From the Green Deal to “Drill Baby! Drill”i
Cosmin Gabrie Pacuraru, PhDii
The global energy system has a complex dynamic depending on regions and economic sectors. An increase in energy demand is projected by 2050 due to population growth and rising incomes. However, we expect the increased energy demand to be moderated by a lower energy intensity, anticipating an increase in energy efficiency.
The United States sets the tone
No matter how much we deny it, the United States has substantially contributed to geopolitical balance and global security. Donald Trump, through the MAGA policy, does nothing but consolidate all the global power resources of the United States, emphasizing economic power. … And an economy without energy does not exist!
The change in direction of the United States, with Donald Trump coming to the White House and Chris Wright being appointed as the new U.S. Secretary of Energy, will bring about a global relaxation of decarbonization policies and an emphasis on energy supply security and a decrease in prices.
Chris Wright is a nuclear engineer and the chairman of the board of Liberty Energy, an oilfield services company specializing in hydraulic fracturing and a pioneer in this field, which started the revolution of oil and gas obtained through fracking, allowing the US to become the world’s largest exporter of crude oil. He also holds a large stake in a company (OKLOHA) that develops small modular reactor (SMR) technology. We also add that he is a climate change denier and opposes the energy transition.
“Drill Baby, Drill!”
Trump and Wright are changing the energy priorities of the United States and will surely set a new trend in the global energy industry, including in that of the European Union.
The trends are clear: oil and gas production will increase, with the demand for energy for transportation becoming ever greater. The same goes for the demand for “baseload” electricity, which is non-intermittent and obtained from gas and nuclear sources. Since investments in gas-fired electricity production capacities are smaller and have a much shorter completion time than those in nuclear, they will occupy a leading position. It is evident that investments in nuclear capacities will also gain momentum, as it is well known that in 2024 many new projects in “classic” capacities and in new SMR technologies worth tens of billions of dollars were initiated. This will reduce investments in intermittent capacities from wind and photovoltaic sources and lead to a decline in the electric vehicle industry. The result is a decreased interest in climate and environmental policies.
Thus, deregulation will be state policy. Both Trump and Wright, coming from American billion-dollar businesses, will lead the United States (and the American energy industry) like a large corporation focused on profit, at the expense of the rules introduced in recent years by the Biden administration, resulting in the easier obtaining of exploration and drilling permits on federal lands and in offshore waters.
Deregulation will not result in a spectacular increase in oil and gas production because the vast majority of the land is owned by the states or is privately owned, with few lands being federally owned. Obviously, there are many states with Republican leadership that will adopt Trump’s federal policy, but not with a spectacular increase in oil production.
The increase in production will manifest itself in a few years because a longer period is required from exploration to exploitation. Today, the price of oil is relatively high, but the pressure announced by Donald Trump on OPEC countries to increase production in order to economically suffocate the Russian Federation, Iran, and Venezuela will lead to a decrease in the price of oil.
In January 2024, the Biden administration suspended the issuance of licenses for liquefied natural gas exports to countries that do not adhere to free trade agreements. Trump’s arrival makes the LNG export policy more permissive, especially since new gas liquefaction and LNG tank loading terminals will be built, which will most likely have Europe as the primary destination and possibly China, depending on how the US-China economic war evolves.
There is also an offensive by the United States towards the European infrastructure for supplying Russian gas through pipelines, with an American magnate expressing his willingness to take over North Stream II.
The price of gas is quite difficult to predict also due to the increase in domestic demand, which is attributed to the low temperatures in the 2024-2025 season.
Nuclear energy is increasingly sought after and preferred because the United States will invest over 500 billion dollars in artificial intelligence (AI) technologies, which are large consumers of base-load energy. Thus, nuclear energy, which uses fuel with the highest energy concentration per unit of mass, has already benefited from several tens of billions of dollars in investments since last year, with these amounts increasing in the coming years. Let’s not forget that nuclear energy is the best option in decarbonization policies, being a reliable and scalable complement to hydrocarbons, to the detriment of renewable sources with or without storage capacities. But knowing that the completion of nuclear investments is long-term, the growth of vertical industries will surpass Donald Trump’s four-year term. Whoever comes to power, these investments will be completed because the Democratic Party also supports the development of nuclear electricity production capacities.
Deregulation policies will also apply to the nuclear industry, thus allowing both classic and new technologies (SMR or fusion) to obtain approvals much more quickly.
Former President Joe Biden strongly supported the development of renewable energy production capacities, especially offshore wind farms. The new administration is much firmer in not subsidizing these types of capacities. The irony is that 70% of the wind energy in the US is generated in Republican-majority states. Trump did as he said during the election campaign: he canceled the issuance of licenses for offshore wind energy and is determined not to offer any new ones.
Unlike wind energy, photovoltaic energy is less targeted because it has much lower costs, and small companies can afford to invest in small production and storage capacities, moving towards energy self-sufficiency. However, knowing that the reciprocal sanctions between the United States and China will increase, it is expected that the imports of photovoltaic panels will face tax hikes. It should be noted that the People’s Republic of China holds a 90% monopoly on the production of photovoltaic panels.
