A New Energy Tack in America
Plus the future of new US sanctions on Russian oil, how the IEA views the future of nuclear power, and the energy angle on Greenland's strategic position
This week we look at how energy policy under the new Trump Administration is likely to unfold in the United States, including its impacts on global markets and geopolitics. Russia is contending with new sanctions imposed by the US and UK on its core oil exports, while Greenland is at the forefront of the international conversation after Trump’s comments on a potential takeover. We also highlight the key takeaways from the IEA’s newest report on the “new nuclear era”.
New President Ushers in a Shift in U.S. Energy Policy, Domestically and Abroad
DRIVING THE NEWS: On his first day in office, President Trump signed 26 executive orders to launch a sweeping new policy agenda in the United States. The E.O.s ranged from federal workforce policies to immigration and border issues, trade and tariffs, energy, environment, and more.
This includes the much-anticipated withdrawal of the US from the Paris Agreement, as well as the immediate restart of reviews for LNG export terminals that had been temporarily paused under the Biden Administration.
Domestically, Trump declared a ‘National Energy Emergency’, which among other things directs federal departments and agencies to exercise emergency authorities to “facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources” (White House), expedites permitting on certain projects, and suspends some environmental rules. He also ordered the opening of roughly 625 million acres of federal waters and previously restricted areas of the Alaskan wilderness to drilling, while halting all new offshore wind farm leases. A separate order also opens a review of federal regulations that impose an “undue burden” on the development of energy sources, especially coal, oil, natural gas, nuclear, hydro, and biofuels. (NY Times, Utility Dive)
While many of these and other orders are likely to face challenges in the courts, the sheer volume and breadth signals that the new administration is committed to upending the policy status quo of the Biden Presidency, while creating a “policy whiplash for the energy industry”. (Axios)
THE GEOPOLITICS: The US oil industry is already producing record outputs, while at the same time the US has become the world’s largest LNG exporter, solidifying the country’s role as a global energy provider.
The new policy agenda is set to reinforce that position through the development of new fossil fuel resources, driven by the “drill, baby, drill” mentality of the new president.
For his part, President Trump views traditional energy development as a key strategic driver of strengthening America’s position abroad. In his inauguration speech, he stated clearly: “America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth. And we are going to use it. We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world.”
While the US is well positioned to continue leading in global energy exports, it may face market realities that limit expansion in the near term. Slowing growth for global oil demand and limits on Europe’s ability to quickly purchase more US LNG while markets remain well-supplied suggest that domestic producers may move more slowly than the new administration imagines. (IEA, Financial Times)
THE NEW PLAYERS: In addition to the slew of executive orders, the new administration also issues in a new set of cabinet members and department heads tasked with implementing these policies. Leadership of these departments extend far beyond the top level, but three notable nominees include:
Chris Wright, nominee for Secretary of Energy: Founder of Liberty Energy, an O&G services company, Mr. Wright has historically pushed back on the potential dangers of climate change as a problem for future generations while focusing instead on the “moral case for fossil fuels” as a tool to address global poverty today (see recent commentary by Mr. Wright). During his confirmation hearing he struck a more diplomatic tone, acknowledging concerns around global warming while prioritizing energy affordability and the development of all forms of energy. In introducing Mr. Wright, Senator Hickenlooper of Colorado stated: “He is indeed an unrestrained enthusiast for fossil fuels in almost every regard… [but he is] also a scientist who is open to discussion.” (NY Times)
Doug Burgum, nominee for Secretary of the Interior: Mr. Burgum shares a similar view to the Administration about the role of fossil fuels in strengthening the US economy, including its role in helping maintain America’s lead in AI (Financial Times). He mentioned in his confirmation hearing an emerging electricity crisis in the US related to inadequate and aging grids and “roadblocks” to developing fossil fuel generation to meet base load requirements. In his new role, Mr. Burgum will lead a comprehensive review of federal wind leasing and permitting practices. North Dakota nearly doubled its onshore wind capacity from 2015 to 2023 under his leadership as governor. (Utility Dive)
Scott Bessent, nominee for Secretary of the Treasury: On energy, Mr. Bessent during his confirmation hearing affirmed his support of strong sanctions against Russian oil producers. He said that if requested by Trump, “I will be 100% on board with taking sanctions up --especially on the Russian oil majors -- to levels that would bring the Russian Federation to the table.” (Reuters)
BOTTOM LINE: President Trump and his new administration view the growth of oil and gas as a core component of reviving American economic and geopolitical might. They will work to deregulate and remove hurdles to traditional energy development wherever possible, while raising barriers to clean energy on the basis of higher costs to customers and unreliability on the grid.
