Trump says to unleash American fossil fuels, halt climate cooperation
(Reuters) - President Donald Trump on Monday laid out a sweeping plan to maximize oil and gas production, including by declaring a national energy emergency to speed permitting, rolling back environmental protections, and withdrawing the U.S. from an international pact to fight climate change.
The moves signal a dramatic U-turn in Washington’s energy policy after former President Joe Biden sought for four years to encourage a transition away from fossil fuels in the world's largest economy. But it remains to be seen if Trump's measures will have any impact on U.S. production, already at record levels as drillers chase high prices in the wake of sanctions on Russia after its 2022 invasion of Ukraine.
"America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth," Trump said during his inauguration speech.
"And we are going to use it."
Trump later signed executive orders declaring a national energy emergency and withdrawing the United States from the 2015 Paris climate deal, the international pact to fight global warming. He also signed orders aimed at promoting oil and gas development in Alaska, reversing Biden's efforts to protect Arctic lands and U.S. coastal waters from drilling, revoking Biden's target for EV adoption, suspending offshore wind lease sales, and lifting a freeze on LNG export permitting.
Trump said he expects the orders to help reduce consumer energy prices and improve U.S. national security, by expanding domestic supplies and also bolstering allies.
"We will bring prices down, fill our strategic reserves up again right to the top, and export American energy all over the world," he said.
Environmental groups have said they intend to challenge the executive orders in court.
The Biden administration had seen electric vehicle and wind energy technologies as crucial to efforts to decarbonize the transportation and power sectors, which together make up around half of U.S. carbon dioxide emissions.
Biden's administration sought to encourage electric vehicle use by offering a consumer subsidy for new EV purchases, and by imposing tougher tailpipe emissions standards on automakers. It also sought to encourage clean energy technologies like wind and solar through tax credits that have drawn billions of dollars in new manufacturing and project investments.
The Democratic National Committee called Trump's day one agenda a "disaster for working families".
Item 1 of 2 President Donald Trump and Vice President JD Vance listen to Christopher Macchio sing during the 60th Presidential Inauguration in the Rotunda of the U.S. Capitol in Washington, Monday, Jan. 20, 2025. Julia Demaree Nikhinson/Pool via REUTERS
[1/2]President Donald Trump and Vice President JD Vance listen to Christopher Macchio sing during the 60th Presidential Inauguration in the Rotunda of the U.S. Capitol in Washington, Monday, Jan. 20, 2025. Julia Demaree Nikhinson/Pool via REUTERS Purchase Licensing Rights, opens new tab
"Killing manufacturing jobs and giving a free pass to polluters that make people sick is hardly putting ‘America first,'" said Alex Floyd, DNC spokesperson.
POWER INDUSTRY OVERHAUL
Trump had said repeatedly during his campaign he intends to declare a national energy emergency, arguing the U.S. should produce more fossil fuels and also ramp up power generation to meet rising demand.
U.S. data center power use, a major driver of growing electricity demand, could nearly triple in the next three years, and consume as much as 12% of the country's power to fuel artificial intelligence and other technologies, according to the Department of Energy.
Trump's declaration seeks to ease environmental restrictions on power plants to meet that demand, speed up construction of new plants, and ease permitting for transmission and pipeline projects.
"It allows you to do whatever you’ve got to do to get ahead of that problem," Trump told reporters while signing the order. "And we do have that kind of an emergency."
Sam Sankar, senior vice president for programs at Earthjustice, a non-profit group which is gearing up to fight Trump policies in the courts, said the declaration of an energy emergency in a non-war period is rare and untested, creating a potential legal vulnerability.
The first Trump administration had considered using emergency powers under the Federal Power Act to attempt to carry out a pledge to rescue the declining coal industry, but never followed through.
Trump's promise to refill strategic reserves, meanwhile, has the potential to lift oil prices by boosting demand for U.S. crude oil.
After the invasion of Ukraine, Biden had sold more than 180 million barrels of crude oil from the U.S. Strategic Petroleum Reserve, a record amount.
The sales helped keep gasoline prices in check, but sank the reserve - designed to buffer the United States from a potential supply shock - to the lowest level in 40 years.
President Donald Trump signed an executive order on Monday to create an advisory group called the Department of Government Efficiency aimed at carrying out dramatic cuts to the U.S. government, attracting immediate lawsuits challenging its operations.
