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What You Need to Know 

  • Key takeaway #1Policy Shifts: The Trump Administration’s withdrawal from the Paris Agreement and rollback of the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) could trigger disputes under international investment treaties. 
  • Key takeaway #2Investor-State Disputes: Halting climate finance and energy incentives may lead to claims from investors relying on United States commitments. 
  • Key takeaway #3Regulatory Uncertainty: Increased legal risks in oil & gas, renewables, and infrastructure due to changing trade policies, tariffs, and permitting practices. 
  • Key takeaway #4Offshore Energy & Leasing: Reversal of prior leasing decisions for oil, gas, and wind energy could lead to legal challenges from affected stakeholders. 
  • Key takeaway #5Tariffs & Trade Policy: New tariffs on Canada, Mexico, and China could impact supply chains and investment strategies. 

Introduction 

In the first days of his Administration, President Trump has issued a number of Executive Orders that mark a significant shift in United States energy and climate policy, marked by deregulation and a focus on traditional energy sources. President Trump’s second term agenda will have profound implications not only domestically but also on the international stage. Understanding the impact of these policies is crucial for businesses and investors alike. This article will explore the effects of President Trump’s agenda with respect to climate change policy, oil and gas, and solar energy sectors. 

Key Sectors 

Climate Change 

The Paris Agreement 

The Trump Administration’s first term saw the undoing of many United States climate policies, influencing global climate initiatives. One significant action was the United States’ withdrawal, in November 2020, from the Paris Agreement, the UN’s legally binding climate accord.[1] 

Though the withdrawal did not directly result in specific, high-profile litigation solely focused on the withdrawal itself, the decision contributed to several domestic legal actions and regulatory disputes related to environmental policy and climate change. For example, several states, cities, and local governments took legal and legislative actions to uphold the principles of the Paris Agreement despite the federal withdrawal. California and New York committed to their own climate action plans and emissions reduction targets, which sometimes involved litigation to challenge federal rollbacks of environmental regulations. California, along with 22 other states, sued the Trump Administration over its decision to revoke California’s authority to set its own vehicle emissions standards.[2] Likewise, New York, along with other states, sued the Environmental Protection Agency over the rollback of the Clean Power Plan, which aimed to reduce carbon emissions from power plants.[3] 

Various environmental organizations also filed lawsuits against the Trump Administration for rolling back climate and environmental protections, which were seen as contrary to the goals of the Paris Agreement. These lawsuits often focused on specific regulatory changes rather than the withdrawal itself. For example, the Natural Resources Defense Council, along with other environmental groups, challenged the Administration’s efforts to weaken methane emissions standards for the oil and gas industry.[4] 

Although President Biden rejoined the Paris Agreement on the first day of his Administration, January 20, 2021, one of President Trump’s first Executive Orders, “Putting America First in International Environmental Agreements,” issued on January 20, 2025, mandates the United States’ withdrawal from the Paris Agreement and any related international climate commitments under the UN Framework Convention on Climate Change. It emphasizes prioritizing American economic interests and reducing financial contributions to international environmental agreements that do not align with United States values or benefit its citizens. 

United States International Climate Finance Plan 

The Putting America First Executive Order also calls for the revocation of the United States International Climate Finance Plan and the cessation of any associated financial commitments. 

A halt to funding existing commitments could lead to investor state disputes between those stakeholders relying on funds and the issuing agencies. Foreign investors who have relied on United States climate finance for their projects in developing countries might seek compensation through Investor-State Dispute Settlement (ISDS) mechanisms. These investors could argue that the withdrawal of funding constitutes a breach of investment treaties or agreements, particularly if the funding was a critical component of their investment strategy. 

