Harris, Trump and Election Effects on Energy

examines the intersection of business policy and law. I'm Nathan Dean, an analysts with Bloomberg Intelligence covering financials policy. The following which you are about to hear, was a US election webinar series with the US Energy Team that was recorded on October twenty ninth, twenty twenty four. If you have any questions or would like to have access to any of the research available is discussed in the webinar, please contact me Nathan Dean at end inten at Bloomberg dot net.

We'll certainly be happy to answer any questions. Also, if you miss this and you know, it's going to be available both as a replay and also as a version of our Votes and Verdicts podcast series, we'll be putting that out before the election and they'll be available on Apple and Spotify and all the other various podcasts platforms. So Bloomberg Intelligence who we are. We are the equity research division of the Bloomberg Terminal. We've got about five

hundred analysts and associates across the globe. We cover a variety number of companies, industries, sectors, commodities, strategies and so forth like that ventially. If it's in your portfolio, we cover it. You can find all of our research at Big The last thing I'll discuss before we move on to the topic of today is all of us are

available to chat with you via the Bloomberg Terminal. If you have a client, please ib us message us, call us, because while we're going to go through the quick version of the electoral impact on the energy sector, we just like the highlight that Will and his team has put out a pretty comprehensive report on the elections, and certainly we would love to get you a copy of that before we find out what happens on November fifth. So with all that being said, let me go ahead and

get started. What I'd like to do is just spend about ten minutes to talk about how you should think about Washington and when you hear the statements from presidential candidates, how does it assist you with policy analysis. Now, this not only applies to energy, but this also applies to financial services, triffs, taxes, and so forth like that. So the first thing that keep in mind is just the general state of the races. We have the House of Representatives,

we have the Senate, we have the presidency. Now, for those of you who aren't in the United States are not familiar with the US government, remember the House of Representatives has fourign thirty five members. Each member serves a two year term and all fourigundred and thirty five members are up for re election. Now, according to our friends over at Bloomberg government. There's about forty four seats that are still undecided, that are either toss up or in

the leaning category. So the majority of House members, when they go to bed on election night, their hard work is done there probably have already won their races, but it's those remaining forty four that we have to watch. Now. Polling in the House is a lot more difficult, But one thing we often say is is that it generally turns on the turnout of the presidential cycles. So if former President Donald Trump wins, more likely than not, the

Republicans take the House. If Kamala Harris wins, more likely not the Democrats take the House, certainly things can change. But the reason why we care about this so much is because whoever controls the hose House of Representatives controls the House in Ways and Means Committee, and the House in Ways and Means Committee is the committee in the

House that deals with tax reform. And because the Trump Air tax cuts expire for individuals at the end of twenty twenty five, there is going to be a robust tax debate taking place next year in Congress, and historically, tax policy starts with the House, so that Chairman or the chairwoman of the House in ways means committee will be an extremely important person to watch, probably even more important than the President when it comes to tax policy.

Moving over to the Senate, you know there are one hundred senators, two from each state. They serve up six year terms. There are thirty four Senate seats that are up for right now, two of them and then state of Nebraska due to Senator Ben sass retiring, twenty three of those are held by the Democrats or their allies. There are four independents right now that caucus with the Democrats. Now,

this is an extremely difficult election for the Democrats. The reason being is is that there are many states that the Democrats are defending in They're either considered swing states or Trump states, and so for the Democrats to keep control of the Senate, the Democrats essentially have to win everything. Right now, the Democrats have a fifty one to forty nine lead. Senator Joe Manchin, he's an independent caucuses with

the Democrats, is going to retire. And you don't have to be a political strategist to note that West Virginia is most likely going to turn Republican. So now the Democrats are fifty to fifty, and right now there are some several tough races, like Senator Cheron Brownie's the chairman of Senate Banking Committee in Ohio. Ohio is generally a Republican state, has been at the least the state wide level for the last few election cycles. The second one

is going to be Montana Senator John Tester. Senator John Tester also a member of the Senate Banking Committee. He's currently about five or six points below and Montana is also a Republican state. So where I'm going with this is that most people in Washington think the Senate is going to turn Republican. And why is that important for us in the energy sector. Well, it's about appointments of

regulatory leaderships. If President Trump wins and the Republicans take the Senate, he will be able to replace the head of FERK, the head of EPA, a lot more regulatory officials with a much faster timeline than if the Democrats controlled the Senate. On the flip side, i Kamala Harris were to win, the Republican Senate could effectively jam her up or force her to keep positions in place and people in place because they're not going to be able

to spend that much time confirming folks. So again something to keep in mind. Now, finally, when it comes to the presidential cycle, I apologize I cannot tell you who is going to win. Before you dialed, before we opened up, the six of us had a robust conversation on who we thought we were going to win, and we still don't know. But what we can say is is that this is a race between former President Donald Trump, vice President Kamala Harris, and the couch. And if the couch wins and people

stay home, they're more likely they're not. President Trump wins. If people get off the couch and they go to the polls, more likely than not, Vice President Kamala Harris wins. And for those of us who are watching, which states to watch, in my opinion, it comes down to Pennsylvania in North Carolina. Those are the two states that I think, over the next couple of days after the election, look to see and you may get an indication of who