The group -- dubbed the Department of Government Efficiency, or "DOGE" -- is being run by Tesla (TSLA.O), opens new tab CEO Elon Musk and has grandiose goals of eliminating entire federal agencies and cutting three quarters of federal government jobs.
Failed Republican presidential candidate Vivek Ramaswamy was a co-chair but has left to run for elected office, Trump spokesperson Anna Kelly said. A person familiar with Ramaswamy's plan says he is gearing up to run for governor of Ohio.
"To restore competence and effectiveness to our federal government, my administration will establish the brand new Department of Government Efficiency," Trump said in his inaugural speech on Monday.
The executive order, announced by the White House late on Monday, stated the group's aim to "modernize federal technology and software."
Trump told reporters there were plans to hire about 20 individuals to ensure the implementation of the group's objectives.
Item 1 of 4 Tesla and SpaceX CEO Elon Musk arrives to the inauguration in the Rotunda of the U.S. Capitol. Chip Somodevilla/Pool
[1/4]Tesla and SpaceX CEO Elon Musk arrives to the inauguration in the Rotunda of the U.S. Capitol. Chip Somodevilla/Pool Purchase Licensing Rights, opens new tab
However, the committee, despite its name, is not a department and has limited official power to carry out any reorganization, let alone the sweeping cuts proposed by Musk and Ramaswamy.
Government employee unions, watchdog groups, and public interest organizations sued within minutes of the announcement.
Among them were National Security Counselors, which alleged, opens new tab that DOGE was breaking a 1972 law that governed federal advisory committees. So too did, opens new tab the American Public Health Association, the American Federation of Teachers, and Citizens for Responsibility and Ethics in Washington, a watchdog group.
Another watchdog group, Public Citizen, is suing over the DOGE's uncertain legal status, opens new tab, along with a union representing U.S. government employees.
Tesla and the White House's Office of Management and Budget, which is named as a defendant in the lawsuits, didn't immediately return messages seeking comment.
Advisory committees on cutting government waste are often announced to great fanfare and typically accomplish little of note.
In 1982, then-President Ronald Reagan announced a group, opens new tab composed of "outstanding experts from the private sector" to review the executive branch's spending. It ended up delivering its report 18 months late; most of its recommendations were never implemented.
British pay growth stayed stubbornly strong in the three months to November but there were more signs of a softening jobs market, according to data on Tuesday that reinforced the current outlook for Bank of England interest rates.
Growth in private-sector pay excluding bonuses - a measure watched closely by the BoE as a gauge of domestic inflation pressure - rose to 6.0% in the three months to November from 5.5% in the three months to October.
It was the strongest reading since February 2024 and suggested that the central bank's forecast of 5.1% for the fourth quarter as a whole will be overshot by a wide margin.
Sterling and market expectations for a Bank of England interest rate cut on Feb. 6 were largely unmoved by the data.
Economists and investors expect the BoE to cut its main interest rate by 0.25 percentage points to 4.5% on Feb. 6, and economists polled by Reuters expect three further cuts this year, while markets expect one or two more after February.
While pay growth pointed to persistent inflationary pressure, other measures of the health of the labour market have pointed in the opposite direction.
Several business surveys have shown a sharp fall in the outlook for employment since finance minister Rachel Reeves announced big tax increases on employers in her Oct. 30 budget.
Tuesday's data showed the jobless rate rose slightly to 4.4% in the three months to November, its highest since the three months to May, as expected in a Reuters poll of economists.
However, the survey used for calculating the unemployment rate is in the process of being overhauled after response rates fell too low to be a reliable gauge of the jobs market.
Separate data provided by employers to the tax authorities showed the number of employees dropped by 47,000 in December, the sharpest fall since November 2020 and following a 32,000 drop a month earlier.
"The latest figures show a familiar combination of strong wage growth despite further cooling in the labour market, with vacancies falling and an uptick in unemployment. Sticky wage growth remains a key concern for the Bank of England," said Jack Kennedy, economist at Indeed, an online jobs portal.
Pay growth for the whole economy, excluding bonuses, was 5.6% higher in the three months to the end of November than a year earlier, the strongest reading since the three months to May 2024. A Reuters poll had pointed to regular wage growth of 5.5%.
Britain's economy stagnated in the third quarter of 2024, when the prospect of big tax rises in the Labour government's budget hit companies, and the BoE estimates there was zero growth in the final quarter of 2024 too.