December 16, 2016

Trump's Cabinet and the Future of Climate Change Policy

Stratas Advisors

This excerpt is from a report that is available to subscribers of Stratas Advisors’ North America and Executive Dialogue services. The full report contains more information about Trump administration nominees Rick Perry, Rex Tillerson and Scott Pruitt. The report also contains an analysis of the trio and the effects they could have on climate.

President-elect Donald Trump has selected three nominees for key cabinet positions that will help shape the future of climate-change legislation. Up to this point, his nominees for Energy, State and the EPA all hold varying views about environmental policy but are generally against intervening with the free market. 

Stratas Advisors has reviewed the backgrounds and previous public statements of the nominees. We’ve gone beyond party platforms to understand how their experience up to this point will influence specific potential policy initiatives. At this time, it looks likely that all three are likely to be confirmed by the Senate, although Secretary of State nominee Rex Tillerson will face more challenging questions from key Senate Republican leaders.     

Rick Perry, Secretary of Energy

Rick Perry, former governor of Texas, made himself a source of brief amusement during a November 2011 presidential debate. He stated that he would abolish three federal agencies, the third of which ─ the Department of Energy ─ he couldn't recall.

Irony aside, Perry has historically taken a skeptical view of climate change and the human contribution to it. In August 2011, he accused climate scientists of manipulating data to attract unnecessary research funding and denied the scientific consensus that human activity is substantially contributing to a warming global climate.

Perry has also voiced opposition to federal tax credits for renewable energy and fossil fuels, although in 2005 he signed legislation that required Texas to increase its renewable-energy capacity to 5,880 megawatts by 2015. This legislation proved mostly symbolic, however, as the renewable energy market in Texas has greatly exceeded that target (it was estimated at 18,00MW in October 2016) due to rising power demand and the favorable economics of wind power. He was generally regarded as an opponent of solar energy as governor of Texas.      

Given the Republican Senate majority, Stratas Advisors expects that he will likely be confirmed in a narrow vote along strictly partisan lines. He will most likely be an advocate for withdrawing from the US's Paris Agreement commitments negotiated under the Obama administration. He could also be expected to possibly cut renewable energy research and development programs at the Department of Energy.

Rex Tillerson, Secretary of State

While both Energy and EPA both have had historical ties to influencing matters related to climate, US participation in the Paris Climate Agreement significantly raises the importance of the State Department's role in this area. In contrast with Rick Perry, Rex Tillerson, Chairman and Chief Executive Officer of ExxonMobil, has publicly acknowledged the scientific consensus surrounding climate change and the substantial contribution of human activity to it.

He has also ostensibly embraced the need for policy interventions to reverse the global warming trend, although this is a more recent development. Throughout the mid-to-late 2000s, while Tillerson occupied senior positions in the company, ExxonMobil provided funding to political organizations that sowed doubt regarding this consensus.

Tillerson was promoted to Senior Vice President of ExxonMobil Corporation in August 2001 and was elected President and member of the board of directors on March 1, 2004. He was promoted to his current position on January 1, 2006.

Of the three nominees, Tillerson is the most in doubt. He continues to face skepticism from key Republican senators, including John McCain (R-Arizona), Lindsey Graham (R-South Carolina), and Marco Rubio (R-Florida) about his close relations with the Russian government, a relationship developed through negotiations on oil and gas projects since 1998.

Under Tillerson's leadership, ExxonMobil lobbied against sanctions levied against Russia after its invasion of Crimea and military intervention in Ukraine in 2014-2015, citing a cost of approximately $1 billion per year in stymied investments.

To secure his appointment, Tillerson would have to make the case to these senators that as Secretary of State, he would take into consideration the balance of economic and strategic interests of the United States as a whole. Although he will have to divest his $151 million in company stock, his network of associates will likely retain significant influence in the formation of his policy views. 

Tillerson notably received an endorsement as a pragmatist who would champion US interests from former CIA Director Robert Gates, who served under both the Bush and Obama administrations.  

Scott Pruitt, EPA

Oklahoma Attorney General Scott Pruitt continues to question the scientific consensus behind climate change, claiming in a National Review op-ed in May 2016 that the debate on the matter is "far from settled." He has led lawsuits against the vast majority of the Obama administration's environmental regulations.

More broadly, Pruitt is also opposed to federal regulation of fracking and GHG reductions.  He can be expected to generally advocate for devolving authority to the states on environmental and climate regulations and continue a track record of deference to private industry.

This is well demonstrated by his submission of a letter to the EPA arguing against new methane rules that was written by industry lawyers. Stratas Advisors expects that he will be confirmed along strictly partisan lines.