Some examples of investment treaties or agreements that could be relevant in such disputes include: 

  • Bilateral Investment Treaties (BITs): These are agreements between two countries that establish the terms and conditions for private investment by nationals and companies of one state in another state. BITs typically include provisions for fair and equitable treatment, protection from expropriation, and access to international arbitration for dispute resolution. If United States climate finance is halted, foreign investors in climate-related projects might invoke BITs to seek compensation. 
  • Free Trade Agreements (FTAs) with Investment Chapters: Many FTAs include chapters on investment protection that provide similar protections to those found in BITs. The United States has FTAs in force with 20 countries. Investors from countries that are parties to these agreements could potentially bring claims if they suffer losses due to the cessation of United States climate finance. 
  • Investment Agreements with Development Institutions: Agreements involving entities like the Millennium Challenge Corporation, the Export-Import Bank, and the International Development Finance Corporation, among others, may include investment protections. If the United States Climate International Finance Plan is linked to projects supported by these institutions, investors might seek recourse through these agreements, although as with any contract, an analysis of claim viability will be fact dependent. 
  • Contracts with Host Governments: In addition to treaties, investors often have contracts with host governments that include stabilization clauses or specific commitments related to financing. If United States funding is halted, investors might claim that the host government has breached these contracts, potentially leading to arbitration under the contract’s dispute resolution mechanisms. 

In summary, halting United States climate finance could trigger disputes under various international investment treaties and agreements, as foreign investors seek to protect their investments and recover losses. 

Inflation Reduction Act 

Further, in another Executive Order issued on January 20, 2025, “Unleashing American Energy,” President Trump revoked President Biden’s Executive Order 14082, “Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022.” The Inflation Reduction Act (IRA) offered tax credits and manufacturing incentives for renewable energy and electric vehicle projects. 

Investors that relied upon the Biden Administration’s environmental incentives include those that invested in the United States for the benefits promised under the IRA. The Trump Administration’s roll back of the incentives promised under the IRA and withdrawal from climate change agreements may make those planned or ongoing projects ripe for disputes. Increased tensions with climate-conscious stakeholders or investors create a risk for an increase in investor disputes due to regulatory uncertainty, breaches of investor expectations, and conflicts with trade and investment agreements. For example, potential legal disputes that may arise from the Trump Administration’s rollback of various climate change legislation may be related to: 

  • Freezing Grants and Loans: The Unleashing American Energy Executive Order also included the freezing of funds for electric vehicle charging stations made available through the National Electric Vehicle Infrastructure Formula Program and Charging and Fueling Infrastructure Discretionary Grant Program, potentially also triggering claims. 

Although these changes may broadly affect companies and investors in the infrastructure space, sectors like oil & gas and renewable energy are most likely to be affected. 

Oil/Gas 

During his first term, President Trump prioritized deregulation of the oil and gas industry, aiming to boost domestic production. In addition to his withdrawal from the Paris Agreement, President Trump expanded offshore drilling efforts. As noted above, President Trump’s decision to withdraw the United States from the Paris climate agreement during his first term was met with strong opposition from various state governors, who emphasized the importance of maintaining leadership in combating climate change. Several states, including New York, California, and Washington, formed the United States Climate Alliance to continue efforts in reducing emissions and meeting the goals of the Paris Agreement independently of federal actions. 

Outer Continental Shelf 

In the final weeks of his Administration, President Biden withdrew certain areas of the United States’ outer continental shelf from oil or natural gas leasing. President Biden’s withdrawal of areas within the Gulf of Mexico, Atlantic, and Pacific and Northern Bering Sea Climate Resilience Area prevents the withdrawn areas from being considered for exploration, development, or production for any future oil or natural gas leasing. Under the Outer Continental Shelf Lands Act, a president has the authority to withdraw lands. However, the Act does not grant explicit authority to undo those protections, and it is unclear how the Trump Administration will reverse such withdrawals in practice. President Trump’s “Initial Rescissions of Harmful Executive Orders and Actions” Executive Order expressly revoked President Biden’s withdrawal, but the legality of this action has already been widely questioned. 

The uncertainty surrounding all these reversals from one administration to the next could harm foreign investments made in reliance on such shifting policies. Foreign investors in the United States that are affected by shifting policies may seek to resolve disputes through investor-state dispute resolution and other contractual mechanisms, as summarized above, if they perceive that policy changes violate their legitimate expectations, create indirect expropriation, result in discriminatory treatment of those foreign investors, or breach contracts. 

