As President Donald Trump begins his second term next month, all signs point to a significant shift in U.S. energy policy. His first term emphasized domestic fossil fuel production, regulatory rollbacks, and an “energy dominance” agenda. With key appointments like Chris Wright as Secretary of Energy and Doug Burgum as Secretary of the Interior, Trump’s approach to energy in his next term appears ready to double down on fossil fuels while deprioritizing federal support and tax credits for renewables.
Fossil Fuels at the Forefront
During President Trump’s first term, the U.S. became the world’s largest producer of crude oil and natural gas, with crude oil production reaching record highs in 2018 and 2019, surpassing previous records set in 1970. The administration also took executive actions to advance pipeline projects like Keystone XL and Dakota Access, which had previously been stalled due to environmental concerns. A similar trajectory seems likely in his second term, with proposals to expand offshore drilling, open more federal lands to energy extraction, and streamline infrastructure permitting.
Expanding U.S. oil drilling will increase supply, stabilize domestic energy prices in the short-to-medium term, especially during high-demand periods or geopolitical disruptions. However, shifting to more domestic fossil fuel production does not insulate the U.S. from global market dynamics and geopolitical events—take the Russia-Ukraine conflict in 2022 which caused significant global price spikes. Overproduction or geopolitical tensions may disrupt global energy markets, and countries investing heavily in renewables could gain an economic advantage over the long term.
Potential Impacts on Renewable Energy
During Trump’s first term, federal funding and support for renewable energy took a backseat, yet the renewable sector experienced rapid growth driven by state-level initiatives and market demand. This time, Trump’s policies may again scale back federal incentives that stem from the Inflation Reduction Act including the Investment Tax Credit and Production Tax Credit, making renewable energy projects like solar, wind, and battery storage less financially attractive and stalling planned renewable energy projects. New clean power plant standards aimed at phasing out coal and natural gas may also be at risk of being rolled back.
Can Fossil Fuel Infrastructure Support Data Center Demand?
Infrastructure investments are poised to shape the future of the U.S. energy sector under Trump, with federal support for pipelines and fossil fuel projects boosting domestic transport and exports. At the same time, bipartisan interest in carbon capture and storage (CCS) offers a way to reduce emissions from traditional energy sources.
A key driver of energy demand is the rapidly growing data center sector, which powers AI advancements and cloud computing. The administration’s emphasis on fossil fuels may align with the stable power these facilities require. However, balancing this demand with environmental goals presents a challenge, particularly as the energy-intensive nature of AI and cloud computing intensifies sustainability concerns.
Nuclear energy, including small modular reactors (SMRs), may gain renewed attention as a low-carbon solution for high-demand sectors like data centers. These reactors present an opportunity to maintain U.S. leadership in nuclear technology while addressing the growing need for reliable, efficient, and sustainable energy. Even within a fossil fuel-centric framework, aligning infrastructure investments with sustainability goals will be critical to meeting the demands of this energy-intensive sector.
The Role of States and the Private Sector
Even if federal energy policy pivots toward traditional fuels, state governments and private companies are expected to continue leading the clean energy transition. Progressive states like California and New York are likely to maintain ambitious renewable energy goals, while corporations pursue sustainability targets to meet consumer and shareholder demands. Corporate net-zero commitments and consumer demand for cleaner energy options are significantly propelling the clean energy sector forward, even in the absence of robust federal support.
As of November 2023, over 7,900 companies, representing 39% of global market capitalization, have committed to setting science-based targets for emissions reduction, with more than 4,200 having their targets validated by the Science Based Targets initiative (SBTi). This corporate momentum is complemented by consumer demand for sustainable products and services, driving companies to adopt cleaner energy solutions and invest in renewable energy sources demonstrating that substantial progress can be achieved through private initiatives and market dynamics, even without strong federal intervention.
Challenges and Data Strategies for Energy Providers
The evolving energy landscape under the new administration is set to create significant opportunities and challenges for energy firms. For instance, strategic site selection will become paramount as companies navigate the opening of federal lands for oil, gas, and renewable energy projects. To streamline project approvals and reduce permitting delays, energy providers will need a strategic focus on evaluating expanded land-use restrictions, zoning regulations, and proximity to essential infrastructure like pipelines and power grids. Balancing these considerations with environmental sensitivities and policy incentives will enable smarter, faster decision-making.
Meanwhile, the demand for efficient energy infrastructure planning will intensify as expedited approvals drive a surge in pipeline and power projects. Energy companies will need to have a renewed focus of mapping existing networks, identifying bottlenecks, and analyzing environmental and community constraints to ensure strategic routing. Additionally, market analysis and forecasting will be crucial for understanding how regulatory shifts influence energy demand, prices, and investment priorities. Leveraging market intelligence and property data will help energy providers stay ahead of policy impacts and seize emerging opportunities in this rapidly evolving sector.
While federal policy will prioritize traditional energy sources, market dynamics, state-level initiatives, and global trends will continue to shape the future of U.S. energy. The challenge ahead lies in navigating these competing priorities-bolstering domestic energy production while addressing long-term sustainability and global competitiveness. For energy firms and CRE investors, the next four years will demand a nuanced understanding of policy shifts, market trends, and innovation opportunities.
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