By: Ted Gruetzner and Cameron Brown
Week one of the Trump presidency goes far beyond the issue of tariffs on Canadian products. The multiple Executive Orders (EO) signed by the President on his first day in office should be a wake-up call for governments, companies and workers in Canada’s energy and resource sectors.
A collective Canadian failure to stop and assess the true impact of these changes on our competitiveness could ultimately be as damaging to our economic future as the ongoing tariff threat that currently dominates both headlines and political thinking in Canada.
Below is our insight into the Executive Orders issued by President Donald Trump relating to energy and resources. The following document does not constitute legal advice, and the situation is rapidly evolving. The Global team is also reviewing the many other Executive Orders which touch on other subject areas.
Trump, Energy and Resources: More than just tariffs
Within hours of being sworn in, President Trump signed dozens of Executive Orders (EOs) as a deliberate signal that the new administration will be a dramatic departure from the Biden-era policies of the past four years. While things like withdrawing from the Paris Climate Agreement and renaming a mountain in Alaska garnered much of the immediate media attention, several of the EOs contain new directions in areas that will have long-term implications for the competitiveness of Canada’s energy and natural resource sectors.
It’s important to note that these EOs are high-level “directional” documents intended to set a day-one tone for the President and are often light on implementation details. How these EOs evolve and how the Canadian federal and provincial governments respond are crucial elements to watch in determining the ultimate implications for Canada’s energy and resource sectors.
Included in the EOs are these that focus on energy: Unleashing Alaska’s Extraordinary Resource Potential, Declaring a National Energy Emergency , Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects and Unleashing American Energy.
A main driver of these EOs is this mindset outlined in President Trump’s EO declaring a national energy emergency: “In an effort to harm the American people, hostile state and non-state foreign actors have targeted our domestic energy infrastructure, weaponized our reliance on foreign energy, and abused their ability to cause dramatic swings within international commodity markets. An affordable and reliable domestic supply of energy is a fundamental requirement for the national and economic security of any nation.”
A broad definition of energy
But while President Trump talks openly about “drill, baby, drill,” it’s instructive to note that “energy” as defined in Declaring a National Emergency is a broad term that includes: “energy” or “energy resources” including crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals. The documents also focus on electricity generation and transmission.
The EOs also rescind dozens of Biden Administration regulations governing climate change, regulatory approvals, species at risk and environmental protection. This includes allowing new LNG plants to go forward while simultaneously cancelling and restricting the development of projects associated with the “green new deal.” As widely reported, the US will once again withdraw from the Paris Agreement, suspend offshore wind development and cancel electric vehicle mandates and tailpipe emission regulations. Also notably included are measures intended to prevent States from instituting their own requirements in areas where US federal requirements are being rescinded.
Review of all existing requirements
The Unleashing American Energy EO contains a provision that requires a rapid and sweeping review of all US federal requirements relating to the development of “domestic energy resources”:
The heads of all agencies shall review all existing regulations, orders, guidance documents, policies, settlements, consent orders, and any other agency actions (collectively, agency actions) to identify those agency actions that impose an 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.
US federal agencies are given just 30 days to not only complete this review but also to “develop and begin implementing action plans to suspend, revise, or rescind all agency actions identified as unduly burdensome.”
Taken in conjunction with the raft of Biden-era environmental initiatives already reversed by President Trump, US regulatory changes resulting from this review will be critical in understanding how these initiatives ultimately impact the relative competitiveness of Canada’s energy and crucial minerals sectors.
Expediting Approvals
Combined, the EOs are intended to enable the rapid development of resource and energy projects beyond oil and gas to include things like transmission lines and nuclear power plants. Emergency approvals and the use of eminent domain powers to move projects forward are very much part of this approach as outlined in this section of the Declaring A National Energy Emergency EO:
Sec. 3. Expediting the Delivery of Energy Infrastructure. (a) To facilitate the Nation’s energy supply, agencies shall identify and use all relevant lawful emergency and other authorities available to them to expedite the completion of all authorized and appropriated infrastructure, energy, environmental, and natural resources projects that are within the identified authority of each of the Secretaries
The US Army, primarily via the Army Corps of Engineers, is also granted significant powers to facilitate project development.
Inflation Reduction Act incentives on hold
In 2022, much of Canada was caught off guard when US Congress successfully passed the Inflation Reduction Act (IRA) on the third try. This kicked off immediate hand-wringing in both government and corporate circles about Canada’s competitiveness in the areas in the U.S. set to receive rich incentives ranging from nuclear power to carbon capture. Canada’s ultimate response was its own proposed tax credits which are still being rolled out, and now the ground has shifted again.
Section 7 of the Unleashing American Energy EO is entitled “Terminating the Green New Deal” which certainly sets the tone for the provisions that follow:
All agencies shall immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 … and shall review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law and the policy outlined in section 2 of this order … Within 90 days of the date of this order, all agency heads shall submit a report … that details the findings of this review, including recommendations to enhance their alignment with the policy set forth in section 2.
So, for the time being, all IRA incentives are on hold, with the tone certainly implying at least some of the production and investment credits under the IRA will be revoked following the 90-day review.
In Canada, the Carbon Capture, Utilization, and Storage, Clean Technology, Clean Hydrogen, and Clean Technology Manufacturing Investment Tax Credits have already been passed into law. The Trudeau government did not get the Clean Electricity and the EV Supply Chain Investment Tax Credits over the line before Parliament was prorogued, but in all cases, the ultimate fate of the corresponding incentive on the US side of the border will no doubt influence the decisions of future Canadian governments on retaining or proceeding with these tax credits in Canada – especially if balancing the budget and military spending become more of a priority in Canada going forward.
What does It all mean?
These EOs were part of the broad swath of EOs the President made a political show of signing during his first day in office. As such, they are typically relatively high-level and do not get into a great deal of implementation specifics. How they ultimately impact Canada’s competitiveness in these sectors will become clearer in the coming months, but nevertheless, the ball is now clearly in Canada’s court.
Given the different constitutional divisions of powers in Canada, our provincial and federal governments will need to watch the US dynamic carefully to assess how their own permitting processes and requirements stack up to the United States to make informed decisions on potential changes. Decisions will also have to factor in the legal status of First Nations and Indigenous peoples, which is different from the U.S.
A collective Canadian failure to stop to assess the true impact of these changes on our competitiveness could ultimately be as damaging our economic future as the ongoing tariff threat that currently dominates both headlines and political thinking in Canada.