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May 02

Trump and the Green Economy: Economic Consequences of Climate Deregulation

Posted in Articles, Domestic Economics, Environmental Economics, Political Economics       Comments Off on Trump and the Green Economy: Economic Consequences of Climate Deregulation

By Ghazal Ismandar


Donald Trump’s return to the presidency marks a turning point for U.S. climate and energy policy — one defined by sweeping deregulation, fossil fuel revival, and a deliberate unraveling of the clean energy agenda. With his administration rapidly dismantling key initiatives from the Biden era, the future of America’s green economy — a sector that has emerged as a cornerstone of innovation, investment, and global competitiveness — now faces unprecedented uncertainty. The economic consequences of this reversal are profound, threatening to stall momentum, undercut job creation, and surrender U.S. leadership in the industries of tomorrow.

Trump’s second term has already seen sweeping actions. On his first day in office, he signed Executive Order 14162, withdrawing the U.S. from the Paris Climate Agreement for a second time and terminating all related international climate finance commitments. He also declared a national energy emergency, lifting the moratorium on new liquefied natural gas (LNG) terminals, ending the federal electric vehicle (EV) mandate, and accelerating fossil fuel infrastructure projects, including offshore drilling and pipeline expansion (Douglas, year).


In line with this agenda, the Department of Energy has canceled clean energy grants, including projects aimed at reducing emissions in low-income housing and expanding EV car-sharing programs (Knickmeyer, 2025). The Environmental Protection Agency (EPA), now staffed with oil, gas, and chemical industry lobbyists, has also granted polluters broad exemptions from rules limiting toxic emissions such as mercury and arsenic (McCormick, 2025). Meanwhile, the administration is reviewing the EPA’s endangerment finding — the scientific basis for regulating greenhouse gases under the Clean Air Act (Second Presidency of Donald Trump, 2025).
Trump’s offshore wind policy has been particularly aggressive. In January 2025, he signed an executive order halting new leasing and permitting for offshore wind projects and initiated a review of existing projects like New England Wind and Empire Wind, threatening their financial viability (Empire Wind, 2025).


These actions have already begun to chill investment in the clean energy sector. The Inflation Reduction Act (IRA), passed in 2022, had catalyzed over $200 billion in private investment by early 2024, offering tax credits and incentives for renewable energy, EVs, and domestic manufacturing (International Energy Agency, 2024). However, the Trump administration has paused disbursement of IRA funds and is attempting to claw back climate-related grants, including those from the Greenhouse Gas Reduction Fund (Second Presidency of Donald Trump, 2025).


Harvard economist James Stock’s warning remains prescient: “Green energy requires long-term certainty. The risk of regulatory whiplash alone can chill investment even if tax credits remain technically available” (Stock, 2025). These policy reversals are already affecting capital-intensive sectors like solar, wind, and battery storage.


Beyond investment, Trump’s second-term agenda is undermining the broader framework of environmental accountability. His administration is targeting ESG (Environmental, Social, and Governance) investing, with efforts to restrict its use in federal and state pension funds (Knickmeyer, 2025). Meanwhile, the rollback of pollution protections has raised alarms among scientists, including Gene Likens, who warns that weakened emissions standards could lead to the return of acid rain in the U.S. (Milman, 2025).
Internationally, the U.S. withdrawal from the Paris Agreement and the slashing of climate finance commitments have weakened global cooperation on climate change. Analysts warn this could trigger a domino effect, encouraging other nations to scale back their own efforts (Setzer, 2025).


While Trump’s supporters argue that deregulation reduces costs and boosts energy independence, the long-term economic tradeoffs are becoming harder to ignore. The global clean energy market is projected to exceed $10 trillion by 2050, and countries like China, the EU, and Canada are aggressively investing to dominate future markets in green hydrogen, carbon capture, and electric transportation (Meyer, 2025). If the U.S. continues to reverse course, it risks ceding leadership in these high-growth sectors.


Trump’s second term is not merely reshaping the trajectory of the green economy — it is actively eroding the policy foundations and market confidence needed for its continued growth. The aggressive dismantling of climate protections, withdrawal from global agreements, and favoring of fossil fuel interests send a clear signal: the United States is retreating from its role as a leader in the clean energy transition. This political reversal may yield short-term economic gains for entrenched industries, but it risks long-term costs that will be far more difficult to recover from — lost investment, forfeited innovation, declining global competitiveness, and mounting environmental damage. In an era where climate leadership defines economic leadership, the choice to step back is not just a policy shift; it is a forfeiture of the future. The green economy, once positioned as a pillar of sustainable growth, now hangs in the balance — not for lack of potential, but for lack of political will.

Sources:
Douglas, Erin. (2025, January 20). Trump Declares Energy Emergency, Pushes LNG and Fossil Fuel Projects. Houston Chronicle. www.houstonchronicle.com/politics/article/trump-energy-emergency-texas-20045343.php. Accessed 29 Mar. 2025.
Empire Wind. (2025). Wikipedia, Wikimedia Foundation. en.wikipedia.org/wiki/Empire_Wind. Accessed 29 Mar. 2025.
Executive Order 14162. (2025). Wikipedia, Wikimedia Foundation.en.wikipedia.org/wiki/Executive_Order_14162. Accessed 29 Mar. 2025.
U.S. Climate Policy and Investment Outlook. (2024). International Energy Agency. . Accessed 29 Mar. 2025.
Knickmeyer, Ellen. (2025, March 6). Trump’s DOE Cancels Clean Energy Grants.. apnews.com/article/cf1dff9ee771c566765e9ca3e3599d91. Accessed 29 Mar. 2025.
McCormick, Erin. (2025, March 27). Trump’s EPA Opens Door for Polluters. The Guardian. www.theguardian.com/environment/2025/mar/27/acid-rain-trump-epa. Accessed 29 Mar. 2025.
Meyer, Robinson. (2025). “What Trump’s Return Means for Climate.” Heatmap News. heatmap.news/politics/trump-climate-second-term. Accessed 29 Mar. 2025.
Second Presidency of Donald Trump. (2025). Wikipedia, Wikimedia Foundation.en.wikipedia.org/wiki/Second_presidency_of_Donald_Trump. Accessed 29 Mar. 2025.
Setzer, Joana. (2025). Global Climate Action in the Age of Trump. USALI Perspectives. usali.org/usali-perspectives-blog/implications-of-the-trump-presidency-for-global-climate-action. Accessed 29 Mar. 2025.
Stock, James. (2025). Quoted in Meyer, Robinson. “What Trump’s Return Means for Climate.” Heatmap News. heatmap.news/politics/trump-climate-second-term. Accessed 29 Mar. 2025.