Examining Last Week’s Energy-Related Executive Orders

Of the 46 formal presidential actions taken by the incoming administration last week, 26 were executive orders, including the six energy and infrastructure-related executive orders shown below:

1. Unleashing American Energy

2. Declaring a National Energy Emergency

3. Unleashing Alaska’s Extraordinary Resource Potential

4. Putting America First in International Environmental Agreements

5. Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis

6. Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects

A number of the stated goals are likely to have broad appeal across the political spectrum as they focus on security, innovation, and resilience:

• Ensuring secure and economical energy supply for industrial, commercial, and residential energy users.

• Addressing the need for baseload generation in support of the massive demand for new power for data centers in support of AI.

• Recognizing the vital national security and economic consequences of not maintaining AI leadership.

• Ensuring the security of domestic supply chains, including those for essential minerals.

• Speeding up regulatory approval processes.

How are the above goals to be realized? This question leads into domains where consensus is unlikely. However, some actions were outlined, including: 

• Promotion of the utilization of fossil fuels and an increase in investments in domestic energy sources other than wind and solar.

• Disbanding of the Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) and the related Presidential Memorandum of January 27, 2021.

• Elimination of the Green New Deal.

• Elimination of EV-related incentives or penalties for not adopting EVs, both for fleets and for consumers.

• De-emphasizing efficiency standards and calling for revisiting efficiency-related incentives and penalties.

• Stopping all payments under the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), including funding for EV charging stations.

It is noteworthy that 84 percent of IRA funding ($96.7 billion) included grants and tax credits which have already been disbursed (e.g., see the Jan 17, 2025 Reuters post: "Biden protects 84% of IRA clean energy grants from being clawed back"). 

The day after the six energy-related executive orders were issued, the Office of Management and Budget (OMB) issued an order titled the Memorandum to the Heads of Departments and Agencies which provides extra guidance to agency heads. Guidance was needed for the implementation of recommended actions stated in the executive orders, including the need for more details to meet the order to stop all payments under the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA). The OMB memo allows the relevant department heads “to continue to disburse funds as they deem necessary after consulting with the Office of Management and Budget.”

An interesting question is whether investments in the energy sector will increase significantly, or instead simply be reallocated differently, with little or no net increase. Fundamentally, investors in the private sector, and utility executives across all types of utilities, are not obligated to invest in energy projects (regardless of the energy source) if they are not economical.

It is easy, at first glance, to dismiss the potential roll-back of efficiency standards since it is hard to believe that manufacturers will retool to make less efficient equipment. But such markets can pivot quickly when the cost savings for purchasers, and profit margins for suppliers, are high, especially given the fact that builders and developers of facilities that are then sold, leased, or rented have a strong financial interest in minimizing up-front costs. In recent decades, the increased use of high-efficiency equipment, appliances, and building materials has been driven primarily by efficiency standards and building codes rather than the lower long-term operating costs of these designs. 

As with many executive orders in the past, legal challenges will abound, so final outcomes of the orders can be assumed to be uncertain at the moment. As noted last month by my ARC colleague Jim Frazer in his insightful piece titled “The Overturning of the Chevron Doctrine” higher levels of uncertainty in the regulatory process, particularly for agencies such as the Environmental Protection Agency (EPA), often clog progress, regardless of political bent. Or, as Frazer stated, “without the ability to interpret ambiguous statutory language, (it will) require explicit legislative mandates to implement new rules, slowing the pace of regulatory updates.” 

How are industrial decision-makers going to adapt and thrive? The need to embrace automation remains as strong as ever, regardless of the energy source. And ensuring a reliable energy supply will continue to involve having a diverse energy portfolio, one where your organization is well set to hedge against policy shifts.