and 155% by 2050.

Energy Under Biden

A second Biden term would likely see him double down on his pro-renewables policies, including investments in hydrogen tech and advanced nuclear energy; however, his administration would likely face even deeper legislative gridlock if Republicans retain control of at least one house of Congress. Last October, Biden announced the locations of seven regional hydrogen hubs set to receive $7 billion from the government under the bipartisan infrastructure law. The hubs will produce green hydrogen as well as hydrogen from natural gas and nuclear energy. Passed by Congress in 2021, the law allocated up to $7B to launch the Regional Clean Hydrogen Hubs program to fund 6-10 regional clean hydrogen hubs across the country. The hydrogen project is part of Biden’s ambitious climate goals wherein he has pledged to cut the country’s greenhouse gas emissions by 50%-52% below its 2005 emissions levels by 2030. 

But this does not necessarily mean that the fossil fuel industry will face a bleak future under another Biden term. Indeed, it’s quite ironic that fossil fuel production under Biden has surpassed Trump levels while oil and gas investors have fared far better than their clean energy brethren. 

According to the U.S. Energy Information Administration (EIA), crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly crude oil production set a new monthly record high in December 2023 at more than 13.3 million b/d.

Meanwhile, the oil and gas favorite benchmark, the Energy Select Sector SPDR Fund (NYSEARCA:XLE), has more than doubled in the time Biden has been in office while the iShares Global Clean Energy ETF (NASDAQ:ICLN) has tanked nearly 70%. The current year is following the same playbook with the oil and gas sector up 12.2%, the third highest return amongst 11 U.S. market sectors, while clean energy stocks are in the red with a -8.5% return. Big Oil investors, in particular, have been laughing all the way to the bank during Biden’s tenure: 

According to data compiled by Reuters, profits of the top five publicly traded oil companies, namely Exxon Mobil Corp. (NYSE:XOM), Chevron Corp.(NYSE:CVX), BP Inc.(NYSE:BP), Shell Plc (NYSE:SHEL) and TotalEnergies SE (NYSE:TTE) rocketed to $410 billion during the first three years of the Biden administration, a 100% increase compared to the corresponding period of Donald Trump’s presidency.

By Alex Kimani for Oilprice.com

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