Biden’s Final Sanctions Hit Russian Energy Sector
DRIVING THE NEWS: In his final days in office, President Joe Biden ushered in his latest round of sanctions against Russia, this time targeting the country’s oil revenue and ‘shadow fleet’ of oil tankers used to evade Western sanctions. (US Dept of the Treasury)
The new sanctions target Gazprom Neft (a subsidiary of Gazprom) and Surgutneftegas—two of Russia’s major oil producers and exporters—along with 183 vessels associated with Russia’s ‘shadow fleet’, a subset of Russian LNG terminals, and several oil, coal, and metals sector entities. (Atlantic Council)
Regarding the new sanctions, outgoing US Treasury Secretary Janet Yellen said: “With today’s sanctions, we are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports”. (NY Times)
WHY IT MATTERS: Since its invasion of Ukraine in February 2022, sanctions have been at the core of the Western strategy to put pressure on Russia’s economy and force President Putin to the negotiating table. Despite sweeping sanctions, however, the Russian economy has avoided contraction and continued to operate surprisingly well.
Until now, the US had been hesitant to implement sanctions specifically targeting Russia’s oil industry over fears of raising global prices and the knock-on economic impacts. However, stronger global oil supplies, record-high US oil production and exports, and easing inflation around the world have changed the situation, allowing more leeway to apply pressure on the Russian industry.
The new sanctions are projected to cost Russian industries billions of dollars per month and add pressure to the economy which is already contending with high inflation. Russia’s central bank recently raised interest rates to 21 percent, and while the IMF has reduced economic growth projections to just 1.3 percent in 2025 compared to 3.6 percent in 2024.
THE GEOPOLITICS: As with previous rounds of sanctions, Western allies are expected to join in the effort. The UK announced its own parallel sanctions the same day (gov.uk), and a contingent of EU countries has asked the European Commission to reduce the already established Russian oil price cap down from $60 per barrel to further curb profits.
The request, co-signed by Sweden, Denmark, Finland, Latvia, Lithuania, and Estonia, stated, “Measures that target revenues from the export of oil are crucial since they reduce Russia's single most important income source” and “We believe now is the time to further increase the impact of our sanctions by lowering the G7 oil price cap”. (Reuters)
Separately, refiners in China and India—the two largest buyers of Russian crude—are reportedly working to source alternative supplies for next month, which could lead to short-term price spikes. (also Reuters)
ONE BIG QUESTION: Can the newly sworn in President Trump simply turn around and rescind these new sanctions? Turns out, it’s not that easy for three reasons:
First, the sanctions have been partially designated under Executive Order 13662 Countering America’s Adversaries through Sanctions Act of 2017, which requires mandatory congressional review of any designated sanctions the President’s office proposes to rescind.
Second, these sanctions are broadly viewed as a gift to the incoming administration, improving President Trump’s negotiating position against Russia while allowing him to shift the responsibility for the sanctions themselves to the outgoing Biden Administration.
And third, President Trump has consistently signaled support for the US oil and gas industry. Inhibiting Russia’s ability to export is a major win for the US industry, allowing US supplies to replace Russian fossil fuels in global markets.
DIVE DEEPER: A full list of sanctioned entities can be found in the US Department of the Treasury press release. For a complete look at the history of global sanctions since the start of the Russia-Ukraine war, see this detailed timeline from S&P Global.
New Report on the Future of Global Nuclear Energy
DRIVING THE NEWS: The IEA last week published its most recent report on what it calls a “new era” for nuclear energy (a timely follow up to last week’s briefing that included the resurgence of nuclear power as a key theme for 2025).
