On Nov. 5, 2024, Donald Trump made history as the first former president to return to office for a non-consecutive term in more than 130 years after securing his victory over Democratic candidate and Vice-President Kamala Harris.
Trump will be sworn in at the Presidential Inauguration on Jan. 20, 2025, completing the United States’ shift from blue to red and kickstarting a host of changes to domestic and international policies that raise a lot of questions for the future of energy policy and emissions reduction efforts in Canada and beyond.
Similar to 2016, Trump’s campaign period was peppered with bold statements and promises to prioritize the American economy through the implementation of tariffs, tax cuts and the removal of regulations, particularly in the oil and gas sector.
As Canada’s largest trading partner, changes to U.S. trade policies have the power to significantly impact our domestic economy. Right now, there are a lot of unknowns that won’t become clear until after January 20 — but when it comes to the Canadian energy landscape, this is what we know so far.
“Drill, baby, drill”
Trump summarized his plans for U.S. fossil fuel production throughout his campaign with the slogan “drill, baby, drill”, promising to create jobs and cut energy prices by freeing up “the vast stores of liquid gold on America’s public land for energy development.”
Over the last four years, the Biden-Harris administration worked to increasingly restrict drilling, leases and offshore development through regulations and increased royalties while focusing efforts on renewable alternatives and innovations.
Trump plans to roll back these changes by loosening regulations on crude production, restarting approvals for LNG export permits, lowering business tax rates, rescinding the Biden administration’s royalty rates increase for producing oil on public land and opening up protected lands in Alaska for drilling.
He has also expressed plans to impose a 10 per cent or more tariff on all goods imported to the U.S. — raising serious concerns for Canadian producers, as the United States received approximately 97 per cent of Canada’s crude oil exports in 2023 (that’s about 193 million metric tons of oil).
However, according to several energy experts, these protectionist trade measures are not expected to apply to Canadian oil imports — much to the tentative relief of the Canadian industry and our nation’s GDP.
“We import a lot of energy from Canada,” former U.S. Commerce Secretary Wilbur Ross told the Canadian Broadcasting Corp. “I can’t imagine that the president would want to tax that, because all it would do would be to raise our costs and not help anything with more American jobs.”
Even if Canadian energy is exempt from these tariffs, there are concerns that increased U.S. oil production will harm Canada’s ability to compete on the global stage — concerns that are amplified further by the release of the draft regulations for the Canadian federal emissions cap on Nov. 4, 2024, one day before the U.S. election.
At the same time the Trump administration is making plans to scale up fossil fuel production, Canada is the only major oil exporting country in the world facing a cap on emissions, which has the potential to impact jobs and GDP across the country and widen the already-significant productivity gap between the neighbouring countries.
“I would question whether putting caps on emissions right now is the time,” former finance minister Bill Morneau told CTV. “We’re going to need to think about whether we focus on energy security in a way that makes us clearly an important part of the U.S. sector in that way.“
Changes to climate policies
Climate policies in the U.S. are poised to undergo a major upheaval over the next four years as well, namely in the areas of climate reporting and regulation, international climate commitments and renewable technology.
Trump has selected Chris Wright, CEO of Liberty Energy, to serve as his energy secretary. As a campaign donor and oil and gas industry executive, Wright fully supports the new administration’s “drill, baby, drill” philosophy.
Trump has also announced his intention to appoint attorney and former congressman Lee Zeldin to lead the Environmental Protection Agency (EPA), the organization responsible for the protection of human health and the environment in the United States.
“He will ensure fair and swift deregulatory decisions that will be enacted in a way to unleash the power of American business, while at the same time maintaining the highest environmental standards, including the cleanest air and water on the planet,” said Trump.
Zeldin was critical of the Biden administration’s decision to rejoin the Paris Agreement — an international treaty on climate change adopted by 196 parties in 2015 — after Trump withdrew U.S. participation during his first presidential term in 2019. Zeldin cited a lack of sufficient study on the potential economic impacts of the agreement and the desire to see other large emitting countries, such as China and India, make more cuts. Now that Trump has been re-elected, he plans to withdraw from the agreement once more.
During his campaign, Trump also vowed to terminate the Inflation Reduction Act (IRA), which was enacted in 2022 under President Biden and, according to the U.S. Department of Energy website, designed to make “the single largest investment in climate and energy in American history … securing America’s position as a world leader in domestic clean energy manufacturing.”
However, while analysts expect the IRA to undergo reform, they don’t expect it to be fully repealed, mainly due to the number of Republican-leaning states — such as Texas and Iowa — who have become major producers of wind and solar energy as a result of investments incentivized by the IRA.
Where is the balance?
All said, Trump’s expected approach to fossil fuel production and global emissions reduction is opposite Canada’s in many ways — as our country introduces increasing regulations and environmental measures, the U.S. prepares to peel the red tape away.
We know from our research that engaged women want government policies to prioritize economic prosperity, energy security and the environment, and they want an approach that is balanced.
Between the two countries, the balance between economic prosperity and environmental protection is poised to become increasingly uneven, and the implications of the upcoming changes to U.S. legislation will have ripple effects for Canada and the rest of the world.
As the Trump administration officially returns to power in 2025, Canadian leaders will need to be prepared to respond to inbound legislative changes that have the potential to impact our country’s prosperity and global competitiveness while balancing our commitment to emissions reduction. And with a Canadian federal election pending in October 2025, all Canadian political parties will need to consider their election platforms as they relate to the economy, energy and the environment.
We will continue to monitor and provide updates on potential impacts to the Canadian energy landscape as Donald Trump is sworn in as the 47th President of the United States and we prepare for our own elections.
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