President Donald J. Trump has taken off the shackles of energy production by ending the Democrats’ war on fossil fuels. He is promoting oil and gas production, canceling the ban on new exports of natural gas, ending requirements for sales of electric vehicles and other electric appliances, and withdrawing from the Paris Agreement and other commitments of the United Nations Framework Convention on Climate Change.
The ease with which Trump has reversed his predecessors’ energy agenda has stunned not only Democrats but also the global environmental establishment. Out with NetZero, incentives for wind and solar, and offshore wind on Federal lands. In with oil and natural gas production, domestic manufacturing, and the choice of old cars or Teslas, as well as gas or electric stoves.
Domestically, this means lower electricity and transportation costs. With increased output, the North American energy platform, with its heavy crude from Canada and Mexico and its light crude and refineries in the United States, will be able to set prices.
Globally, countries will no longer have to depend on corrupt governments as sources of oil and gas. The president’s goal is energy dominance, which means producing enough oil and natural gas to replace OPEC countries as the global price setter, cutting into Russia’s oil revenues and weakening its economy.
America will no longer have to rely on China for critical minerals, renewables, and electric vehicles. China produces a large share of the renewables mandated by President Joe Biden, and about 80 percent of electric batteries.
Europe and the United Kingdom will be pressured into softening their strict NetZero laws and following suit. Staying on the same path will sow social unrest as European GDP growth slows, unemployment rises, and differences in standards of living between America and Europe grow.
In emerging economies, more support for fossil fueled power plants will lower energy prices, as US and international banks start lending for fossil fuel projects. This 180-degree turn will give America leverage among energy-starved regions such as sub-Saharan Africa, Latin America, and South Asia, all areas that are affected by energy poverty.
Secure Energy at Home
The United States has approximately 1.7 trillion barrels of technically recoverable oil and over 4 quadrillion cubic feet of technically recoverable natural gas resources, enough to use at home and export to Europe and Asia. Treasury Secretary Scott Bessent proposed increasing US production by 3 million barrels per day, potentially driving prices below $50 a barrel.
Trump’s actions are welcome news. America faces a national energy emergency because the Biden administration has created a serious and dangerous energy situation so damaging to ordinary people and our country that it requires immediate action.
Biden’s energy agenda caused prices of electricity and transportation to rise, raising inflation, disproportionately hurting poor people, small businesses and farmers.
These poorly considered climate regulations impoverished Americans and made China rich without lowering global emissions or temperatures. Four more years of Democrat green energy policies would have indebted the nation through subsidies and high energy costs while only reducing global temperatures by two tenths of one degree by 2100, according to government models.
Trump’s executive orders will reverse Biden’s damage. He has paused final Environmental Protection Agency regulations that require 70 percent of new cars sold in 2032 to be battery-powered electric or plug-in hybrid, up from eight percent today, or face fines and mandatory purchases of credits. This is wise because these cars are more expensive than gasoline-powered vehicles. The popular Chevy Silverado is $96,000 for an electric, $42,300 for a gasoline-powered pickup truck.
Auto companies also have had to deal with California auto regulations, and California’s Advanced Clean Car II Rules require all new vehicles sold in the Golden State to be plug-in hybrid or pure battery powered by 2035. Trump wants to rescind President Biden’s waiver for California that allowed it to set auto regulations. Without the waiver, California cannot set its own vehicle emission standards.
The average US residential electricity price is 17 cents per kilowatt-hour, and rates range from 11 cents per kilowatt-hour in Utah and Louisiana to 33 cents in California. (Hawaii, in the Pacific, has a higher rate.) Of the 10 states with the highest electricity prices, all but one has required use of renewables. Of the 10 states with the lowest electricity prices, all but one have no requirements for renewables.
The residential cost of electricity has risen by 32 percent since January 2021. With 50 states, each with its own way of producing electricity, it’s clear that the required use of renewables leads to higher prices. This is because intermittent energy is more complicated to produce than continuous energy. The wind blows for free, and the sun shines for free, but integrating their energy into the electricity grid is more complicated and costly than running a natural gas generator continuously.
Trump wants to roll back incentives for wind and solar, which reduce production of electricity from natural gas, coal and nuclear power, and send electricity bills higher. He has ended the ban on new natural gas exports, which has hurt our allies, and is speeding up permitting for pipeline construction to get the natural gas to export terminals.
American states are still free to impose their own restrictions on energy production, and many will continue to do so. But states that want to produce energy can now, in Trump’s inimitable words, “drill, baby, drill,” and access “the liquid gold under our feet.” The direct consequences will be to lower the costs of American electricity and make it easier to attract energy intensive manufacturing.
Emasculating OPEC and China
Energy dominance will allow America to produce enough oil and natural gas to replace OPEC countries as the global price setter. As noted above, with increased output, the North American energy platform will be able to set prices.
Sales of US oil and natural gas can give countries an alternative to Russian products and cut into Russian sales. Russian oil and natural gas revenues in 2024, the vast majority from oil, amounted to $120 billion, about 30 percent of its total revenues, substantially lower than levels of 50 percent between 2011 and 2014.
This will be even more important when fighting in Ukraine ends, with possible removal of sanctions on Russia. Trump would be able to pressure countries to use American oil rather than Russian oil, potentially using tariffs to encourage buyers.
Trump’s planned increase in domestic production of critical minerals would cut into China’s current dominance. China now controls 38 percent of the reserves of global rare earth elements; 60 percent of rare earth mining; 85 percent of rare earth processing, and 90 percent of rare earth permanent magnet manufacturing. This enables the production of 80 percent of solar components, global battery production, and cobalt refining capacity.
