Trump's DOE pick likely to speed LNG permits, slow renewable energy efforts

President-elect Donald Trump's pick to run the Department of Energy is expected to end the US pause on LNG export permits and reverse efforts to promote renewable energy, but any attempts to increase US oil and gas production will be limited by market fundamentals.

Trump plans to nominate Chris Wright, CEO of Liberty Energy and environmental policy skeptic, to be the next energy secretary, the transition team announced Nov. 16.

"Wright is a very smart individual who has a deep understanding of the oil and gas industry and the importance of energy dominance," said Frank Maisano, Bracewell LLP energy analyst, in a Nov. 18 note. "He will be able to dig through the nuance and the complexities in our energy policy and help us continue to drive forward to provide innovation and new technologies that can meet consumer needs reliably and affordably while still providing important energy safeguards and reduce emissions."

Policy impacts

Wright is expected to reverse early in his tenure is the Biden administration's temporary pause on LNG export permits, which oil and gas groups have criticized as counterproductive and harmful to US businesses and allies.

"We look forward to working with him once confirmed to bolster American geopolitical strength by lifting DOE's pause on LNG export permits and ensuring the open access of American energy for our allies around the world," Mike Sommers, CEO of the American Petroleum Institute, said in a statement.

Wright has expressed skepticism of renewable energy efforts relative to the benefits of fossil fuels. In his 2023 video, Wright said a visit to a lithium mine would cause an observer to be "shorn of the illusion that solar and wind are lily-white clean."

"There are no such things as clean energy or dirty energy," Wright said.

Environmentalists expressed concern that Wright's appointment could lead to a slowing of DOE's efforts to promote renewable energy sources with Inflation Reduction Act funding.

"Given the devastating impacts of climate-fueled disasters, DOE's core mission of researching and promoting cleaner energy solutions is more important now than ever," said Jackie Wong, senior vice president for climate and energy at the Natural Resources Defense Council. "Putting a champion of dirty fossil fuels in as the leader of the department would be a disastrous mistake."

In his announcement, Trump said Wright's position on the newly formed National Energy Council — which will "consist of all Departments and Agencies involved in the permitting, production, generation, distribution, regulation, transportation of ALL forms of American Energy," according to the statement — would allow the administration to to "drive US Energy Dominance, which will drive down inflation, win the A.I. arms race with China (and others) and expand American Diplomatic Power to end Wars all across the world."

Senator John Barrasso of Wyoming, ranking member of the Senate Energy and Natural Resources Committee said that after Biden's energy policies, "our country is desperate for a Secretary who understands how important American energy is to our economy and our national security."

Changing DOE

The DOE, which was formed in 1977 and for much of its existence has focused on the management of the US nuclear arsenal and sponsoring science research programs, does not have oversight over US fuel production on federal lands and waters. Those policies are managed by the Interior Department, which North Dakota Governor Doug Burgum was nominated by Trump to lead.

The next energy secretary's oversight of the US Strategic Petroleum Reserve will be closely watched, after Republicans in Congress have criticized the Biden administration's management of the emergency stockpile. In 2022, Biden released 180 million gallons from the SPR in the face of price spikes resulting from Russia's invasion of Ukraine.

Wright is also expected to end the Biden DOE's focus on clean energy investments through the Inflation Reduction Act.

The DOE under Biden has distributed $27 billion in funding for development projects including carbon capture, hydrogen, and advanced nuclear energy, according to the Government Accountability Office, DOE's Office of Clean Energy Demonstrations. It recently approved financing for two large sustainable aviation fuel projects in Montana and South Dakota. DOE has also created the Office of Infrastructure "tasked with stewarding billions in historic investments to renew our nation's infrastructure."

"I like to think of the IRA like a memorandum of understanding, and like any MOU there's a lot to be done after it's signed and executed, and that's being done by Treasury and Department of Energy and other aspects of the administration," said Shariff Barakat, Akin Gump project finance partner, on a Nov. 13 webinar. "And so there's an incredible amount of public policy that's running through those agencies, and that could very well change."