A Republican-controlled United States will shift the country’s energy policy away from net-zero emissions targets, but the full agenda of elected President Trump will face political and market opposition, according to Wood Mackenzie’s analysis.

The U.S. is likely to face more relaxed emissions regulations, protectionist trade policies, and a withdrawal from the Paris Agreement, all of which would move U.S. policy away from a net-zero emissions trajectory. However, bipartisan support for the Inflation Reduction Act (IRA) in Congress, the competitive economy for renewable energy, and private sector net-zero emissions goals will not derail the energy transition.

“The IRA has supported more than $220 billion in manufacturing investments, much of which has concentrated in Republican-led states,” said David Brown, head of Wood Mackenzie’s Energy Transition Service. “The likelihood of a complete repeal of the IRA is low. However, there could be some modifications to the legislation. Renewable energy investment might slow, but capacity is expected to grow by 243 gigawatts (GW) between 2024 and 2030, even in our delayed transition scenario.

“We expect President-elect Trump to support the growth aspirations of major tech companies. We’ve identified more than 51 GW of new data center announcements since 2023, which are more likely to materialize if the Republican-backed permitting reform passes. Since manufacturing investments are concentrated in Republican states, we believe advanced manufacturing credits will remain intact, and around 7 GW of solar energy will likely continue to be produced.”

Brown noted that given the strong push for low-carbon investments, the impact of the elections will vary depending on the sector, commodity, and technology, with some at more immediate risk than others.

U.S. Solar: Short-term project pipeline is solid, while long-term projects face policy risks

According to Wood Mackenzie, the U.S. does not lack solar demand. The contracted utility-scale solar project pipeline amounts to nearly 100 GW of DC capacity, and demand for distributed solar projects from customers continues to grow. A Trump administration will not change this in the short term.

“We expect steady installation growth over the coming years despite high solar demand, mainly driven by interconnection and transmission bottlenecks,” said Michelle Davis, Wood Mackenzie’s Global Solar Energy Director. “Then, between 2028 and 2031, annual growth should modestly pick up, averaging 5% per year, reaching around 50 GW of DC capacity. However, several IRA incentives, such as bonus tax credit supplements and tax credit transferability, drive additional growth in our base case forecast. This growth is at risk if the IRA undergoes substantial modifications, a strong possibility given Trump’s agenda to maintain tax cuts.”

Offshore and Onshore Wind: Implementation risks emerge after 2040

Wood Mackenzie expects the new administration to downplay offshore wind development by restricting permitting resources and limiting new lease agreements. However, these impacts will not materially change 10-year outlooks, as nearly 25 GW of projects in development already have permits or are in the final stages of securing them.

The most significant risk is related to project economics.

“If the administration decides not to issue guidance on the additional domestic content credit for offshore wind or reduces the 45X advanced manufacturing tax credit, investments in the domestic supply chain could be significantly delayed,” said Stephen Maldonado, a Wood Mackenzie research analyst. “While Wood Mackenzie’s base case outlook expects 27 GW of installed capacity by 2033, the combined effects of these restrictions could result in a 30% reduction over the same period.”

A second Trump administration also presents a significant risk of falling onshore wind energy. If Congress tries to repeal key IRA mechanisms or restructure an early phase-out of the production tax credit, implementation could slow significantly.

Energy Storage: Exposed to IRA policy changes

In Wood Mackenzie’s base case scenario, the IRA remains in effect, and energy storage continues to expand rapidly as a necessary component for grid balancing, reliability, and resilience due to the increase in renewable energy. However, policy changes to the IRA could alter this.

“A faster phase-out of the ITC and PTC tax incentives, the elimination of bonuses and manufacturing incentives, and heightened protectionism, including higher tariffs, are events to watch,” said Allison Weis, Wood Mackenzie’s Global Energy Storage Director. “Although transferability may not be a likely goal for Republicans, its removal presents a particular downside risk for storage, as it has been a key source of ITC funding for standalone storage projects.”

Natural Gas Demand: Deregulation supports growth in demand through 2030

Wood Mackenzie expects the U.S. Environmental Protection Agency (EPA) to be a target for deregulation and to become more favorable to fossil fuels. The demand challenging the final greenhouse gas (GHG) emission standards for existing coal plants and new gas plants is still ongoing.

“We believe GHG standards will not survive either the legal process or Trump’s EPA,” said Ryan Sweezey, Wood Mackenzie’s director of energy and renewables. “Demand growth driven by data centers and manufacturing will require significant investment in new generation.”

Carbon Removal Technologies: 45Q remains secure

Trump’s executive powers have little ability to completely eliminate various IRA provisions, such as the enhanced 45Q credits and project funding, and bipartisan support for CCUS makes it unlikely that a Republican-led Congress will focus on these incentives in an IRA dismantling. However, other administration priorities, such as repealing SEC emission reporting and EPA emission reduction requirements, could have a cascading effect on short-term CCUS adoption.

In Wood Mackenzie’s base case for U.S. Energy, it expects CCUS capacity to reach 80 Mt by 2030.

Low-carbon Hydrogen: Short-term momentum slows until 45V guidance emerges

A second Trump administration introduces greater uncertainty for low-carbon hydrogen investment. Without a clear Republican stance on hydrogen, 45V guidance could change drastically.