Rolling back requirements for wind and solar energy, as well as electric vehicles and appliances, will reduce America’s dependence on China and improve American energy, economic, and national security. China is trying to corner the market for green energy infrastructure formerly mandated by American politicians and still mandated by Europe.
Supporting China’s green dominance is especially egregious because the Chinese Communist Party is a totalitarian regime with a poor environmental and human rights record. Beijing is committing genocide against the minority Uyghur people of Xinjiang and has imposed draconian restrictions on political freedoms in Hong Kong. The CCP has reduced or eliminated religious liberties for Christians and Buddhist worshippers of the Dalai Lama throughout Tibet and is now censoring churches in mainland China.
Pressuring Europe to Abandon NetZero
The international consequences of Trump’s energy revolution go beyond dominating export markets and reshaping foreign policy. By walking away from the NetZero fiasco that has taken over the West, Trump is quietly pressuring other countries to do the same. Uncuffing ourselves from NetZero will cause American growth to accelerate and lead other countries to take a clear-eyed look at their electricity prices to stop the giant sucking sound of manufacturing following the lowest energy prices.
By abandoning electrification mandates, Trump will not only reduce Chinese exports to America but may encourage Europeans to follow in order to remain competitive. It would be unsustainable for Europe to stand back and watch manufacturing relocate to America due to lower electricity and transport costs. American tax reductions will add further pressure.
Right-of-center European parties are making gains due to impatience with NetZero policies that raise the costs of electricity and car ownership. Farmers are protesting in countries including France and the Netherlands due to required changes in agricultural practices.
Similarly, when President Ronald Reagan and Congress reduced America’s top tax rate from 50 percent to 28 percent in the Tax Reform Act of 1986, many other countries followed suit to remain competitive. The top rate in Britain declined to 40 percent from 60 percent; Canada’s top rate went from 34 percent to 29 percent; Japan lowered its rate from 70 percent to 50 percent; and New Zealand reduced its top rate from 66 percent to 33 percent.
With American energy dominance, companies that have factories in Europe and America could choose to expand their American operations. And decoupling from China, another of Trump’s goals, will be far easier with lower energy prices and tax rates.
Cheaper energy caused by additional US production and loans for fossil-fuel power plants would benefit people without reliable electricity and cheap fuel in emerging economies. Lower oil prices empower countries with poor electricity distribution, lowering costs of diesel generators used by businesses and households.
Prosperity and Reduced Migration
Trump has come under fire for closing down the US Agency for International Development and ending billions in foreign aid. But to help emerging economies and to stem migration pressures, Trump could, at no cost, roll back the ban on loans to poor countries for fossil fuel power projects.
Currently international development organizations and private banks are pressured to lend only for green energy. That means no loans for power plants, transmission lines for fossil fuel electricity, or distribution lines and meters to people’s homes. This ban gives China more leverage to lend to African and Latin American countries and take their ports as collateral.
Refusing to lend for fossil fuel power projects has more harmful economic effects than ending some of USAID’s $40 billion in funding, because this ban keeps emerging economies poor. Lack of fossil fuel energy is impoverishing many African and Latin American countries and placing pressure on residents to migrate to fossil fuel rich areas, particularly Europe and North America, in search of higher standards of living.
Consider that in 2020, 11 million people from Africa were living in Europe; 5 million in Asia; and 3 million in North America. The same year, about 25 million people from Latin America were living in North America.
Although some have left, 140 private banks from 44 countries, including Barclays, JP Morgan Chase, and Sumitomo, joined the United Nations’ NetZero Banking Alliance and have pledged to reduce lending for fossil fuel projects. The World Bank discourages lending for fossil fuels and nuclear power and prioritizes renewables.
The relationship between economic development and energy use is so strong that not a single nation has high per capita income and low per capita energy usage. Conversely, no country has high energy use per capita and low per capita income.
Higher energy use allows for better lives from higher productivity, increased agricultural yields, and higher household consumption, which reduces the drudgery of subsistence farming. With energy, farmers either have access to innovative farming technologies, or gain economic mobility to learn other skills to make a livelihood.
Countries that only use around 500 kilowatt hours of energy per person annually often have subsistence-level production and incomes of around $1,000 per year, making migration an attractive prospect. When energy consumption is above 10,000 kWh per person, poverty declines drastically, with a virtual eradication at around 100,000 kWh per person.
High-energy-use nations have access to more doctors and safer drinking water, which result in lower maternal and child mortality, as well as investments in pollution-mitigation measures.
The West romanticizes nature, but natural disasters disproportionately inflict greater humanitarian damage on poor and developing countries than on wealthy ones, due to disparities in warning systems, resilient shelter, and the means to quickly recover. Access to affordable energy is vital to rectify these inequalities.
For example, Lesotho, Djibouti, and Zimbabwe each consumed less than 4,000 kWh of energy on a per capita basis in 2018. That year, they each had an average of about $4,450 in per capita income and consumed approximately $3,400 (in 2018 dollars). On the other hand, Norway, the United States, and Iceland each consumed more than 80,000 kWh of energy (per capita) and each had almost $45,000 in per capita GDP and more than $22,000 in consumption.
When low-energy-use countries are prevented from accessing reliable energy, their residents search abroad for other opportunities. Illegal immigration is imposing substantial economic costs on the United States and Western Europe. Allowing real economic progress in Latin America and Africa would relieve some of the pressure to move.
President Trump is making US energy dominance a key component of American foreign policy while ensuring that domestic and international goals are aligned. His new path will allow the United States not only to secure affordable energy for its citizens, markets for its energy exports, and access to new energy natural resources—but to make dramatic changes around the globe.
Diana Furchtgott-Roth, is Director of the Center for Energy, Climate and Environment at The Heritage Foundation and served in the administrations of Presidents Reagan, Bush ‘41, Bush ‘43, and Trump ‘45.