Interesting is what is happening in the electric car market. They benefited from subsidies, which the new administration cut, emphasizing that vehicles using fossil fuels are better and cheaper. But still, the American electric vehicle market cannot fail to be influenced by the global market, where the electrification of transport remains a priority and battery costs continue to decrease due to technological advancements, making electric vehicles more accessible.
The new policies provide for the strengthening of electricity transport and distribution networks, which actually encourage renewable energy.
The consequence is that the United States will exit Climate and Environmental Internal Policies, the United Nations Framework Convention on Climate Change, and the Paris Agreement, and will increase investments in the energy industry, reaching over 7 trillion dollars.
The geopolitical contamination of the European energy industry
The economic sanctions imposed on the Russian Federation and China should have a boomerang effect for the United States because the European Union should move towards renewable energy. We note that after the 2020 pandemic and the start of the war in Ukraine, the opposition of EU members to the Brussels establishment has been sporadic, with few having the strength to speak out against decarbonization policies that have led to a further increase in electricity prices due to the intermittency of renewables.
The Draghi Report, drafted in 2024, commissioned and adopted by the European Commission, acknowledges the instability of energy supply and the transition from the Russian gas monopoly to the Chinese monopoly over metals and rare earth elements. Thus, in the fall of 2024, the European Union defines 34 metals and non-metals as critical materials, of which 17 are declared strategic, the majority being under Chinese monopoly. The solutions proposed by the former Italian prime minister involve a slowdown of decarbonization policies for a few years and suggest investments in gas production capacities (as a transition fuel) in the short term and nuclear capacities in the long term.
If, before Trump’s arrival, there were a few voices in the EU that opposed (half-heartedly) the “green” policies, and here we mention the countries that actually opposed the reduction of Russian gas transit, Hungary, Austria, and Slovakia, today more voices are being heard in opposition to the decarbonization of the European industry, which has become uncompetitive compared to the industries in the United States and China. Recently, the energy ministers of Poland and Romania have stood out, declaring that EU members must use their existing energy resources (coal or gas), which currently make national economies more competitive, at the expense of adopting the “green” technologies imposed by the Green Deal. “The ‘greening’ policies of Europe were not well-thought-out public policies, but an ideology followed blindly, akin to shock therapy.” “And, like any ideology imposed without careful planning, it has turned into a utopia that costs us dearly—economically, socially, and strategically.” noted Sebastian Burduja, the Romanian Minister of Energy.
And in Germany, the European country most affected by the energy crisis generated by the Green Deal, the leader of the opposition conservative bloc (CDU/CSU), Friedrich Merz, has stated that he will build 50 gas power plants if elected chancellor.
I have always shown that the Green Deal is a misguided policy because it standardizes the energy industries of the member states. Starting from the consumption in the primary energy mix, where thermal energy is in the first place, followed by the energy needed for transportation and then electricity, we consider that standardization cannot be achieved because a Nordic state has different energy needs compared to a Southern state, one state has different resources compared to another, the geography of a state with access to the sea determines certain energy consumptions compared to a continental one, and Eastern states, former communist countries, have a completely different energy industry architecture compared to the old members of the European Coal and Steel Community.
The result of the energy policies pursued by the European Union is disastrous, as seen in the following graph of the variation in gross domestic product.
Source: stadafa.com
The European Union has long been considered an important player in global geopolitics, having a significant role in the world economy due to its economic influence, promotion of democratic values, and shaping of international policies. In recent years, the EU’s position on the global stage has become increasingly less relevant.Besides the misguided energy policies, the decline in European economic growth has also been due to excessive bureaucratic processes, divergent national interests, and complex EU decision-making mechanisms. Undoubtedly, the EU remains an important player in the global economy, but the differences with the USA and China tend to widen. This gap is also contributed to by the proximity of the war in Ukraine, the aggressive policies, and the hybrid warfare waged by the Russian Federation against EU countries.
Donald Trump’s arrival at the White House will surely change European policies, with the EU being forced by the economic war between the United States and the People’s Republic of China and by the economic sanctions imposed by the entire community of democratic countries on the Russian Federation.
It is possible that in the near future there will be a change in the vision of the Union’s economy within the European People’s Party, a change that must begin with the reform of the energy industry. The change in PPE policies is necessary to stop the rise of sovereignist groups in the European Parliament, especially the group of Trump’s favorite, Georgia Meloni – “Patriots for Europe.”
i The Romanian publication karadenizpress.ro originally published this article.
ii Cosmin Gabriel Păcuraru works in the energy industry on a freelance basis. He has a PhD in “International Relations and European Studies” from Babeș-Bolyai University in Cluj Napoca with a thesis on Romania’s energy security (2013). He is the author of the books “Romania – Energy and Geopolitics” (2018), “Energy – a National Security Issue” (2022), “Geopolitics and Energy Security” (2024). He has published numerous scientific articles in the field of security and energy policies in national and international specialized publications.