Trump 2.0 and the year ahead

Intro: Welcome to The Energy Shift, a podcast series focusing on the rapidly evolving energy landscape with hosts Luisa Fuentes and James Wright.

James Wright: Hello everyone. Luisa, it’s good to be back, how are you?

Luisa Fuentes: I’ve been well. How about yourself, James?

James Wright: Braving the cold. It is very, very cold here in Chicago, so we’re wrapping up warm. Otherwise, good, thank you. Yep. Happy 2025.

Luisa Fuentes: It was nice to walk the dog in 12 degree weather this morning instead of seven degree weather, but I think that’s cold comfort early. It also feels like the hundredth day of January, if I’m honest.

James Wright: I was going to say, I’m not sure, can I technically still wish you happy new year? I guess I can. Can I still do that? Are we allowed to on January 23rd? 

Luisa Fuentes: I would not judge you for that. I would appreciate it.

James Wright: Great. So let’s get into it. So first, it’s great to be back. The second half of last year, you and I had to take a little break from this pod. I think only because we were so busy really, if we’ve been honest, on the kind of client side and transaction side. So it’s great to be back and it feels pretty poignant to be getting this running again around energy shift discussions given what’s happening. We’re what, four days into the new presidency and in terms of energy policy formation, it feels like the administration has really hit the ground running. We have seen a swathe of executive orders this week, lots of new faces in key positions across both Congress and the executive. And this is already coming at a time when we’re seeing some real pressures in the energy economy. So demand is up, prices are up. There’s nervousness on things like potential tariff impacts and what that’s going to do to the infrastructure build out we need in the US. So what’s your thoughts on that, Luisa?

Luisa Fuentes: Yeah, as of today, and I think it is day four officially. We certainly feel the uncertainty across sectors as being very high, which means general discomfort across the renewables and decarbonization sectors. This goes for developers as well as financial sponsors and obviously lenders. It’s a good time to have as deep as possible an understanding of what’s going on at the federal level. And as always, it’s a critical time to stay close to our clients.

James Wright: Yeah, I fully agree. So with that, in today’s episode, we’re going to welcome Lesley Hunter into this discussion. So Lesley is the Senior VP for Policy and Engagement at ACORE, which is the American Council on Renewable Energy. ACORE is a nonprofit organization that’s been around for I think over 20 years now, providing thought leadership that reunites finance, policy and technology around renewable energy and the broader energy transition. Lesley and her team are really entrenched in the DC world of policy and politics as it pertains to renewables. And I’ve no doubt this is going to be a really extremely busy month for them in the months ahead. So welcome, Lesley. Great to have you on.

Lesley Hunter: Thank you so much, James and Luisa. Really appreciate you having me and excited for this conversation.

James Wright: Likewise, so let’s get straight into it. I think it’d be great, Lesley. I like to do this sometimes with new guests to the pod. Just tell us a quick bit about you. What brought you here to this point of your career with ACORE? What was your path? Just tell us a quick bit about your background.

Lesley Hunter: Sure, so I have been in the clean energy sector for about 15 years now with much of that time actually spent at ACORE. So as you mentioned, I now head our policy and engagement team that focuses across government affairs, our regulatory work, research and analysis, and all of the engagement work that we do with members of our organization on policy related issues. But what really drew me into the sector and contains me within this world is, being at the intersection of policy, finance and technology in this what’s been a really rapidly growing industry. The clean energy industry too has been such a focal point for economic growth and has significantly improved the quality of energy options available to consumers and pretty limited timeframe here. So in my time in the clean energy sector, I focused on a wide variety of issues focused on promoting clean energy investment and growth. Some of that work has been with the financial community and working with tax credit investors, for example, on the regulatory policies that threaten to upend project financing. I’ve done some work with the Department of Defense to help them procure clean energy to enhance their mission success and done a lot of work with the standard setters who are shaping how companies are able to use and invest in clean energy and really to help promote flexible and meaningful procurement options in the buyer space. So what I’ll say is that it’s never dull. There are always new players seeking to enter the industry and these new players are new beneficiaries of the sector. So it’s quite an exciting space.