Solar 

During President Trump’s first term, the solar industry in the United States experienced both challenges and growth. One of the most significant actions impacting the solar industry was the imposition of tariffs on imported solar panels and cells. In January 2018, the Trump Administration announced a 30% tariff on solar panel imports, which was intended to protect domestic manufacturers from foreign competition, particularly from China. While this move was aimed at boosting United States manufacturing, it also led to higher costs for solar projects, potentially slowing down the adoption of solar energy. 

Despite the challenges, the solar industry continued to grow. The federal Investment Tax Credit (ITC) for solar energy remained in place during President Trump’s first term. The ITC, which provides a tax credit for a percentage of the cost of installing solar energy systems, has been a crucial driver for the growth of the solar industry. The credit was set to step down gradually but continued to provide significant incentives for solar investments. Moreover, many states continued to support solar energy through their own policies and incentives. States like California and New York maintained strong renewable energy standards and incentives, which helped drive solar adoption at the state level, somewhat counterbalancing federal policy challenges. And according to the Solar Energy Industries Association, the United States solar market installed significant capacity each year, driven by declining costs of solar technology, state-level policies, and the ITC. The industry also saw job growth, although the rate of growth was affected by tariffs and other factors. Increasing demand from corporations and consumers for clean energy also contributed to the growth of the solar industry. 

While the Trump Administration’s policies posed challenges for the solar industry, the industry continued to grow due to state-level support, federal tax incentives, declining technology costs, and increasing demand for renewable energy. Continued protectionist measures and limited federal incentives for solar development are expected during President Trump’s second term. 

On January 20, 2025, President Trump has also issued the “America First Trade Policy” Executive Order. The Order focuses on addressing trade deficits, investigating unfair trade practices, and ensuring fair currency practices. It also emphasizes the importance of reviewing and potentially renegotiating existing trade agreements, particularly with China and the United States-Mexico-Canada Agreement (USMCA). With regard to potential tariffs, it directs the Secretary of Commerce, in consultation with the Secretary of the Treasury and the United States Trade Representative, to investigate the causes of the United States’ trade deficits and to recommend appropriate measures, such as a global supplemental tariff, to address these deficits. Additionally, the United States Trade Representative is instructed to review the Economic and Trade Agreement with China and recommend actions, including the imposition of tariffs, if necessary. The Order also calls for a review of existing trade agreements and potential tariff modifications related to unfair trade practices and industrial supply chains. 

Since the USMCA’s implementation in July 2020, there have been several notable disputes and litigation efforts related to its provisions. For example, in 2021, Canada challenged United States safeguard measures on solar products, arguing that they were inconsistent with USMCA obligations. 

On February 1, 2025, President Trump issued a series of Executive Orders, imposing tariffs on imports from Canada, Mexico, and China. The tariffs include a 25% increase on imports from Canada and Mexico, with a lower 10% tariff on Canadian energy resources, and a 10% increase on imports from China. The measures aim to hold these countries accountable for failing to stop the flow of illegal drugs and immigration into the United States. 

For further information, please contact:

Robert A. Hager, Partner, Crowell & Moring

rhager@crowell.com

[1] The Paris Agreement (also called the Paris Accords or Paris Climate Accords) is an international treaty on climate change that was signed in 2016. The treaty covers climate change mitigation, adaptation, and finance. See United Nations Framework Convention on Climate Change, The Paris Agreement, https://unfccc.int/process-and-meetings/the-paris-agreement. 

[2] State of California et. al. v. Chao et. al., Complaint for Declaratory and Injunctive Relief, Case No. 1:19-cv-02826-JMC (Sept. 20, 2019). 

[3] Am. Lung Ass’n v. EPA, 985 F.3d 914 (2021), reversed and remanded West Virginia v. EPA, 597 U.S. 697 (2022). 

[4] Clean Air Council v. Pruitt, 862 F.3d 1 (2017). 

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