Make America Energy Dominant
- SWS
- Feb 19
- 7 min read
Energy Policy Perspectives Vol. 4 - February 19, 2025
On February 14th, President Trump unveiled his latest executive order (EO) “Establishing the National Energy Dominance Council”. This order creates a council to advise the President on how best to achieve his previously stated policy objectives to make America energy dominant through a renewed focus on fossil fuels, dispatchable electricity generation, reducing permitting bottlenecks and broad deregulation.
The National Energy Dominance Council. The aim is that the National Energy Dominance Council (Council) will foster an unprecedented level of coordination among federal agencies to advance “American Energy”, which the Administration views as crucial to jumpstarting the economy, driving down the cost for consumers and helping to generate revenues to help reduce the deficit. By May 25, 2025 (within 100 days of the date of the order) the Council is expected to recommend to the President a National Energy Dominance Strategy. The 19-member council, with the potential for additional members as designated by the President, will be chaired by Secretary of the Interior Doug Burgum, vice-chaired by Secretary of Energy Chris Wright and consists of the heads of numerous executive departments and agencies involved in the permitting, production, generation, distribution, regulation and transportation of all forms of American energy (including the Secretaries of State, Treasury, Defense, Agriculture, Commerce, Transportation and the Attorney General).
Led by businessmen, not career politicians. We believe looking at its leadership may give a glimpse of what recommendations the newly established council may provide. Secretary of the Interior Doug Burgum is a career software executive and venture capitalist whose experience in energy is related to his tenure as Governor of North Dakota (2016-2024), while Secretary of Energy Chris Wright is an engineer, entrepreneur and fracking executive with no prior political experience. Both are strong advocates for fossil fuels, but each also understand technology, investment and take a more measured approach that reflects a shift in priorities from net zero to energy abundance rather than a radical policy overhaul.
Dispatchable generation and critical minerals. The Trump administration continues to highlight its support for dispatchable electricity generation sources (i.e. natural gas, coal, nuclear, biofuels, geothermal and hydro) as well as critical minerals. Section 4 (ii) provides a non-exhaustive list of actions agencies can take to increase energy production. We interpret the “facilitating the reopening of closed power plants” as an indirect commentary on the greater role the Administration sees for coal which has seen its electrical output cut by ~1/3rd over the past two decades as it has been replaced by cheaper and cleaner natural gas and renewable generation. Delaying coal retirements and re-opening recently shuttered plants represent one of the few short-term solutions the Council could pursue. The Council could see this as an opportunity to buy time for less proven dispatchable clean energy technologies such as geothermal and small-modular nuclear reactors to mature.
Faster permitting promised again. Section 4. (ii) of the order also establishes faster permitting as a key area of interest, something that we believe is much needed and can broadly benefit the entire energy sector. The order prioritizes significantly increasing electricity capacity and rapidly facilitating approvals for energy infrastructure. In his day one executive order, “Unleashing American Energy” President Trump has already revoked President Carter’s 1977 Executive Order that gave regulatory authority to the Council on Environmental Quality (CEQ) in an effort to streamline the National Environmental Policy Act (NEPA) review process and accelerate permitting timelines.
Supply chain challenges and grid infrastructure presents obstacles to growth. Permitting is only one obstacle; another is the availability of critical electrical equipment such as transformers which are necessary for new projects and infrastructure. Transformers, which step up and step-down voltages throughout the power system, come in numerous types and sizes but electricity demand growth, aging infrastructure and extreme weather events have caused demand for larger transformers to surge with no signs of relief on the horizon. The shortage began during the COVID pandemic and has only been exacerbated. There is no quick fix to resolve current bottlenecks which have already resulted in project delays although policy can help incentivize actions to make sure these issues do not linger and to proactively address developing ones. According to the National Association of Electrical Manufacturers (NEMA) delivery of a new distribution transformer ordered today could take up to three years, compared to the 4–6-week timeline of five years ago. Last week (February 12th), Eaton Corp. Plc (ETN, $313.12, NR) announced plans to help address the critical shortage of transformers amid record demand by adding a 3rd U.S. manufacturing facility for its three-phase transformers in South Carolina but production will not begin until 2027. Additionally, in its investor deck last week (February 11th) WESCO International, Inc. (WCC, $199.95, NR) highlighted AI-driven data centers typically take 3-5 years to power, with transformers one of the last pieces of equipment to arrive, compared to 1-2 years to construct the principal facility. Given the importance of AI dominance to the Trump Administration, we anticipate further support to relieve these bottlenecks will be a strategic priority.
Natural gas infrastructure may finally receive a boost. The executive order explicitly sets out the policy objective of “approving the construction of natural gas pipelines to, or in, New England, California, Alaska, and other areas of the country underserved by American natural gas”. While the need for additional natural gas pipeline infrastructure is nothing new and will ultimately require federal and state approval, we believe this is a priority of the Trump Administration which will do everything in its power to push through. Given differentials in New England we believe this could be particularly beneficial to Appalachian E&Ps and potentially help stimulate growth in the 2027+ timeframe. Additionally, Governor Kathy Hochul (D-NY) recently approved permits to expand the capacity of the 414-mile Iroquois pipeline to get more natural gas into New York City and southern Connecticut. This is notable because it goes against New York’s green energy law, demonstrating that safety and reliability will not be compromised in order to achieve statewide greenhouse gas emission limits.
