Unleashing American Energy Executive Order: Impact on Carbon Capture
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The Trump Administration issued the “Unleashing American Energy” Executive Order (EO) on January 20, 2025, which, among other matters,
- seeks to eliminate any “undue burden on the identification, development, or use of domestic energy resources - with particular attention to oil, natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy resources,”
- directs that in all federal permitting adjudications or regulatory processes, all agencies shall adhere to only the relevant legislated requirements for environmental considerations and any considerations beyond these requirements are eliminated,
- eliminates the calculation of the “social cost of carbon” from any federal permitting or regulatory decision, and
- directs all agencies to immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 (Public Law 117-169) or the Infrastructure Investment and Jobs Act (Public Law 117-58) and instructs the agencies to review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of these appropriated funds for consistency with the law and the policy outlined in section 2 of the EO.
It is expected that this executive action will decrease government support for carbon capture and could decrease demand for carbon capture.
The Unleashing American Energy EO does not affect tax credits provided in the Inflation Reduction Act, and tax considerations are not within the scope of this Legal Update.
REVOCATION OF PRIOR EXECUTIVE ORDERS
This Unleashing American Energy EO revoked several executive orders issued by the Biden Administration—including Executive Order 14082, “Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022”—and abolished any offices established with those executive orders. Executive Order 14082 sought to (i) achieve the climate goals of the United States to reduce greenhouse gas emissions 50-52% below 2005 levels in 2030, achieve a carbon pollution-free electricity sector by 2035, and achieve net-zero emissions by no later than 2050; (ii) advance “environmental and climate justice through an all-of-government approach”; and (iii) promote construction of clean energy generation, storage, and transmission.
IMPACT ON CARBON CAPTURE
It appears the Trump Administration is directing agencies to shift focus away from reducing carbon emissions. This directive is further emphasized by President Trump’s withdrawal of the United States from the Paris Agreement, an international climate accord in which countries around the world agreed to cut greenhouse gas emissions. The Paris Agreement and other governmental incentives have helped drive the carbon footprint offset demand. With decreased government support and a shift away from reducing carbon emissions, it is possible the demand for carbon capture and subsequent use or sequestration will decrease.
SUBSEQUENT ACTIVITY
On January 21, 2025, President Trump issued Memo M-25-11 to provide guidance for the implementation of the Unleashing American Energy EO. The memo clarifies that the pause on the disbursement of funds appropriated under the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act only applies to funds supporting programs, projects, or activities that may be implicated by the policy outlined in section 2 of the EO.
However, a recent court order states that federal agencies cannot pause or terminate any awards or obligations on the basis of the president’s recently issued executive orders. Nonetheless, an agency may do so based purely on that agency’s own permitted discretion.
