By Kim Sung-woo
Former President Donald Trump was elected as the 47th U.S. president, opening the Trump 2.0 era. The U.S. climate policy seems to be facing unprecedented uncertainties as the president-elect dismissed climate change as a “hoax” during his first term.
To gauge the direction that the new Trump administration will be heading, it would be helpful to consider his political pledges, Agenda47, remarks he made during the campaign trail and cabinet appointments. Notably, in his final pledge book released last July, there was not even a single reference to the words “climate” or “environment” in the 16-page booklet presenting details on Trump’s 10 major pledges. Instead, the pledge book combines climate issues with energy “unleashing,” deregulation, antiregulation and reliable and low-cost energy solutions. Together with the pledge book, Trump’s camp remarks during his campaign trail shed further light on the future direction of his upcoming administration in responding to climate issues.
For one, policies with a clear, measurable bottom line would take precedence over environment-oriented policies. Trump’s campaign showed support for easing and accelerating the federal government’s oil and gas drilling permit process, construction of fossil fuel power plants, the installation of natural gas pipelines, promotion of nuclear energy production through the operation of nuclear power plants and relevant investment and easing environmental regulations on greenhouse gases such as the abolition of the rules of the U.S. Environmental Protection Agency (EPA). Another approach expected under the second Trump administration is the abolition of environmental policies with high price tags that hinder economic feasibility.
Trump’s pledge book also discusses the end of the so-called “socialist-type” Green New Deal and the abolition of mandatory use of electric vehicles. Trump’s camp remarks on the withdrawal from the Paris Agreement, replacement of the head of the climate disclosure agency and rollback of unused funds under the Inflation Reduction Act all point in this direction.
The directions suggested above become clearer in the president-elect’s recent nomination of his cabinets. Lee Zeldin, a former member of the House of Representatives, was nominated as the head of the EPA, which oversees environmental policy. Known to be against eco-friendly bills that restrict oil drilling and other pro-industry activities, Zeldin said shortly after his nomination that he would create jobs and enable the U.S. to achieve energy dominance. Doug Burgum, appointed as the chairman of the National Energy Council and Secretary of the Interior, is the governor of North Dakota, one of the three largest states in the U.S. for oil reserves and production volume. Burgum commented last May that “Trump will stop Biden’s attack on fossil fuels.” Oil mogul Chris Wright, who was nominated as the energy secretary, is the CEO of Liberty Energy, the second-largest U.S. company specializing in fracking. Wright had claimed that the climate crisis is fiction and that the advantages of fossil fuels outweigh the damages caused by climate change.
The directions for and uncertainties surrounding climate change and environmental policies under Trump’s second administration could pose burdens to Korean companies. Companies who are seeing trade deficit vis-à-vis the United States need to be ready for changes in trade conditions that arise from tariffs and tougher bilateral negotiations while ensuring that their resilience capacity in the face of U.S.-derived supply chain disruptions and diversified production bases is in order. In addition, companies should prepare for changes in competitive environments in other markets as a result of any trade conversion effect caused by stronger U.S. protectionism. Other non-U.S. countries to which companies export a bulk of their products may also follow suit and ramp up their adoption of stronger protectionist measures.
Some risks, however, present potential opportunities. Korean companies need to keep an eye out for ways to leverage their strengths in line with the Trump administration’s policy direction. For example, tensions between the U.S. and China present an opportunity for Korean companies to expand their market for solar energy and energy storage systems into the U.S. Further, as the U.S. is expected to expand its technology for harmonizing fossil fuels and clean energy, lowering technology prices through the cooperation on hydrogen and carbon, capture, utilization and storage technologies — which are also in high demand in Korea — would present another opportunity. In addition, according to a statement issued during the nomination of the chairman of the National Energy Council, the electricity supply in the U.S. is expected to increase.
One may expect more opportunities for increasing exports of Korean power generation infrastructure equipment to the U.S. market — the competitiveness of which has already been proven in many global markets — as well as a suitable timing for collaborating on nuclear energy projects in the U.S. For non-U.S. markets, now is the time to further reduce carbon emissions from products exported by Korean companies to those markets. Low-carbon products will help Korean companies gain competitiveness in advanced countries that have already begun to require carbon reduction of products, compared to competitors in other countries such as China. The carbon border tax has expanded from the European Union (EU) to Britain and Australia. As the EU Battery Regulation and the Ecodesign for Sustainable Products Regulation take effect one after another, export businesses face increasingly rigorous requirements to disclose carbon details on their products, all of which will significantly affect their bottom line on an even greater scale than before.
Kim Sung-woo, head of the Environment & Energy Research Institute at Kim & Chang, is a member of the Presidential Commission on Carbon Neutrality and Green Growth.
