Administration change may imperil clean energy supports

Campaign cries of “Drill, baby, drill!” could ring a little hollow in Kern County if the incoming Trump administration follows through on threats to claw back federal subsidies that have driven local investment in cleaner energy and carbon removal.

President-elect Donald Trump’s pre-election criticism of what he has called a “new green scam” have created uncertainty for local oil producers that may not benefit much from his pro-exploration stance, but which stand to lose if he ends federal investment in climate action led by the outgoing Biden administration.

Some note it’s still too early to know what steps Trump will ultimately take to either promote drilling or defund carbon removal and renewable energy development. But already a local congressman has joined other Republicans in urging restraint in efforts to repeal or reform the primary support for climate-forward action: the billions of taxpayer dollars included in the Inflation Reduction Act of 2022.

“A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return,” stated the Aug. 6 letter addressed to House Speaker Mike Johnson and signed by Hanford Rep. David Valadao and 17 other Republicans whose districts are in line to receive energy incentives through the IRA.

Such concerns surfaced as recently as last month, when oil industry representatives are reported to have approached the Trump campaign and members of Congress asking them to keep IRA supports in place. Meanwhile, no details have emerged on what specific steps the president-elect will take on climate action once in office.

The situation’s irony is that what may sound like pro-oil policies at the federal level could offer little help for the industry in California, partly because of permitting setbacks likely beyond the reach of Washington, D.C.

Another irony is that Trump’s doubts about the need for cleaner energy could undermine some of the biggest investments oil producers have planned in Kern County, especially in carbon removal.

“The businesses in Bakersfield are certainly walking a tightrope between the goals of the Newsom administration and the incoming Trump administration,” said Edward Ring, director of energy and water policy at the California Policy Center, a conservative and libertarian think tank based in Tustin.

He said there has been suggestion state government could make up for any loss of federal incentives by increasing its per-ton tax credit for carbon storage. But there remains the question of how to pay for that.

Also unclear, Ring noted, is whether the incoming administration holds firm enough sway in Congress or has the legal authority to carry through with cuts in IRA subsidies.

“There’s a possibility that most of that (IRA funding) may stay intact,” he said.

The Western States Petroleum Association trade group noted it’s uncertain whether policy shifts under Trump will influence what it called California’s ideological approach to regulation. But clearly voters want affordability, an association spokeswoman wrote, and so the group is ready to engage with new state lawmakers and “ensure technical realities support aspirational dream without leaving anyone behind.”

Long Beach-based California Resources Corp., a major player in Kern County oil production, has California’s most advanced plans for injecting captured carbon dioxide deep underground for permanent storage. In an email statement, the company acknowledged the uncertainty presented by the change in presidencies.

But it expressed hope in Gov. Gavin Newsom’s visit Monday to a low-emissions cement plant outside Gorman planned to capture CO2 from its exhaust stream and send it by pipeline to an injection facility in a former petroleum reservoir in western Kern.

“While changes in federal administration bring uncertainty CRC is encouraged by growing recognition at all levels of government of the importance of carbon capture and sequestration,” spokesman Rich Venn wrote.

Robert Meadow, a senior adviser and pollster at political strategy firm Lake Research Partners, based in Washington, D.C., said there may be some clean-energy implications behind Trump’s appointment of Elon Musk, CEO of electric vehicle-maker Tesla, to an important role within the incoming administration.

It would be a mistake to view petroleum and renewables as a political polarity, Meadow said, adding that “most voters are all of the above,” and there may be legitimate concerns about the United States getting left behind with regard to electric vehicles.

His view was that CCS wouldn’t be sustainable without the support of federal tax credits.

The August letter signed by Valadao and others urged Speaker Johnson to “prioritize business and market certainty” when Congress considers taking action on the IRA and tax credits incentivizing major investments in U.S. energy infrastructure.

Without being specific, the letter criticized the legislation as deeply flawed, with the potential to disrupt energy markets. It called for a different approach that will unite the party and promote conservative values.

At the same time, the authors warned that prematurely repealing energy tax credits could undermine private investment and halt developments already under construction.

“Energy tax credits have spurred innovation, incentivized investment and created good jobs in many parts of the country — including many districts represented by members of our conference,” the letter stated.

Policies that harm U.S. families should be reversed, it said, but protections and refinements should be made to those that make the country more energy independent.

“As Republicans, we support an all-of-the-above approach to energy development and tax credits that incentivize domestic production, innovation and delivery from all sources,” it said.

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