Trump executive orders deliver a blow to wind projects

 Justin McGown

 

January 29, 2025

 

Speculation about what a second Donald Trump presidency would mean for infrastructure investment in the US was widespread during the election.

 

It was not clear how soon the new administration would move to end offshore leasing of wind power projects and pause the disbursement of funds from the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA),or move to once again withdraw from the Paris Agreement.

 

Yet that it would happen was a near certainty. And it happened quickly. Last week, Trump signed executive orders that attempt to redirect the course of US environmental and energy policy. The "Temporary Cessation and Immediate Review of Federal Wind Leasing and Permitting Practices" withdraws federal approval for onshore and offshore wind projects nationwide on federal lands, bringing and already slowing offshore wind industry to a halt and casting doubt on the future of a number of onshore projects as well.

 

At the same time, the "Unleashing American Energy" executive order paused investments from the IRA and IIJA, with a special emphasis on the buildout of EV infrastructure and federal support.

 

"In summary, President Trump is doing exactly what he said he was going to do," North Sky Capital managing director and head of infrastructure, Adam Bernstein, tells Infrastructure investor.

 

Bernstein notes that the firm authored two policy pieces in Q4 2024 that proved prescient about the likely actions of a Trump administration, but that doing so was not especially challenging.

 

"We have gotten feedback in the past week saying, ‘Wow, you really nailed it!’ “Bernstein says, allowing that campaign promises from many politicians do go unfulfilled. "We would love to take credit for being excellent forecasters but all he did was listen to what candidate Trump was saying."

 

Indeed, about two weeks before his inauguration, Trump declared: "We’re going to try and have a policy where no windmills are built."

 

According to Bernstein, the pause of offshore wind leasing, along with the Department of Energy IRA loans and grants, and any other executive orders, are the result of Trump taking a "maximal view of his ability to gear those policies towards his preferred outcomes." That means a likely impoundment strategy on many funds, and potentially pushing Congress for a recission of some Biden-era policies.

 

Less clear has been the pause on the IIJA and IRA funding disbursement. A clarification issued by the Office of Management and Budget on 21 January aimed at clearing up confusion caused by broad language in the original order only indicated that agency heads were to pause funding for projects that were part of the "Green New Deal," without indicating any specific included or excluded programs.

 

According to James Grice, a partner at Ackerman, this could be part of a broader strategy on the part of the Trump administration to maximize leverage in future negotiations. Even if he is clearly stating his intentions, the president is still engaging in a form of political theater.

 

"I don't think we should ever discount that President Trump is all about ‘the art of the deal.’ He prides himself on being a master negotiator," Grice says, stressing that he is purely an outside observer. "It's like the tariffs, it seems like he uses all of his tools to get leverage. Does this now create leverage for offshore oil exploration? Could there be a concession where we can reverse some of the wind energy stuff so long as we get new oil projects too?"

 

Lauren Bachel, a senior counselor at Linkdaters who has extensive experience with both onshore and offshore wind energy projects, was more focused on near-term implications. She characterized the collective result of the executive orders as a setback for many climate goals, but not necessarily a fatal one.

 

"I think it's possible for the states to move forward without the federal government, and that's definitely what we are seeing with the Paris Agreement," Bachtel says. "But where federal approvals or permits are necessary, I think we’re going to see states stepping up and challenging more because they can't do that without the federal government."

 

Bachtel says it is likely that companies involved in wind projects – including onshore projects, which are also sometimes dependent on federal approvals – will mount legal challenges to the executive order were possible. It will, however, take time for legal arguments to shape up, particularly given the new administration's rapidfire issuing of orders that may be unclear or even contradictory.

 

Another important consideration is that while wind may have been singled out, other renewable sectors were either relatively unscathed or stand to benefit from other executive orders.

 

Solar for instance has reached profitability in many instances even without subsidies or federal support. While the Trump administration is largely redirecting federal support towards fossil fuel operations, it has not taken any action to actively hinder the growth of solar.

 

Bernstein notes that, as a lower midmarket fund, the deals North Sky finds itself involved in are primarily with state and local governments, and typically insulated from federal matters on many projects

 

"We seek to deploy about $100 million a year of transactional capital," Bernstein says. "Were looking for the single best best couple of regional solar deals or battery deals. Wer’e not macro exposed to those kinds of changes the places where the Executive Order hits are in things like grants and loan programs, as opposed to tax policy."

 

"In both the Unleashing American Energy in the Energy Emergency Executive Orders we're seeing a big push by the Trump administration to streamline permitting," Bachtel notes. While fossil fuels are the primary beneficiaries, low carbon options like hydropower, biofuels, and nuclear energy may also see a reduction in red tape under those acts.

 

"It's definitely not an ‘all of the above strategy,’ “ Bachtel says. "While we do have this energy emergency, it seems they are really giving a lot of favor to certain types of energies at the expense of others."

 

"It's made very clear in the Executive Order that there is an emergency that needs to be combated in the US, a struggle for energy dominance...[but] there is no listing of any renewables. There is no solar, there is no wind there is no battery even, while those make up a significant part of the portfolio of what we’re using now. There is a clear emphasis not to focus on renewables to help this stated energy emergency."

 

Trump executive orders deliver blow to wind projects