James Wright: I 100 % echo your comment at the end there, it’s never dull. This is definitely not a dull sector. So that’s great, that’s excellent. Thank you. So Luisa, why don’t you kick it off?

Luisa Fuentes: Yes, of course. It’s never a dull time, as you mentioned. I mean, the energy shift we imagine is certainly different than the one we’re conceptualizing today. As we frame up the renewable energy year ahead, Lesley, it might be good to hear from you an overview of the key Trump appointees and nominees who will be at the center of the new energy agenda. Burgum and Interior Wright at the DOE. I’m sure you can speak to others who will have impact on budgets that will cut across our client base and our jobs as bankers. Maybe give us some pointers as to what we can expect in the coming months in terms of policy formation and maybe some of the clues you’ve already received from the first few days here.

Lesley Hunter: Sure. What I see as most notable about some of the individuals that President Trump has put forward here is their broad knowledge of and interest in energy issues broadly, along with the tax and the trade policies that will also shape our sector. So you mentioned Burgum, you mentioned Wright. They and other individuals here do have a history of supporting all of the above energy options. For example, Doug Burgum, when he was Governor of North Dakota, had introduced a net zero target to help advance those clean energy and other energy solutions. The nominee for energy secretary, Chris Wright, was CEO of fracking company Liberty Energy and has also supported research in emerging energy technologies. He’s been an investor in Furbo and other activities in the sector. He’s very prolific. I recommend you check out his writing in the space and comments on what he sees as the future here. We’ve seen confirmation hearings for many of the key individuals for cabinet positions in particular, Burgum and Ed Wright, for example, have acknowledged the role of all of the above energy options and their statements, have had some positive remarks also about the need for transmission expansion. Haven’t commented yet, but we also have Russell Votte at OMB and Scott Besant at Treasury and others who will be critical decision makers on the funding programs, the tax credits at play for our sector, which they touched on in their hearings as well. With these hearings, there’s kind of a resistance to getting too detailed in on these issues. So time will tell on how they will actually carry out in these roles. But some of their responses do indicate clear skepticism about continuing the status quo for incentivizing certain clean technologies and the broader opposition to what they see as Biden-era policies and, in quotes, the Green New Deal. So there is broader coordination clearly on messaging and alignment with the administration’s broader objectives for energy dominance. And we can talk about the executive orders that have just been announced in a few moments here. But lastly, in terms of the people, last thing I’ll comment on is the formation of the National Energy Council at the White House, which Burgum, Wright and a few others will be part of. This will essentially replace the White House office that Podesta oversaw that was focused on climate and orchestrate energy policy across the federal government. So the influence of the council remains to be seen, but is a clear signal that energy dominance again is of a critical importance to this administration.

James Wright: I was thinking, you know, when we were talking about having this discussion, Lesley, I was going to suggest we talked about, you know, as in any new leadership position, you often ask a leader about their first kind of 100 day plan, but I feel like we’ve barely managed to digest day one yet. So maybe we should just kind of talk about those executive orders you mentioned just now. There’s obviously been a, you know, a real flurry of them in the first couple of days of the administration, as expected. A few of which pertain directly to our world and the stuff we talk about on this podcast, so energy and renewable energy in particular. Two that caught my attention were the Wind and Offshore Wind Order and the Order for Unleashing American Energy as it was titled, which included some directives on climate funding. What was your initial take on those and reactions thus far? And I guess, are there any other key ones that we should be suggesting listeners also keep an eye on?

