Donald Trump’s back-to-back victories in the early primary contests in Iowa and New Hampshire all but assure that the former US president will be the Republican Party’s nominee to face incumbent Joe Biden in November’s presidential election.

There is little doubt that a second Trump term would mean an about-face on US energy policy and a potential threat to Biden’s signature climate law.

Analysts on both sides of the Atlantic agree that a Trump return to the White House could mean sweeping changes to Biden’s clean energy investment incentives and a boost to US oil and gas production.

Polls show a close matchup in the November election between Democrat Biden and Trump, despite the latter’s multiple criminal indictments and his baseless claims that the 2020 election was stolen.

The Trump campaign has promised to “unleash the production of domestic energy resources” in a second term and to “reduce the soaring price of gasoline, diesel and natural gas, [and] promote energy security for our friends around the world”.

Botond Feledy, geopolitical analyst and chief executive of Brussels-based Red Snow Consulting, says a second Trump term is being presented as “a blessing to the fossil fuel industry, and preparations show that the administration-in-waiting is serious about its intentions”.

Feledy says: “As far as one takes at face value the declarations made by Trump about energy and climate policy, the picture is the following: the Trump 2.0 administration is preparing the terrain for the return of fossil fuels from day one in office.”

Biden’s Department of the Interior has significantly scaled back offshore oil and gas lease sales in the Gulf of Mexico while encouraging the buildout of offshore wind, with the goal of reaching 30 gigawatts offshore wind capacity by the end of the decade.

The administration has proposed the minimum number of offshore oil and gas leasing rounds required by the Inflation Reduction Act (IRA), which provides billions of dollars in clean-energy incentives.

The IRA is currently offering some $400 billion in subsidies for clean-energy technologies for US companies and those of its free-trade partners, such as UK supermajor BP and Norway’s Equinor, over 10 years.

While Trump would not be able to overturn the law without significant Republican majorities in Congress, he would likely use every means at his disposal to chip away at the legislation’s key pillars.

Some say the law could use some recalibration. Phil Flynn, Chicago-based senior market analyst at The Price Futures Group, points to growing “frustration” among green investment managers over some of the IRA’s key features.

“Impax Asset Management, which hailed the Inflation Reduction Act as a game changer shortly after it was unveiled in mid-2022, now says the legislation has too many built-in hurdles that are delaying implementation and enriching middlemen while leaving less money for green projects,” he says.

Noting that, as federal law, “some things (in the IRA) can be reversed, some things cannot”, Flynn insists that “there is a growing amount of criticism” about inefficiency in the way the green-energy funding is being administered.

“If the government spends lots of money, it doesn’t mean it does it in the most effective way,” he says.

International investors

The prospect of another Trump term raises questions about whether international investors will stay committed to US projects.

Equinor and BP, joint venture partners in the Empire Wind 2 project, this month pulled away from a plan for the second phase of the offshore wind development in New York, citing commercial conditions for the “reset”.

But Equinor’s senior vice president for low-carbon solutions, Grete Tveit, recently told Upstream that the Norwegian company has increased its investment in carbon capture and storage projects in the US, saying the government has provided greater regulatory clarity than Europe.

A second Trump administration would almost certainly shift the nation’s energy focus back to hydrocarbons, says Francesco Sassi, research fellow in energy geopolitics and markets at Italy’s RIE.

Trump insists that “the US must reassess its global status as an energy superpower by increasing oil and gas production,” Sassi says.

“This narrative will characterise the US energy strategy in case of his reelection next November, and it could be a boon for the US oil and gas industry.”

Trump’s deregulatory stance will be reflected in rules coming from his administration’s Interior and Energy departments and the Environmental Protection Agency, should he be granted a second opportunity to staff them with political appointees.

Flynn says: “[Trump] is very focused on US energy and gas, and he will try to reverse and put back in place some of the executive orders he had in regard to US energy production.”

That would include the reversal of some of Biden’s bans on drilling on federal land, and the likely repeal of new industry-related pollution regulations, which groups such as the American Petroleum Institute say have led to underinvestment in oil and gas.

However, Sassi points out that market forces can derail even the best-laid energy plans.

Trump’s “political narrative” is one thing, he says, “and another would be how energy companies will act in unstable global energy markets, where geopolitical risks become a major element in determining strategic decisions and energy policies.“

“Just as Biden wanted to limit oil and gas production, and the US further increased production and exports of both in the aftermath of Russia’s invasion of Ukraine, Trump’s strategy will have to face the interdependent nature of global energy markets and the fickle nature of the American ‘energy dominance’ narrative,” he says.