Despite the short-term uncertainty emerging from the 2024 elections, the U.S. offers globally competitive investment incentives. Wood Mackenzie’s Energy Transition 2024 report considers hydrogen a pillar of decarbonization across all scenarios.

Small Modular Nuclear Reactors (SMRs): Policies and market support to continue

A second Trump administration will support nuclear energy, citing energy independence and U.S. technological leadership in the energy sector. The capacity range expected between our base case and delayed transition scenarios is between 14 and 27 GW by 2050.

Liquefied Natural Gas (LNG): Permitting reforms to boost new U.S. LNG supplies

Wood Mackenzie expects President-elect Trump to lift the pause on permitting for U.S. LNG capacity outside of free trade agreements, facilitating the development of additional U.S. LNG export projects. In Wood Mackenzie’s recent 10-year North American gas investment outlook, it expects 50 million metric tonnes per annum (mmtpa) of U.S. projects to reach FID between 2025 and 2027, compared to the previous forecast of 30 mmtpa.

“The competitive environment for new LNG projects in the U.S. will intensify during President-elect Trump’s second term,” said Mark Bononi, a senior analyst at Wood Mackenzie. “Global LNG prices are expected to fall in the coming years as more capacity comes online in North America and the Middle East, but the market will need more LNG post-2030, and the U.S. is competing with other suppliers to meet that need. We expect the Trump administration to enact legislation that simplifies and strengthens the permitting process. A more stable and predictable regulatory and legal environment should allow buyers to renew their reliance on the U.S. for new LNG supplies.”

Oil Markets: Slower economic growth lowers global oil demand and prices

Wood Mackenzie’s analysis shows that the tariff plan could reduce global economic growth by 0.5 percentage points in 2025 and 0.8 percentage points in 2026.

According to Ann Louise Hittle, Vice President of Oil Markets at Wood Mackenzie, “If implemented in full, the tariffs would reduce global oil demand by nearly 0.5 million b/d in 2025 and 1.1 million b/d in 2026.”

L48 Upstream: Activity shifts to the margins

“We do not expect publicly traded exploration and production companies to add new platforms as the group is already dealing with lower crude prices while setting budgets for 2025,” said Robert Clarke, Vice President at Wood Mackenzie. “Keeping reinvestment rates low to support maximum profitability for investors will remain the top priority. We expect average annual oil production to reach 13.2 mb/d in 2024. Volumes will rise to 13.6 mb/d in 2025.”

While price remains the most important determinant, private exploration and production activity could continue to increase in 2025. Washington’s more responsive stance on oil and gas, the potential for permitting reforms on federal lands, and associated infrastructure expansion could encourage operators with more flexible capital plans. The number of private exploration and production rigs has quietly exceeded 50% of the total, which presents some upside potential.

U.S. Refining: Trade tensions benefit traditional refineries

U.S. refining would immediately benefit from new tariffs as refinery sale prices on the Atlantic Coast would rise, as it is a major importer of gasoline and blending components. Despite the short-term support to the refining industry, global headwinds on oil demand, due to weaker economic growth and lower oil demand growth, limit long-term benefits.

“In 2025, we see potential for domestic crude production to rise by ~100 kb/d as refineries seek to capture higher margins,” said Alan Gelder, Senior Vice President at Wood Mackenzie. “We also expect a shift towards gasoline production to replace volumes of imports mostly coming from Europe. However, the economic slowdown starts to limit demand in 2026.”

Coal: Short-term demand increase but no major rebound

With expected short-term demand growth driven by data centers and electrification, the decline in coal generation may experience a brief pause. However, as coal-fired power plants become less economical to operate and continue to close, domestic demand for thermal coal will weaken irreversibly in the coming years. Annual coal production has dropped from 774 Mst in 2017 to just over 500 Mst in 2024. Coal generation capacity has dropped by 179 GW by Q4 2024.

Metals: U.S. tariff policies risk driving metal prices higher

“With the Trump administration, we expect environmental policies around mining to loosen, which will allow for faster processing and potentially lower costs for domestic metal extraction or processing operations,” said Natalie Biggs, Global Director of Base Metals Markets at Wood Mackenzie. “However, despite lower production costs in the U.S., metal costs for U.S. consumers are likely to rise significantly if Trump proceeds with plans to impose tariffs.”

Trade Tariffs: The world must prepare for more protectionism

President-elect Trump has pledged to raise tariffs on imports by at least 10% globally, with a more punitive rate of 60% on Chinese imports. Tariffs could be enacted as early as 2025 through an executive order, replacing existing trade agreements.

“In the short term, the increases in U.S. domestic production to replace imports will be minimal: available manufacturing capacity is insufficient,” said Peter Martin, Director of Economics at Wood Mackenzie. “Changes in trade patterns, particularly to reduce imports from China, will be significant.

“However, with tariffs rising on all trading partners, import costs will increase. We estimate that the increase in tariffs could cost an additional $450 billion in import duties in 2025, a burden that U.S. businesses and households would bear. And this is before any global retaliation.”

Net Emissions from Energy in the U.S., Bt CO2e