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Most of Obamas signature energy policies were implemented via executive order, which means that the new
president could reverse many of them without seeking approval from Congress
While Trump differs with many Congressional Republicans on trade, deficit spending and foreign policy, they are
on the same page when it comes to energy
The Trump administrations agenda likely includes approval of the Keystone pipeline, undoing many regulations regarding
fossil fuel production, cancellation of the Paris Agreement and lower fuel efficiency standards for automobiles.
All things being equal and notwithstanding concerns over the longer term effect on the environment, the combined impact
of less regulation and potentially lower business taxes (another Trump promise) will improve the bottom lines of many
U.S. corporations.
Unfortunately, Trumps energy U-turn comes at a time when costs for many Canadian companies are set to rise due to
the implementation of carbon-control regulations. This could place many Canadian businesses at a competitive
disadvantage vis--vis their U.S counterparts. This disadvantage could be further reinforced by Trumps intentions to
reduce corporate taxes as well.
Harold Hamm is the billionaire chief executive and majority owner of Continental Resources, a leading U.S.
shale-oil producer. He has been mentioned as a possible Energy Secretary.
Kevin Cramer is a North Dakota congressman and noted climate-change skeptic. He is a strong advocate for the
oil and gas industry.
Robert Grady is a venture capitalist who worked in the Bush Senior administration. He has been floated as a
contender to head the Energy or the Interior Department.
Myron Ebell heads the Environmental Protection Agency (EPA) transition team. He feels that any warming
caused by greenhouse gases (GHG) is no more than modest and could even be beneficial. He is fiercely opposed
to the Paris Climate Agreement and previously worked for the Competitive Enterprise Institute.1 It is safe to
assume that, under his leadership, the EPA will be much more accommodating towards fossil fuel producers.
Donald Trump Could Put Climate Change on Course for Danger Zone, The New York Times, November 10, 2016.
GEOPOLITICAL BRIEFING
The Keystone pipeline is back in play
Trump is strongly in favour of developing energy infrastructure. For starters, he supports the Keystone pipeline project. After
seven years of regulatory delays, President Obama rejected the project in November 2015. Trumpwho will have the power
to approve this and other projects without needing congressional authorizationhas invited TransCanada to resubmit its
application. If completed, the 1,197-mile pipeline would deliver 830,000 barrels of bitumen per day to Nebraska, where it
could then flow to the Midwest and onward to the gulf coast.
He is also in favour of the 1,100-mile Dakota Access pipeline, which would carry oil from North Dakota to Illinois. The
Obama administration requested a temporary halt to construction after Native American groups claimed the pipeline
would damage important cultural sites and threaten their primary source of drinking water. This pipeline has been the
focus of a months-long confrontation between police and protesters.
If approved, the two pipelines will lower costs for oil companies in certain regions that have often had to rely on more
expensive rail shipments when existing pipelines operate at full capacity.
2
3
Trump Choosing Leaders to Roll Back Environmental, Energy Policies, Associated Press, November 14, 2016.
U.S. Department of National Energy
GEOPOLITICAL BRIEFING
Dismantling the Clean Power Plan
The Clean Power Plan is at the centre of Obamas climate agenda. It calls for the electricity sector to reduce GHG emissions
to 32% below 2005 levels by 2030. Given that coal-fired plants are by far the worst GHG emitters, they would be the ones
most negatively impacted by the plan. Under the plan, each state has to come up with its own plan for cutting emissions.
Implementation of the law is currently delayed pending the outcome of the legal challenge brought forth by 28 states and
more than 100 companies. If the Federal Appeals Court upholds the Clean Power Plan, the case will probably be taken
before the Supreme Court, where it will likely be considered by a right-leaning majority bench of judges once Trump fills the
seat left vacant by the recent death of Justice Antonin Scalia. Trump could also order the EPA to issue new rules setting
much less stringent controls on GHG emissions. Finally, under leadership chosen by Trump, the EPA could simply decide
not to enforce the Clean Power Plan.4
The Republicans could also very well attempt to pass a bill in Congress to strip the EPA of its authority to unilaterally
regulate carbon dioxide emissions. This would prevent any future president from following in Obamas footsteps of regulating
GHG emissions via executive order. Instead, all future attempts at such regulation would require congressional approval.
The odds of the Republicans being able to pass such a bill will be discussed in greater detail below.
4
5
Donald Trump Wants to Dismantle Obama's Climate Rules. Can Anyone Stop Him?, Vox, November 10, 2016.
Teslas Future in Trumps World, Bloomberg, November 11, 2016.
GEOPOLITICAL BRIEFING
How easily will Trump and the Republican Party be able to pass bills?
For the first time since 2007, Republicans will soon have control of both the executive and legislative branches of
government. The Republicans will have 51 seats in the Senate against 48 for the Democrats. As for the House, the
Republicans will have 239 seats against 219 for the Democrats. While this constitutes a slim majority, particularly in the
Senate, it still leaves Republicans well positioned to pass major legislation that enjoys wide support within their party. For
legislation to be made into law, it must be approved by the two houses of Congress and signed by the President.
Traditionally, the minority party in the Senate has resorted to filibustering in order to obstruct legislation. Filibustering is a
process whereby the opponents of a measure require the other side to obtain a supermajority of 60 votes to pass
a bill in the Senate. However, over the past decade or so, the power to filibuster has been steadily eroded. As a
result, various types of bills have been passed by simple majority vote. Here are two recent examples:
In November 2013, the Democrats (when they controlled the Senate) voted to amend the rules and allow a
simple majority to approve court and federal agency appointments.
In December 2009, Obamacare was passed via a procedure called reconciliation, which prevented it from being
filibustered in the Senate.
While a reconciliation bill can only be used in matters related to spending and taxation, the Republicans could
attempt to fold environmental measures into legislation focused primarily on other things. Such a move could be
used to pass a law preventing the EPA from unilaterally regulating carbon emissions. It is important to note, also, that
some of the 25 Democratic Senators up for re-election in 2018 might be tempted to vote with the Republicans on certain
energy bills, particularly if they are from Republican-leaning states.
GEOPOLITICAL BRIEFING
Conclusion
Energy is one of the sectors where Trump and the Republican Party will have the most immediate and profound impact for
two reasons. First, President-elect Trump will have the power to undo many of Obamas executive orders. Second, Trump
and Congressional Republicans are virtually in complete agreement when it comes to energy policy.
Lower energy costs in the United States has raised fears that many Canadian companies will find themselves at a
competitive disadvantage vis--vis their American counterparts. This disadvantage could be exacerbated by Trumps
intentions to reduce corporate taxes. The resulting economic landscape could force the Liberal Party to soften the financial
impact of its environmental policy.
Angelo Katsoras
GEOPOLITICAL BRIEFING
ECONOMICS AND STRATEGY
Montreal Office
514-879-2529
Toronto Office
416-869-8598
Stfane Marion
Marc Pinsonneault
Warren Lovely
Senior Economist
marc.pinsonneault@nbc.ca
Paul-Andr Pinsonnault
Matthieu Arseneau
Senior Economist
matthieu.arseneau@nbc.ca
Krishen Rangasamy
Angelo Katsoras
Senior Economist
krishen.rangasamy@nbc.ca
Geopolitical Analyst
angelo.katsoras@nbc.ca
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