Repeal of US EV perks, LNG freeze possible on Trump’s first day – US oil group

Al Greenwood

14-Jan-2025

HOUSTON (ICIS)–On his first day in office as president, Donald Trump could repeal the pause on permits for new liquefied natural gas (LNG) terminals and automobile policies that are so restrictive, critics say they favor electric vehicles (EVs) over those powered by internal combustion engines (ICE), an oil and gas trade group said.

Repealing those polices are among the goals of the American Petroleum Institute (API), and they would have indirect effects on the US chemical industry.

LNG exports affect US chemical markets because they support prices for natural gas by providing another source of demand. Natural gas prices influence those for ethane, the main feedstock that US crackers use to make ethylene.

EVs consume more plastics than their counterparts that are powered by internal combustion engines. EVs are also creating demand for new polymers and fluids that can meet their unique material challenges.

REMOVING THE HALT ON NEW LNG PERMITS
The US has effectively frozen the issuance of new LNG permits since January 2024, when President Joe Biden issued the order. The freeze applies to terminals that will export LNG to countries that lack free trade agreements with the US.

“I think the LNG pause is something that they can address on day one,” said Mike Sommers, API president. He made his comments in a briefing earlier in the week.

Trump takes office on 20 January.

If Trump removes the freeze, it would not automatically lead to a flood of new permits for LNG terminals.

US companies may be reluctant to build more terminals when global LNG capacity is expected to increase.

Rising US costs for material and labor have made LNG projects less attractive.

Legal challenges could arise during the permitting process.

REMOVING EFFECTIVE RESTRICTIONS ON ICE VEHICLES
Trump could ax two Biden automobile policies his first day in office, Sommers said.

  • The Environmental Protection Agency’s (EPA’s) recent tailpipe rule, which gradually restricts emissions of carbon dioxide (CO2) from light vehicles.
  • The Department of Transportation’s (DoT’s) Corporate Average Fuel Economy (CAFE) program, which mandates fuel-efficiency standards.

The group also wants Trump to withdraw a waiver that the federal government granted to California, which allowed the state to adopt a program that will gradually phase out ICE vehicles.

California’s program, called Advanced Clean Cars II (ACC II), is the lynchpin for similar programs adopted by 12 other US states and territories. If Trump can successfully withdraw the waiver, then it would prevent California and the 12 other states and territories from adopting ACC II style programs.

The fate of the ACC II program could become a legal dispute over state versus federal power that would need to be settled in court.

OTHER POLICY GOALS OF THE API
EVs and LNG permits make up two of the five policies that the API will promote to the new administration.

The other three include permitting reform, tax policy and issuing a new five-year offshore leasing program.

Under these five policy goals, the API has outlined more than 70 actions that the administration could take, many of them possible on Trump’s first day in office.

Others may require acts from Congress. This could be challenging because Trump’s party holds a two-seat majority in the lower legislative chamber of the US.

API TO DISCOURAGE TARIFFS ON CANADIAN CRUDE
Prior to taking office, Trump had threatened to impose tariffs of 25% on imports from Canada. Trump did not indicate that he would exclude Canada’s sizeable shipments of crude oil.

In 2023, Canadian oil made up nearly 60% of all crude imported by the US, according to the Energy Information Administration (EIA).

Canadian oil is heavier than that produced in the US, so the two grades complement each other in the nation’s refineries.

“40% of the American refinery kit is not tooled to refine the kind of oil that is found in the US,” Sommers said.

“We’re confident that the Trump administration understands the importance of that kind of trade, and we’re going to work with them as they consider their trade policy over time,” he said.

PIECEMEAL PRESERVATION OF IRA
The API would like the government to preserve some of the tax credits created by the Inflation Reduction Act (IRA). Those include the carbon capture tax credits under Section 45Q and the hydrogen production tax credits under Section 45V.

Many API members are developing carbon capture and hydrogen projects.

Meanwhile, it would like the government to repeal the IRA’s methane fee.

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