Lesley Hunter: So the executive actions that have come out over the past few days have largely been broad, but we’ve had several focused specifically on energy dominance. Many of these orders are also tied to campaign messaging, although several are broader in scope than what earlier indications had shown, in particular the wind memorandum. So James, you mentioned a couple here and I’ll add to those that specifically relate to energy and along with some other cross-cutting actions that could also impact our sector. So first the unleashing American energy executive order is serving as really the primary energy document of the Trump administration. This seeks to promote reliable and affordable energy in part by removing the policies that the administration deems burden the development of these resources and also includes some permitting fixes to help streamline these technologies. But as you mentioned, part of this order includes pausing certain IRA and IIJA funding, which we can get into in a moment. Second, what rises to the top here is the memorandum to halt offshore wind leasing within the outer continental shelf and also pause the issuance and renewal of permits or approvals that affect both onshore and offshore projects. This memorandum also requires the Secretary of Interior to conduct a review of the necessity to terminate or amend existing wind leases for environmental, economic or other reasons, and also opens the door for removing what they deem as defunct turbines. The third broad energy order is the one declaring a national energy emergency, which invokes authorities under the National Emergencies Act to do so. So we were expecting this, but the energy technologies that it seeks to promote are pretty limited in scope. And the definition only refers to technologies like those in the fossil fuel sector, nuclear hydropower, geothermal, I think biofuels is in there as well, and does not include wind and solar. So there’s some underlying messaging here that might be some, what of a distinction that we’ll continue to see in how they are defined. Baseload or firm technologies as opposed to those that they see as intermittent. And then the other orders of note are those removing the US from the Paris Agreement, removing the US from the OECD Global Tax Agreement or Pillar 2 that was affecting some of the investors in our sector. There’s a regulatory freeze, which is in line with what past administrations have done as well. But then also other actions reversing past executive orders and government programs, particularly those related to diversity, equity and inclusion. So due to the broadness of these orders, there’s still a significant amount that we don’t know about how they’ll be implemented and interpreted, but I’ll narrow in on the two key unknowns that you raised, James. So one is the extent of the wind action. Reading it literally, this could have broader implications than what we had originally heard of related to the rumors around this memorandum. It could potentially impact onshore and offshore projects that need any sort of federal approval, not just those that are on federal lands. So we’re working right now on some analysis regarding the number of projects that that could potentially impact. The other question here is how they will define the defunct turbines that could be removed and how that could in fact impact the repowering as well.

James Wright: There’s a lot to unpack there. I feel like we could do a whole podcast just on these, yeah?

Lesley Hunter: Oh, of course, yeah.

Luisa Fuentes: One of the things we think about is the of the relatedness of the tax reform that Trump wants to put into effect, the extension of the Tax Cuts and Jobs Act specifically, also known as the billionaire tax cut that he’s been very vocal about extending. When we think about how that gets funded in relation to what we’ve described as just a general drift away from the renewable sector, how do we think about the pay-fors here? How will how might that impact tax credits for clean technologies? For renewable power? Just maybe touch on that from your perspective.

Lesley Hunter: The Tax Cuts and Jobs Act that was passed in 2017, the associated individual tax rates and other policies that are contained within that are expiring this year, and the extension requires congressional action. So right now we’re looking at a budget reconciliation process to help get this done. This is a process that can move forward without bipartisan support, so Republicans are pursuing it largely on their own right now. The first step of this process is for ways and means to work on a budget resolution to kick off the process. And we might see text of this budget resolution within the next couple of weeks. However, when we see that text, it still may not be clear about what they’re trying to do until we see the full markup on the bill. So Congress will be writing the actual reconciliation through March. And in April, they’re targeting the bill to be done and sent to the president to be signed into law. So this is a very aggressive schedule for a partisan process with some slim Republican majorities, but there’s been a lot of alignment around President Trump’s priorities on these issues. So we’ll see how that actually comes into fruition. On the pay-fors that you mentioned, so the cost to extend the TCJA over the next 10 years would be about 4.6 trillion on the low end, likely going to be higher with the new tax cuts that are proposed. Congress is likely to seek offsets to help limit the increases to the national debt through cuts to other government funding, through tariffs and other sources of revenue. As part of this, there’s increasing discussion for considering the clean energy tax credits that can be used as pay-fors. And this is aligned with the desire of some Republicans to see the end of the suite of Biden era tax credit policies. Still, you know, these tax credits have been around, they’ve been extended by bipartisan coalitions in the past, and the threat of changes is already facing some bipartisan opposition in Congress.

