Second Time’s the Charm? A Review of the Trump Administration’s Executive Order on Energy

While there are some merits to President Trump’s recent executive order on energy, there are some pitfalls that can be avoided if he relies on market forces, rather than executive orders.

Presidents are often evaluated based on what was accomplished in their first hundred days. The second Trump administration has set a more ambitious tempo than the first, with a bevy of significant executive orders and actions during its first ten days seeking to restructure many aspects of the executive branch.

While much of the media attention has focused on actions relating to hot-button cultural issues, not enough attention has been paid to other equally important actions, particularly the administration’s executive order on energy.

The executive order contains an intimidatingly long list of items and repeals a number of Biden-era actions. The Biden administration’s pause on permits regarding export facilities for liquified natural gas has been revoked, as have been the fuel efficiency standards that were designed to force electric vehicles to make up half of all U.S. auto sales by 2030. The order makes a number of technical changes to how the costs and benefits of potential regulations are calculated, including eliminating the “social cost of carbon,” which estimates damages caused by greenhouse gas emissions. The order pauses clean energy subsidies under the misnamed Inflation Reduction Act. The order also directs agencies to find ways to reduce the time to get a permit to start many energy projects and the extraction of critical minerals. And that’s not even an exhaustive list.

Despite the variety of disparate items in the order, the overall theme is aptly summed up in its title: “Unleashing American Energy.” This is a worthy goal and is in keeping with the administration’s overall philosophy of enabling American dominance in the economy and in technological innovation.

Many of the provisions in the order will help to advance this goal, particularly those portions repealing costly or misguided executive actions undertaken by the Biden administration. The Biden administration finalized $1.9 trillion of regulations over its single term. This was far more than the $498.5 billion in regulatory costs imposed during President Obama’s first term and lightyears ahead of the $64.7 billion in regulatory costs from the first Trump administration.

A substantial fraction of that cost comes from energy regulations, with $870 billion coming from vehicle emission regulations alone. Biden administration policies were also focused on delaying, complicating, or preventing the extraction of resources on public land. This included designating areas as protected, rescinding permits that had been previously issued under President Trump, and requiring additional reviews of the issuance of drilling permits by political appointees. Eliminating these policies may make it easier and faster for producers to extract resources from public land.

However, the mere fact that President Trump could so easily reverse so much of the Biden administration’s energy policies shows the limits of his own executive orders on the subject. Presidents have increasingly turned to executive orders to try to advance their agenda because they are easier to enact than getting legislation through Congress. But the fact that executive orders are easy to do also makes them easy to undo. President Trump’s first administration ultimately left little in the way of an energy legacy because it relied so much on actions by the executive branch. To avoid a repeat of this fate, President Trump will have to work with Congress to provide his energy policies with more legal stability.

There are also a few dissonant notes in the melody of the executive order. Provisions in the order restricting permits for wind energy and potentially relying on the Defense Production Act (DPA) to force project construction run counter to the overall theme of unleashing American energy. America is rich both in natural resources and talent, and our energy system has worked best when it is allowed to flourish, not when it is micromanaged from Washington. The Trump administration should allow all forms of energy to compete fairly and reserve measures like the DPA as a last resort to rectify true national security concerns that cannot be addressed through the market.

Overall, the executive order lays out an ambitious energy agenda that is in keeping with the broader themes of the Trump administration’s America First philosophy. But the administration will have to go beyond executive action if it is to sustain that agenda over the long term.