2025 Energy Policy Outlook: Industry Uncertainty and Executive Orders

The New Reconciliation Tax Bill

Congress will soon vote on the Republican tax reconciliation bill, which may slash some tax credits to incentivize renewable energy projects. These credits were made possible by the Inflation Reduction Act (IRA), which passed in August 2022.

No Republicans voted for the Democrat tax reconciliation bill in 2022. However, Jordan said there are parts of the Democrat bill that Republicans do support. “There are Republicans who have long supported nuclear, biofuels, and other forms of energy that had tax credits in that bill,” Jordan said. “There’s also a new set of [Republicans] who may not have supported the tax credit, but they see a ton of investment in their districts.”

As a result, some Republicans have shifted their positions on the tax credits, with Jordan pointing to the fact that many Republicans are publicly opposing their rollbacks.

Trump’s Tariffs and Energy Infrastructure

Since Trump took office, he’s announced the enforcement of sweeping tariffs that will heavily affect the energy industry’s supply chain in two major ways: 1) Uncertainty for renewable energy and fossil fuel and developers, and 2) increased costs for essential parts.

“Any future development that’s not already planned in the energy sector seems to be at a standstill,” said Emma Sbrollini, a FiscalNote Professional Services consultant. “Companies are wondering whether they should wait until the administration cools down on the tariffs, but it’s hard to navigate and stalls a lot of the progress currently being made in the sector.”

Sbrollini said the tariffs also increase renewables project costs, slowing the clean energy transition. “[The industry] is already grappling with shortages of essential parts,” Sbrollini said. “These new tariffs are only exacerbating the issue and making it more challenging to support the necessary components for this type of infrastructure.”

Energy Project Permitting

The U.S. Department of the Interior recently announced it would accelerate the energy permitting process to 28 days maximum in response to Trump’s declaration of a national energy emergency.

However, Sbrollini refutes the idea that the U.S. is experiencing an energy emergency. “One of President Trump’s main focuses is on energy sovereignty and trying to bring as much back to the U.S. as he can. He has conflicting ways of doing that, but I wouldn’t say there is an energy emergency.”

Jordan said the new energy permitting process will significantly impact the energy sector. “We’ll see how much of that stands up in court because this is sure to draw legal challenges from both Democratic states and environmental groups,” he adds. “[Trump’s] administration saw quite a bit of defeat in the courts over these issues in his first term.”

The Rise of Data Centers and AI

The increased use of artificial intelligence (AI) will demand more data and energy capacity in the U.S. Currently, data centers are among the country’s largest industrial power consumers, with their footprint expected to double or triple by the end of the decade, Sbrollini said.

“The sweeping tariffs are making it increasingly expensive and difficult to build AI infrastructure,” she adds. “Only 20 percent of the total U.S. demand for transformers can be met by domestic suppliers, so we have a large dependency on our foreign suppliers for this essential equipment.”

At the same time, the Trump administration has used the rise of AI as an excuse to justify policies that would keep baseload power plants online. For instance, Trump recently lifted the Environmental Protection Agency’s restrictions on coal plants. “It’s another thing that’s a bit unknown since we’ve seen models that don’t need quite as much power as some of the models we’re more familiar with,” Jordan said. 

Looking Ahead

There’s looming uncertainty for the energy sector as the Trump administration’s orders unfold. Some states are frustrated by the federal government’s reach and are expected to challenge the administration’s actions in court. 

“All the executive orders the Trump administration has put forth have pushed for a fossil fuel revival,” Sbrollini said. “Companies are seeing this and wanting to respond accordingly, then you see all the policies they’re implementing, and it’s a complete contradiction.”

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