The report states that: “the market, technology, and policy foundations are in place for a new era of growth in nuclear energy over the coming decades”, highlighting growing electricity demand, the climate benefits, and energy security as key drivers of renewed interest.
KEY TAKEAWAYS: The report looks at the landscape of new nuclear reactors currently planned or under construction, underscoring the “global technology imbalance” that is emerging.
The growing concentration of nuclear power technologies and uranium production capacity in Russia and China poses a major risk to the future of the industry. The report states: “greater diversity of uranium supply and enrichment services is essential for a secure and affordable expansion of the nuclear sector”.
Underscoring this point, Keisuke Sadamori, IEA Director of Energy Markets and Security, noted separately that, “France is now dependent on Russian uranium, it’s an important issue that requires attention. Efforts are ongoing for investing in this area to expand enrichment capacity”. (Power Engineering Int’l)
The report also notes that: “of 52 reactors that have started construction worldwide since 2017, 25 are Chinese design and 23 are Russian design.” China alone is set to overtake the aging US and EU fleet in installed nuclear capacity by 2030.
On small modular reactors, the IEA recognizes the importance of the technology both in its potential to control costs and deployment timelines, as well as for unlocking new business models and reducing investment levels down to those associated with offshore wind and large-scale hydro power.
ONE KEY CHALLENGE: The IEA sees private funding as critical to growing the industry, which can be unlocked through new financing approaches and industry efforts to de-risk large-scale projects.
The nuclear industry has been notorious for cost and schedule overruns, which have raised the perceived risk for lenders and made it more difficult to unlock capital. For years, the industry has recognized the problem and said it is working to correct it, but progress has yet to be made.
Altogether, the IEA sees the future of the industry as a combination of SMRs and new large-scale reactors, which—if kept within budget and initial timelines—could pave the way for Europe, the US , and Japan to reclaim leadership in the industry.
Greenland’s Energy and Resource Significance
DRIVING THE NEWS: Greenland finds itself at the forefront of the geopolitical conversation in recent weeks after President-elect Trump reignited his first term calls for the US to acquire the island territory, stating “we need them for economic security”. (referring to both Greenland and the Panama Canal, ABC News)
The statements caused immediate backlash from Greenland and Denmark (both NATO allies), as well as the wider international community. The Greenland Prime Minister Múte B. Egede responded: “Greenland is for the Greenlandic people,” while Denmark’s PM Mette Frederiksen called Trump directly to reiterate that the island is not for sale. (The Belfer Center, BBC)
THE ENERGY ANGLE: The geopolitical importance of Greenland rests on both its strategic location near the arctic and its natural resources, which are known to include critical mineral and rare earth element deposits.
As the US, Europe, and other countries seek to reduce their dependence on Chinese critical minerals, Greenland is uniquely positioned to play a key supplier role in the energy transition. As one story from the Pulitzer Center puts it, “nationals with access to these resources have a significant competitive advantage”.
However, Greenland has made clear that it seeks to balance the development of these resources with its own economic and political independence from Denmark, as well as strict environmental sustainability standards. The island currently relies heavily on a $550 million block grant from Denmark, but is searching for ways to achieve economic independence in the future through mining and tourism. (Financial Times)
THE CONTEXT: To date, Greenland has seen only limited development of its natural resources due to a combination of factors, including its difficult winter weather which substantially increases costs, and its oscillating political environment.
In 2023 Greenland signed a strategic partnership with the EU on raw material supply chains (European Commission) and has worked closely with the US State Department for years to share information about critical minerals. (US State Dept.)
Currently, however, only a single anthracite mine is in operation. While expanding resource development is seen as an important step toward independence from Denmark, it continues to be highly polarizing within Greenland.
Case in point: Australian mining company Energy Transition Minerals spent over 15 years investing in the development of a uranium mine, only to be forced to abandon the project after a newly elected government instituted a ban on uranium mining in 2021. This sort of political uncertainty has added to the concerns within the financial community about the risks of major investment in the sector.
DIVE DEEPER: The Arctic Institute published a piece discussing the situation through the lens of international law, geopolitics and right to self-determination. Reuters also put out a map and discussion of key resources located around the island.