Luisa Fuentes: So, Lesley, as a follow on question to that discussion, can you talk maybe a little bit about the Congressional Review Act, the CRA, maybe remind folks who are listening what it is and how it might be utilized in the coming administration?

Lesley Hunter: Yes, the Congressional Review Act essentially allows Congress through simple majorities of the House and the Senate to reverse regulations from the previous administration within a certain look back window. And that’s now estimated to be around mid-August of last year. But what the CRA would do is essentially nuke the regulations and prevent agencies from proposing a substantially similar rule. So while we do anticipate the CRA to be exercised for certain environmental policies, it has not in its history been used for a treasury rule and could be an unpopular choice because treasury would be limited from changing the guidance in the future associated with these tax credits. So what we see as a more likely scenario is that these tax credits could be modified at the budget reconciliation process with the current guidance intact until they are changed so that Congress can consider the full score and the amount that they can help offset for the TCJA.

James Wright: Let’s change tack a bit just briefly if we can, Lesley. One thing I’ve been thinking about a little as we sort of get into this year and we kind of path ahead is just, you know, the power of messaging, I guess, is the way I tee this up. And during the election, I think we saw some extremely effective and powerful messaging alongside some quite poor messaging. And in that context, as you and the ACORE folks think about messaging for the coming months and years ahead, what is it that you think about in terms of clean energy that make it or should make it an attractive to a bipartisan audience, right? What are the key considerations in your mind that shouldn’t make this a party line polemic, so to speak?

Lesley Hunter: On adaptive messaging, there are several core elements about clean energy that we can cite that already make it attractive to a bipartisan audience. Many of these qualities too are not new and shouldn’t be surprises to those in the industries, but are elements that we just need to talk about more. So first, there are tremendous economic impacts that our sector can point to. We now see over $100 billion invested per year in just new clean energy power generation. These are private sector dollars and you know, lead to tremendous job growth. The sector is currently supporting over three million jobs in just the broader clean energy sector. And this year we’re set to see more manufacturing and generation projects than ever come online. And these projects are going to benefit more communities than ever in the history in our industry. So now is the time for businesses to talk about the benefits of these projects and also for local policymakers, communities, and individuals to also discuss their benefits.

James Wright: Yeah, fully agree. And I think some of that some of that job that you mentioned is really impactful as well, particularly in this in this economy.

Luisa Fuentes: Lesley, switching gears a bit onto another aspect of the clean energy debate, which is often overlooked, but again, should be arguably something that both parties can agree to. And that’s the need for more transmission. Yesterday, we saw the announcement of Stargate as the White House is now focused strategically in a laser like way on AI infrastructure. It sounds exciting and it’s very much needed. And certainly we spent a lot of time thinking about data centers and the knock on effect from that on power and equipment supply and transmission. So it feels like there’s not the ability to send enough electrons down the wires to those shiny new data centers unless we have a build out of transmission. I think there was an announcement recently that China now has 34 ultra high voltage transmission lines crisscrossing their country and we have a total of none. So how should we start looking at this? Is this a transmission crisis? Should this be part of the national emergency that is being referenced by the new administration, especially as we consider the resiliency of our infrastructure?

James Wright: And sorry, Lesley, before you jump in on that, I’ve got to just make a post script comment on that. When I saw the front pages yesterday with this announcement about Stargate, I felt like all my 1990 sci-fi dreams were coming true. But actually, it wasn’t the Stargate from the 1990s. It was a new version. But anyway, go on, carry on.

Lesley Hunter: (laughs) Okay. So, Luisa, yes, this is definitely a national competitiveness and security question. The US has an opportunity now to lead in strategic industries like advanced intelligence, like building these new data centers and also expanding domestic manufacturing, which requires a tremendous amount of new electricity to power as well. But to lead we need to meet the power needs of these growing strategic industries for our country. Electricity demand growth, as we’ve all heard, is rising at a really rapid pace now. Wind, solar, and other clean energy technologies are good, quick, and cheap ways to help meet the needs of these consumers. And a critical way of making this happen is by expanding transmission to deliver the power that’s unlocked by this quickly growing energy supply. Unfortunately, the large scale transmission lines that are needed to unlock the lowest cost, highest potential clean energy projects continue to face multiple policy barriers, including unnecessary permitting delays. So for critical interregional lines in particular, the delays can amount to 10 or 15 years or even longer. So permitting reforms in particular are necessary to help overcome these delays and scale the growth of transmission to help the US compete on the international level.

