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Translating Trump

Energy

Renewed Energy and a Climate of Concern

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After an election cycle in which energy and environmental issues were mostly sidelined, President-elect Donald Trump has sent clear signals about the direction of his energy and environmental policies with a handful of appointments that indicate a resurgence for the fossil fuel industry.

Signs point to a less-is-more environmental policy: hands-off, limited regulation, and a rapid, pro-growth agenda. All of this is in line with Candidate Trump’s campaign commitment to “economic justice” and what he called an America First energy plan focused largely on increasing production of America’s fossil fuel reserves and related infrastructure investment, and rolling back regulations that he claimed undermined the growth of domestic, conventional energy.

Specifically, Trump and the Republican Congress are likely to attempt to overturn or water down Obama Administration regulations regarding greenhouse gas emissions, including the Clean Power Plan (CPP) regulations of utility emissions that are currently in U.S. Appeals Court. These positions align neatly with the new Republican Congress and, not surprisingly, Democrats and environmental groups have expressed alarm at the prospect of a Trump Administration undoing much of President Obama’s environmental agenda. Yet some of Trump’s potential cabinet members have supported renewable energy, acknowledged the science around climate change and even supported the global Paris agreement.

With that in mind, we provide a look at Trump’s appointments to key departments and agencies, and their ramifications for policy priorities.

  • Department of Energy: Facilitating economic value from fossil fuel production would frame former Texas Governor Rick Perry’s Department of Energy. This could include decisions to make carbon capture and sequestration technologies more economically viable, thus facilitating coal use. Meanwhile, he’ll face public backlash for once stating he wanted to eliminate the department and further scrutiny for his role on the board of Energy Transfer Partners, which is developing the Dakota Access Pipeline. Interestingly, this former Governor also found economic value in renewable technologies, making Texas the leading wind energy producer in the country. Signals on renewables as well as nuclear writ large are largely unclear which also means opportunity for interested parties.
  • Environmental Protection Agency: Trump’s proposed Administrator of the U.S. Environmental Protection Agency and current Oklahoma Attorney General, Scott Pruitt, has a long history of battling it out in the courts with the very agency he would lead. Pruitt has indicated he will seek to repeal or revise a host of regulations, but he could face obstacles under the Clean Air Act, Clean Water Act, and other statutes and regulatory precedents.
  • Department of the Interior: Rep. Ryan Zinke (R-MT) has indicated he would prioritize increased development of coal, oil and natural gas on federal lands, but he has opposed the transfer of federal land ownership to the states. His inconsistency has baffled conservationists and even the Republican Party when he quit the platform-writing committee because of its call for land transfer. What is fairly clear is Zinke’s Interior Department would oppose regulations to limit climate action overall, including reducing methane emissions from oil and gas wells.
  • Department of State: Trump’s nomination of Exxon CEO Rex Tillerson as Secretary of State could have significant consequences for energy and environmental policy. While Secretary Kerry has used his office to advance climate change policy, Tillerson will be a strong proponent of increasing market opportunities for American oil and gas companies and draw on his experience negotiating deals around the world. As for climate change, while Trump’s other cabinet picks are likely to support abandoning the Paris Agreement, Tillerson has expressed support for the agreement and could provide balance to the Administration’s deliberations on the issue. Of course, heightened scrutiny around Tillerson’s ties to Vladimir Putin in light of Russian interference in the U.S. election may make his confirmation more difficult than others.

 For a more in-depth analysis of what we might expect from the agencies under these leaders, energy and environment expert Paul Bledsoe prepared an analysis exclusively for Edelman. You can find it here

It is worth remembering that policy alone doesn’t drive business decisions – some of which have already led to significant reduction in greenhouse gas emissions. Experts agree that technology and market forces influenced the rise of natural gas at the expense of coal, and many companies, especially utilities, have indicated their long-term strategies have already accounted for lowering carbon and they are staying the course regardless of the CPP outcome.

Moreover, it’s important to remember that public attitudes toward energy have shifted, as a March 2016 Gallup poll found that almost two-thirds of Americans are concerned about global warming, and that almost three in four Americans now prioritize alternative energy over oil and gas.

Finally, Trump’s election does not change the expectation by consumers and investors that companies in the energy and environment space will use sound science in evaluating risks and employ innovations with lower environmental impact technologies whenever possible. This contrast between political stances and actual consumer expectations is most vividly illustrated by the fact that Tillerson’s positions on climate science and policy are generally more within the corporate mainstream than those of Trump nominees who have come directly from elected office.

So, what could all of this mean for energy companies and interest groups with a stake in these critical decisions?

  • Companies must continue to protect their license to operate. Companies should not view the expected loosening of regulations or climate commitments as a free pass on environmental protection. The potential shift may result in companies facing tougher questions than ever before on how they manage their environmental footprint throughout their operations and supply chains. Their standards will continue to be scrutinized and the pressure to meet or exceed stakeholder expectations will require actions to enhance transparency and communicate company efforts.
  • Business must lead in solving problems. Increasingly, people expect companies to do good for society while doing good for their business. Companies should underscore their distinct contributions to environmental protection as well as energy’s societal and economic benefits, focusing on the merits of their actions and behavior regardless of the political and policy environment.
  • Partnerships should not be underestimated. Partnering with NGOs, government and others to advance common interests, from business operations to public policies, has long been a trust-building attribute. We have seen in the last decade that environmental groups and energy companies can have more in common than meets the eye, but this might be tested in this new environment. One way to navigate this complexity is to bring unique partnerships or “strange bedfellows” to the table in pursuit of mutually beneficial outcomes.
  • Know your audience better than ever. At a time when people are not open to challenges to their world view, companies had better know what their audiences’ beliefs and values are. If companies share those beliefs and values, they can connect in meaningful ways through audiences’ preferred channels. Especially on the merits of environmental protection and energy production, both can and should stand for better futures for families and communities. Aligning with that starts the conversation on the right foot, provided the company is genuine and authentic in its communications.

Amy Hemingway is an executive vice president based in Washington, D.C. and a senior counselor in Edelman’s Energy and Business and Social Purpose practices.
Paul Bledsoe is a senior advisor to Edelman on energy and environmental issues and president of Bledsoe & Associates.

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