COVERAGE AREA and macrothesis

As President Donald Trump begins his third year as President – and, not to be overlooked, his 2020 re-election campaign – incoming House Democratic Party leaders have telegraphed their plans for vigorous “oversight” activities that could circumscribe the pace and scope of his deregulatory agenda. We expect the Administration to focus on finalizing and defending marquee rollback initiatives, especially greenhouse gas (GHG) standards for the power sector and light-duty vehicles and meta-regulatory matters such as the social cost of carbon and infrastructure permitting under the National Environmental Policy Act.

To “pendulum-proof” the President’s efforts against a differently minded, future White House, we also expect the White House to prioritize the seating of simpatico federal jurists disposed to uphold those rules. Senate Republicans’ ongoing cohesion with the White House may prove critical for the President’s realization of his deregulatory and judicial goals. An adverse report by Special Counsel Robert Mueller – even one that falls short of directly impugning the President – could spur some of the 22 Senate Republicans facing their own re-elections in 2020 to break with the President.

Legislatively, we anticipate heightened pugilism, rather than policy cooperation, after a mid-term election where both parties gained ground by going on the attack. House Democrats’ embrace of a “Green New Deal” – a government-directed, low-carbon transition –and the reinstatement of a Select Committee to pursue this goal augurs weak legislative prospects, in our view. It also suggests that both sides could address climate policy symbolically, rather than substantively, as a wedge issue. We continue to give low odds for a federal carbon tax, and not just because fossil-levered Senate Republican gatekeepers seem likely to block it.

In addition, progressives and climate activists appear to looking beyond market-based measures in favor of stricter regulatory modalities that could deliver more certain, more immediate impacts. Even if no federal law passes, the Select Committee could reactivate state-level climate debate (and fracking and flaring debate, too) by spotlighting mid-continent producing states led by incoming Democrat Governors with new statehouse majorities. Meanwhile, in green-leaning, Democrat-led coastal states, we see a second wave of carbon pricing programs under consideration, particularly in the transportation sector.

A comprehensive understanding of energy market dynamics requires a view beyond supply and demand. The U.S. may not have any state-owned energy companies, but political leaders and regulators influence economic outcomes all the way from the mine mouth to the smokestack and from the wellhead to the gas pump. Our coverage looks at everything from macro-level political trends to politician-specific economic incentives. Our annual Energy Policy by the Numbers survey provides clients with our analytical tool set, including comprehensive, economic and political dashboards with state- and district-level granularity. We incorporate these tools into all of our research, including as-needed notes, reports and flash blasts regarding key U.S. policy or political issues. In addition, our soon-to-be-released, new quarterly product, Themes, Trends and Discontinuities, will contextualize recent developments and outline our forward-looking projections of relevant economic and policy outcomes.

Updated: December 24, 2018.