The energy sector's first big gathering of the year showed that its executives, policy makers and observers remain conflicted in their views about how US president Donald Trump's second term will affect it, following his flurry of pronouncements and executive orders since he was sworn into office.
While some see a sharp reversal in attitude from Washington towards the previous administration's Inflation Reduction Act (IRA), others hold out hope that, despite negative comments from Trump about certain types of renewable energy, he will eventually come to recognise that they deserve a place in the energy mix.
Speaking on the first day of energy technology firm Baker Hughes' annual conferencein Florence, Italy, last week, Trump's former US energy secretary Dan Brouillette said that tearing up the IRA was not possible under the US system of government, as the president cannot "undo a federal statute at a stroke". "Executive orders do not apply to federal statutes," he said, adding that he thinks there will be more, not less, investment in renewable power under Trump.
Brouillette noted that the US has been retiring firm base-load power faster than it has been able to add new generation capacity, and the country will be some 25-30GW short of electricity within a few years — approximately five times the capacity currently needed to power New York City's grid. "We are short on electrons. We are short on infrastructure. We are short on power," he said. While acknowledging that his erstwhile boss is not currently supportive of offshore wind and some other types of renewable power, Trump "understands clearly that we need more electrons. And, candidly, an electron, once it's created, doesn't know where it came from, whether it was created by a nuclear facility or a windmill".
In contrast, investment bank RBC Capital Markets' head of global commodity strategy, Helima Croft, said at the conference that "the landscape in Washington has fundamentally shifted" with respect to the IRA since Trump returned to office.She pointed out that the first acts of former president Joe Biden's administration four years ago included taking the US back into the Paris Agreement and announcing a pause on new oil and gas leasing on federal land. The US is undergoing "an absolute inversion" of those moves, Croft said. "One of the first acts is to leave the Paris climate accords. We now have a pause on projects related to wind and solar on federal lands, while at the same time we're opening up drilling on federal lands for oil and gas. So you can't overstate the sea change in Washington," she said.
Crunch time for low carbon
And Croft is sceptical about the future for wind and solar energy in the US. There had been an expectation that much of the IRA would be future-proof as many Republican states are beneficiaries of renewable energy investments, but "everything we've seen so far in wind and solar would indicate that this is not a bulwark against some dismantling", she said. The question now is which low-carbon technologies have bipartisan appeal. Carbon capture, utilisation and storage, nuclear energy and geothermal energy have broad bipartisan support, according to Croft.
Sharing the stage with Croft was commodities trading company Trafigura energy transition head Margaux Moore, who argued that the energy sector and industry more widely must come together now to decide on which energy technologies to invest in today, rather than wait for policy makers. An approach whereby industry invests limited sums in multiple low-carbon technologies to learn how they will mature is "becoming synonymous with inaction", Moore said. But investment decisions made today will have long-lasting consequences. "The choices we're making now are going to have an impact on what we see in 2050, right? We cannot afford to wait and see," Moore said.