Natural gas supply agreements directly to data centers. As we have previously highlighted, natural gas is expected to be a big winner of the AI-focused data center buildout underway in the U.S. Last week, (February 10th) Energy Transfer LP (ET, $20.30, NR) and Cloudburst Data Centers, Inc. entered into a direct natural gas supply agreement for up to 450,000 MMBtu/d via ET’s Oasis Pipeline. Cloudburst expects to reach final investment decision later this year, operational by 3Q26 and would use the gas supply for ~1.2 GW of “behind-the-meter” electric power. This is the first of what we expect will be several agreements to supply, store and transport natural gas to fuel data centers, electric generation facilities, and other industrial power demand customers.
Mend or end the IRA? Section 4 (iv) tasks the council with advising “the President regarding incentives to attract and retain private sector energy-production investments”. We believe this could be an indirect reference to the Inflation Reduction Act (IRA). While President Trump has been a vocal critic of the IRA, not all Republican members of Congress are onboard with a full repeal given a majority of the resulting investment and job creation has benefited Republican states. The Republican-leaning bias of rural states/counties (i.e. cheap land), geographic distribution of wind and solar resource along with generally less stringent regulations has led to marriage of convenience between Republican states and increasingly cost competitive renewables. Texas is now the national leader in clean energy deployment and Midwest states such as Iowa, South Dakota and Kansas generate over 50% of their electricity from wind according to EIA data spanning November 2023 – October 2024. One of the slimmest margins in the House of Representatives in nearly 100 years ensures it would be difficult to garner sufficient Congressional support to fully repeal the IRA. Particularly the investment and production tax credits, which were extended (most through 2032 with a sunset in its final three years) and broadened by the IRA but trace their origins back to the Energy Policy Act of 2005, could prove more trouble than it is worth to override particularly as they help to support Trump administration objectives of domestic energy production, job creation and reindustrialization. While the Administration will likely look to remove and/or change specific sections of the IRA, we believe it will have to choose its battles wisely to not spook the private markets that it will soon seek to leverage for its own energy initiatives.
More clarity is required to facilitate private sector investment. The confusion and uncertainty from a flurry of executive orders, funding delays, permit freezes, judicial challenges and layoffs we believe add risk to administration achieving its energy goals. Large-scale energy infrastructure projects expected to be in operation for multiple decades with capital costs in the billions require a degree of policy certainty/consistency to attract investment. Given the current upheaval we believe this is a difficult time to support new investment of any type as executives try to filter the signal from the noise whether it relates to IRA benefits, tariff increases or potential broader economic impacts of the administration’s policies and rhetoric. Additionally, some have expressed concern around the Administration’s close scrutiny of government agency spending and what that may mean in terms of the Department of Energy (DOE) receiving adequate resources as it attempts to address the significant electricity load growth ahead. This is particularly true as the Trump Administration’s energy policy aims to promote relatively nascent technologies such as carbon capture, geothermal, small-modular nuclear reactors and next-generation hydropower.
Wildfire Liability Opportunity? While the EO did not specifically address the wildfire liability risk issue, the new council could be an important avenue for utilities to address the issue with the administration. With the council seemingly keen to facilitate significant new electricity infrastructure, the wildfire liability issue needs to achieve something akin to a Price-Anderson Act (PAA), that enabled the nascent nuclear electricity generation development in the 1950s, for utility wildfire liability to enable the utility sector to efficiently fund the huge electricity infrastructure investments needed over the next few decades.
Solar, wind and batteries look for ways to fit into American Energy Dominance. The Trump Administration’s call for energy dominance is centered around fossil fuels but it does include clean energy technologies such as nuclear as well as dispatchable, renewable energy resources such as biofuels, hydropower and geothermal. Solar and wind, the fastest growing sources of electricity generation in the U.S. and globally, are notable exceptions and attempts to slow their progress are contradictory to the Administration’s goal of energy abundance. All generation options are increasingly needed to meet the significant electricity load growth anticipated in the years ahead, particularly solar, batteries and wind which represented over 90% of power capacity additions to the U.S. grid in 2024. Clean energy advocates continue to stress the domestic manufacturing, economic and job creation benefits of solar and wind, which overlap with policy objectives of the Trump Administration as they seek less hostility at the federal level. Others see solar, wind and batteries as necessary parts of the U.S. energy dominance toolkit from a national defense and energy independence perspective given China’s dominance and the growing influence it will gain as many emerging economies, that do not have the benefit of domestic fossil fuel reserves, see solar + batteries as a compelling option. The growth of the U.S. solar module manufacturing industry, which has increased from 7 GW in 2020 to 50 GW today (U.S. is now the 3rd largest solar module producer in the world) shows the potential for the U.S. to grow to become a leader globally. Fossil fuels were once an area of weakness and vulnerability for the U.S. and now an area of strength, some believe this same playbook can be adapted to drive U.S. global dominance in clean technologies.
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