Luisa Fuentes: Just a quick follow up on that, Lesley. How do you see the availability of equipment and things like copper and wiring as impacting the rollout of transmission?

Lesley Hunter: Looking at the global supply chain for the clean energy sector and also for transmission needs, we do need, you know, a smart approach to trade and trade interventions moving forward. Right now, there have been constraints to, you know, accessing all of the equipment that has been needed to really help build these projects. There’s opportunity here to bring more of that to the US through extraction of critical minerals and manufacturing domestically. But there’s going to be a process for on-shoring that capacity. And in the meantime, there’ll be some continued reliance on international supply chain. So to really make that happen, we do need to kind of have a balanced approach to trade policy to allow us to meet those domestic needs while also continuing to build transmission and clean energy generation in the US.

Luisa Fuentes: All right, Lesley, as we wrap up, then one last question from me. What’s your view on initial investor reaction to some of the current political uncertainties? What are you hearing? Are there any particular points of concern from investors thinking here about topics like transferability, for example, which had been a game-changing tool and had gotten more private capital into the renewable space? Curious to see your initial early day thoughts on this.

Lesley Hunter: So we work with a number of investors across our sector who are interested and motivated and continuing engagement in the clean energy industry. For project finance in particular, clean energy is a low risk investment with predictable returns. A lot of the banks in our space, for example, have been in the clean energy world for over a decade and many want to do more. And now with the entrance of transferability, the amount of players in our sector who can invest in clean energy projects has opened up tremendously. We see more small businesses than ever benefiting from tax credit investments than ever before. This financing source has quickly become instrumental to the market because of how many projects are now looking to leverage both tax equity and transferability to bring more dollars in the door for these projects. It’s also funding advanced manufacturing projects and newer clean energy technologies that are attracting bipartisan support like nuclear and other technologies that historically have not been able to access tax equity. So for last year and transferability investments were estimating about $17 billion just in that space. Transferability is something that’s really bringing in a tremendous volume of private sector dollars into the sector. And if there is a risk to that provision in the offsets considered for the TCJA that its elimination would sacrifice tremendous economic growth potential.

James Wright: I agree. And just to put a double click on that point, Lesley, I feel like transferability is kind of one of those really, you know, kind of wonky topics that all of us talk about a lot in the finance world. But actually, it brings it back to the messaging point in my mind, just how important it’s been and just how many billions of dollars have been moved into the economy as a result of that. So I think it’s a really important point. Great. Well, this was fantastic. Thank you, Lesley. We could go on for literally hours on this stuff. And I’m sure we’re going to be doing many more discussions around some of these topics in the coming weeks and months. But we’ll start to wrap up. And what we love to do at the end of each pod is to just have a little kind of outro segment on what shifted your week. So it can be business thing. It can be a personal thing. Luisa, why don’t you kick it off? What shifted your week?

Luisa Fuentes: I mean, I think the first four days of this administration have really shifted my week in a very meaningful way. And I like your optimism, James, when you call it excitement. But I remain kind of firmly awaiting where this is going to impact our existing transactions, our pipeline, and our clients. So I really don’t have a cute story today. Sorry about that.

James Wright: No, I hear you. It’s not always easy. Go on, Lesley. What about you?

Lesley Hunter: Interesting question to answer in the first week of a new presidential administration. But on a bright note is some of the conversations I’ve had just with members of the industry and with coworkers over the past few weeks. And although we are facing an uncertain future right now, there’s been a lot of discussion about how our sector has had decades of momentum and has really established itself as a dominant source of energy. And we’re really seeing private sector demand drivers still there and there’s still genuine interest in growing the clean energy technologies broadly. We have a great industry, a lot of great people within this sector who we look forward to continuing conversations with. And what’s just most critical right now is working together on solutions that recognize the benefits of clean energy and also continue our path forward.

