U.S. Energy Industry Shifts Post-2024 Trump Re-Election

As we look ahead to the potential outcomes of the 2024 U.S. presidential election, one thing is becoming increasingly clear: Donald Trump’s commitment to pulling the U.S. out of the Paris Agreement will likely become a central part of his administration’s climate policy. For many, this brings up significant concerns—not just for the United States but for the entire world. But what does this mean for the future of U.S. energy, and how will this play out on the global stage?

What is the Paris Agreement?

First, let’s briefly revisit what the Paris Agreement actually is. Signed in 2015 by 195 countries, including the U.S., the Paris Agreement seeks to combat climate change. Its goal is to limit the global temperature rise to well below 2°C above pre-industrial levels, with an ideal target of 1.5°C. The agreement established Nationally Determined Contributions (NDCs), which are essentially targets set by each country to cut their greenhouse gas emissions. For the U.S., this meant aiming for a 26–28% reduction in greenhouse gas emissions by 2025, based on 2005 levels.

However, under Trump’s first term, the U.S. took a controversial step by withdrawing from the Paris Agreement in 2017. Trump argued that the deal was unfair to U.S. workers, particularly in the fossil fuel industry, and would hinder economic growth.

The Importance of U.S. Participation in the Paris Agreement

Why is it important to talk about the climate action of the U.S.? As a matter of fact, the U.S. is the second-largest emitter of CO2 globally, accounting for around 12% of total global emissions. This means that the U.S. has an outsized influence on climate policy and global emissions reductions.

Under Biden’s administration, the U.S. staying in the Paris Agreement have contributed to achieving global climate targets. This commitment were also positioning the U.S. as a leader in the global transition to clean energy. Additionally, it has highlighted the country’s dedication to innovation and investment in renewable energy technologies.

However, by withdrawing from the Paris Agreement, the U.S. risks losing its leadership role and may encourage other nations to backslide on their commitments as well.

The failure of a major emitter like the U.S. to meet emissions targets could undermine global climate efforts. This could also lead to a loss of trust in the international climate framework.

Short-Term Impact of the 2024 Withdrawal on U.S. Energy

The immediate effect of withdrawing from the Paris Agreement could be a major shift in U.S. energy policy.

If we look at the Trump’s first term, policies favoring fossil fuels were front and center. There were environmental rollbacks including easing restrictions on coal plant emissions and opening federal lands to oil and gas exploration. The most significant regulatory changes took place within the Environmental Protection Agency (EPA), where over 100 environmental rules were either repealed or weakened.

Now that Trump is re-elected, we can expect a similar approach. He would relax regulations, tax incentives for fossil fuel companies, and an overall prioritization of traditional energy sources.

Even under the Biden administration, fossil fuel jobs have risen approximately 11.3% since 2021, particularly outpacing the growth in clean energy job creation. Under Trump’s administration, this trend would likely accelerate.

Impact on the Global Energy Market and Neighboring Countries

When the U.S. pulls back from global climate efforts, the effects are not contained within its borders. Europe, for example, is investing heavily in the green energy transition through its European Green Deal, which aims for carbon neutrality by 2050. European countries, like Germany and France, are leading the charge with green technologies and renewable energy policies. If the U.S. continues to distance itself from the Paris Agreement, Europe’s role as a leader in global climate action will likely intensify. In fact, European countries may start to impose stricter environmental standards. It will become more difficult for U.S. industries to remain competitive in the global market.

Canada and Mexico, two of the U.S.’s closest neighbors, are also committed to reducing their emissions.

Canada, for example, has made significant investments in renewable energy and green technologies, and its economy is increasingly shifting toward clean energy solutions. Higher U.S. fossil fuel production could increase competition for Canada’s energy sector. However, it may also create collaboration opportunities, especially on cross-border projects like Keystone XL. While this may strengthen North American energy independence, it could clash with Canada’s renewable energy goals.

Increased U.S. production could intensify competition for Pemex, state-owned oil company. Mexico’s focus on prioritizing Pemex over private renewables may lead it to respond with more nationalistic policies in reaction to shifts in U.S. energy strategy.

On the global stage, China is another key player. China, unlike the U.S., has continued to push forward with renewable energy projects and investments. In 2020, China committed to reaching 1,200 gigawatts of renewable capacity by 2030, more than double its capacity at the time. At its current pace, it could meet this goal by 2025 and could reach 1,000 gigawatts of solar power alone by 2026. Fossil fuels now account for less than half of China’s installed power capacity, a significant reduction from two-thirds a decade ago.

If the U.S. does not adapt its energy policies to keep up with the global shift toward clean energy, it risks falling behind both economically and technologically.

Long-Term Risks and Potential Benefits

While the short-term economic benefits of focusing on fossil fuels may be appealing, the long-term risks are much more concerning. As the effects of climate change become more pronounced, the costs of inaction will only rise. In 2022, climate and weather disasters in the U.S. cost over $176 billion. This damage is making the U.S. the third most expensive year on record. So, if global warming continues, the resulting damage is expected to increase significantly.

In terms of energy, the U.S. also risks missing out on one of the most lucrative markets of the future: green energy. The global renewable energy market is expected to reach USD 1.39 trillion by 2024 and grow to USD 3.60 trillion by 2030, with a 17.2% CAGR.

Countries that lead in clean energy technologies will reap the benefits, and the U.S. had the potential to be at the forefront of this transformation. In other words, countries like China and Germany are leading the way in the renewable energy market. As a result, it will be difficult for the U.S. to catch up with these technological advancements later.

Conclusion

The potential re-election of Donald Trump and his opposition to the Paris Agreement could lead to significant impacts for the U.S. This stance could isolate the U.S. from countries leading in renewable energy development, while benefiting fossil fuel industries. Given the importance of this shift, it’s crucial to stay informed about its ongoing changes and long-term effects on climate action.

As we’ve observed, governments may prioritize fossil fuels like oil and coal. This makes it even more crucial for individuals and the public to take action. Supporting renewable energy organizations or even participating in the market can make a real difference. While it may be challenging, you can also support these initiatives through carbon credits. Not only do carbon credits help sustain these efforts, but they can also enhance the competitiveness of you or your business. It’s time to take action!