Dive Brief:
- Several of the executive orders issued by President Donald Trump in the first two weeks of his second term have impacted the clean energy industry, including: a six month pause on offshore wind development in federal waters, a pause on certain Inflation Reduction Act and Bipartisan Infrastructure Law funding and a freeze on federal grants and loans.
- Some clean energy developers and advocacy groups are also awaiting further clarification on the scope of the orders, as several pieces of clarifying guidance have already been issued by the Office of Management and Budget.
- “There’s potential risk for the billion dollars of capital and the workforce that has developed around the [offshore wind] industry, but it’s a quickly moving target,” said Felisa Sanchez, a partner with law firm K&L Gates’ maritime and finance practice groups. “There are daily developments, and I think people are just doing the best they can with the limited information we have at the moment.”
Dive Insight:
Trump’s Jan. 20 order to pause federal offshore wind activities halts lease awards in the federal waters of the Outer Continental Shelf and directs the Secretary of the Interior to conduct a comprehensive review of “the ecological, economic, and environmental necessity of terminating or amending any existing wind energy leases, identifying any legal bases for such removal,” then issue a report.
Former North Dakota Gov. Doug Burgum, Trump’s nominee for Secretary of the Interior, said during his confirmation hearing that he supports an “all of the above” approach to energy generation and noted that North Dakota had “good wind resources,” but added, “we need more, and the thing we’re short of right now is baseload [generation].”
Dominion Energy, which is developing the 2.6 GW Central Virginia Offshore Wind project, told Virginia Business Jan. 21 that the project remains on schedule for completion in 2026.
Dominion spokesperson Jeremy Slayton pointed to a remark Burgum made during his hearing that if wind projects “make sense and [are] already in law then they will continue.”
“CVOW clearly fits this standard,” Slayton said.
John Northington, a government affairs advisor and a member of K&L Gates’ public policy and law practice group, said he’s hopeful that the meetings Burgum is having with various senators will shed light on his approach to the review.
“I'm looking forward to specificity coming out of some of those in terms of commitments, or, ‘Hey, this is how this is going to go down’,” he said. “Obviously, no pre-judged outcomes or anything like that, but just logistics of how it will be conducted.”
Sanchez said the period of uncertainty resulting from the pause will have more of an impact on projects in the permitting phase, which will be on hold until they’re once again able to secure the permits necessary to proceed. “That obviously creates issues with any investors, financiers who are wondering what the impact will be on their funds,” she said.
Other executive orders, like the pause on IRA and BIL funding and the pause on some federal loans and grants are endangering grid-bolstering renewable energy projects underway in the Appalachia region, which struggles with grid reliability, said Chelsea Barnes, director of Government Affairs and Strategy at Appalachian Voices.
“Through [BIL and IRA], we've seen an enormous investment of programs and funding for things like small scale solar, wind, grid improvements, and just general access to cleaner energy and energy efficiency as well,” she said.
The current status of much of that funding is “a little unclear,” Barnes said, “because there was an executive order pausing all [IRA and BIL] programs, but that was walked back very quickly the next day with guidance from OMB that said, ‘No, it's just programs that are in contradiction to this executive order.’ But it's not clear to the general public what that means. I can't say for sure which projects are at risk.”
Trump’s blanket order freezing federal loans and grants was also seemingly rescinded Wednesday by a clarifying memo from OMB, but White House Press Secretary Karoline Leavitt later wrote on X, formerly Twitter, that the memo was “NOT a rescission of the federal funding freeze” but “simply a rescission of the OMB memo …. The President's EO's on federal funding remain in full force and effect, and will be rigorously implemented.”
This series of actions by the White House has “caused much confusion the last few days,” said Brian Murphy, utilities and renewables tax leader at EY Americas Power. “However, as it stands, renewable energy investment and production tax credits under the IRA appear to fall outside the scope of the EO and are currently viewed as ‘safe.’ In simple terms, laws passed by Congress can only be reversed through an act of Congress.”
Barnes said she’s paying particular attention to funding under the U.S. Department of Agriculture’s Empowering Rural America and Powering Affordable Clean Energy programs, as USDA recently announced “big clean energy projects in Virginia and Tennessee and throughout the TVA region.”
“For some organizations, they're just plowing through. We work with partners who are actively submitting grant applications. We're actively submitting grant applications,” she said. However, she added, smaller organizations that lack resources or staff attorneys “are really confused and worried, and I'm sure this will hurt efforts to grow the economy here. We're focused on [outreach] with local and state elected officials and members of Congress – showing them what projects are at risk.”
Gideon Gradman, a managing director with law firm Baker Tilly’s development and community advisory practice, said Trump’s order freezing federal grants and loans “definitely caused everyone to pause and try to begin to understand [its] impact.”
“If you had a loan or a grant either awarded, or you're being considered for one, I think probably you need to revisit your financing plan to make sure that you would be comfortable proceeding if that grant was not awarded,” he said. “Particularly if it’s an area that was identified as an area to be curtailed. I think that developers need to really consider their funding options if they were relying on a grant in an area that might be affected.”
He pointed to funding for wind, electric vehicles and electric vehicle charging stations as particular areas of focus for the administration.
“Other renewables, they were either silent on those, or at least not as pointed. I think what [developers] should do to prepare is simply to remain informed over the next 90 days,” Gradman said. “There's going to be an evaluation across all different departments looking at these programs and whether or not they're aligned with the White House's energy policy priorities. If a project doesn't seem to fit those priorities, they need to strongly consider their financing options going forward.”