James Wright: Yeah, fully agree. We love half full glasses on this podcast, Lesley. So like, like the positive sentiments. So look, I’ll add mine, I think maybe it is obviously a down low, but I think it’s important to just touch on for a minute. For me, it was the wildfires in Los Angeles. It’s really kind of shifted me over the past week. It’s been really awful seeing all the devastation and these fires becoming uncontrollable over so many days and the thousands of properties that have been destroyed as a result. You know, outside of the human tragedy, I think putting this back into the energy transition dialogue we’ve been having on this podcast, it also made me think about just infrastructure resiliency. And, you know, we all spend a lot of time in this world, as we should do, talking about climate change mitigation technologies and what we can build to change the way we use energy in order to help us slow or prevent climate change. I really don’t think enough time has been spent talking about infrastructure resiliency and what can we do to make our infrastructure more resilient to a changing climate. And, you know, the challenge there in my mind is somewhat economics. You know, most of the climate mitigation stuff we will talk about, you know, let’s think about renewables, for example, really, you know, they produce a commodity which has an upfront economic value. So it’s a lot more complex that analysis when you look at the cost of making infrastructure more resilient. Now that’s the one for me, I think it will undoubtedly be a topic for California as they pick themselves up from this and begin the monumental rebuild process after these awful fires. With that, thank you everyone again. And that’s a wrap for this episode. It’s great to be back and having these discussions as we kick off 2025. Big thank you to you, Lesley, who as you can all can tell is a wealth of real knowledge on this stuff and perspective on these topics we’re going to be talking a lot more on in the coming weeks and months. It feels like it’s really going to be a big year for the US energy sector and dare I say it, we’re going to see some shifts with many critical investment and financing decision trees ahead of us all, which we’ll be navigating with you in the coming months. We’ve got many more great guests lined up, so please keep listening, spread the word, and wishing you all a happy, energy-driven 2025.

Luisa Fuentes: Thank you.

Lesley Hunter: Thank you so much.

Outro: Please join us next time on The Energy Shift as we continue to tackle some of the hottest topics in the US energy transition landscape, providing fresh insights and viewpoints to help you shift your perspective.

Disclaimer: The materials disclosed on this podcast are for informational purposes only and subject to our Code of Conduct as well as applicable IIROC and FINRA rules. The information and data contained herein has been obtained or derived from sources believed to be reliable, without independent verification by CIBC Capital Markets and, to the extent that such information and data is based on sources outside CIBC Capital Markets, we do not represent or warrant that any such information or data is accurate, adequate or complete. Notwithstanding anything to the contrary herein, CIBC World Markets Corp (and/or any affiliate thereof) shall not assume any responsibility or liability of any nature in connection with any of the contents of this communication. This communication is tailored for a particular audience and accordingly, this message is intended for such specific audience only. Any dissemination, re-distribution or other use of this message or the market commentary contained herein by any recipient is unauthorized. This communication should not be construed as a research report. The services, securities and investments discussed in this report may not be available to, nor suitable for, all investors. Nothing in this communication constitutes a recommendation, offer or solicitation to buy or sell any specific investments discussed herein. Speakers on this podcast do not have any actual, implied or apparent authority to act on behalf of any issuer mentioned in this podcast. The commentary and opinions expressed herein are solely those of the individual speaker(s), except where the author expressly states them to be the opinions of CIBC World Markets Corp. The speaker(s) may provide short-term trading views or ideas on issuers, securities, commodities, currencies or other financial instruments but investors should not expect continuing analysis, views or discussion relating to those instruments discussed herein. Any information provided herein is not intended to represent an adequate basis for investors to make an informed investment decision and is subject to change without notice. CIBC Capital Markets is a trademark brand name under which Canadian Imperial Bank of Commerce (“CIBC”), its subsidiaries and affiliates provide products and services to our customers around the world. For more information about these legal entities, as well as the products and services offered by CIBC Capital Markets, please visit www.cibccm.com.