is going to win. So with all that being said, the last thing I want to leave you with before I start asking questions to my colleagues about the energy sector is just remember how things get done in Washington. There's largely three ways. The first is legislation. Now, look, legislation. The House Representative passes a bill, the Senate passes a bill. It has to be the identical bill. They come together, and then they send it to the President's desk. It

doesn't happen all that much. The reason being is the Senate has something called the filbuster. It allows one senator to overturn or block, not overturn, block legislation unless sixty senators overturn him or her. Now, this is not written down in the Constitution. It's actually not written down anywhere. It's essentially sixty or sorry, two hundred and fifty years of best practice. And there has been some chatter about

doing away with the philbuster. The philbuster for nominations, for example, doesn't exist anymore. We think the filibuster is going to remain, so we think legislation is going to be extremely difficult to come by. It will happen, but it's extremely difficult.

the Inflication Reduction Act through. So the Republicans state the House, the Senate, and the Presidency look for another round of very robust tax debate next year and maybe multi trillion dollar tax packages through because they can essentially bypass democratic opposition. So that's legislation. The second is regulation. If you've been following Furk or you follow the Federal Reserve, you know what a proposal looks like, a proposed rule several hundred

pages of industry impacting regulations. Now, regulators can put this out and they can essentially bypass the opposition party, and they can do what the president wants in terms of regulation. But a it takes time. Even a deregulatory effort by President Trump would take probably two to three years to begin to truly feel the impact in the sectors. And secondly, courts are becoming increasingly skeptical towards the power of regulators

when it comes to new regulations. So if Kamala Harris wins, you're going to see courts continue to question whether or not those regulations actually are constitutional or not. We can certainly get into that in the Q and A if you'd like, but I'll just let you know it's becoming much more difficult and as a result, a lot of regulators, we think at a Kamala Harris presidency, would turn to

the enforcement arm. And then finally is executive orders. Now, in my estimation, eighty five percent of executive orders are symbolic in nature. It's a fancy way of the president picking up the phone and saying to his or her staff, I want you to do something either the la legislative route or the regulatory route. But please remember that in that other fifteen percent, the power of the presidency is a lot more powerful when it comes to things like

national security, foreign relations, trade, and tariffs. So if you're interested in comments and you think that there's a real risk or opportunity that comes with President Trump saying that I want to put sixty percent tariffs on all goods from China, this is something that he can do fairly

early in his presidency and can essentially bypass Congress. Now, our just real brief thought on tariffs is that even if you see an executive order that comes out from President Trump, it says I'm going to put these tariffs in place, Please note that tariffs are viewed by presidents as negotiation tools when conducting foreign relations, and so you're not going to see an immediate tariff. You'll probably see

the redline come across the Bloomberg terminal. There'll probably be a market reaction, but in the actual text of the executive order, you'll probably see language like this won't go into place into two except for two hundred and seventy days or three hundred and sixty five days unless the Treasury Department says this, or unless the Energy Department does that, because presidents also want to keep flexibility when they conduct negotiations.

So just something to keep in mind as you hear kind candidates talk and as we talk about the energy sector today, just remember how does this fit into one of those three buckets? Okay, so let's go ahead and turn it over to the questions. First. I'm going to start with talent and just talking about the power of the presidency. Let's talk about the energy exports and the

LNG pause. So, talent, what is the latest on the freeze on the LG export authorizations, What are some likely outcomes and who are the beneficiaries of the freeze and who does it hurt the most.

was a political move to play CAID activists. You know, we said from the beginning that in January that we don't expect anything to happen until the election and really the inauguration, and we're kind of on track for that. You know, in July there was a federal judge that overturned it, but unofficially it remains. There was a one off with New Fortress Energy. They have a small project in Mexico. They actually issued a five year expert authorization

to non FTA countries instead of twenty five years. But you know it's in Mexico. It's one off. It was a way of saying like, okay, you know it was overturned. We're looking without really looking. So we still don't expect anything until really the inauguration the outcomes. So if you have if Harris wins, I don't think it's a permanent man. I think eventually the energy track will we'll keep moving.

Some projects will move forward, but it will you know, inhibit some and I do expect some stricter emissions criteria and regulations. Obviously, if Trump wins, it's going to be a lot more favorable for LNG. I think one of the first things he does will be to stop the pause. I think will try to expedite some of those authorizations or extensions. But you know, I think ultimately even that it will take a few months to address. He has to get a new Energy secretary, maybe take a look

at Ferk. The Energy Department's already understaff, so I think even that's going to continue to pressure the administration along with you know, activists appealing everything. So the bottom line is we're looking at delays of over a year and higher costs for many of these projects regardless of who comes in. But ultimately Trump would be more favorable for LERG and beneficiaries and you know winners and losers of this.

So who are the beneficiaries? The first thing that comes to mind are the international exporters and competitors through most mostly through three q this year of LNG contract signed firm or tentative, the US comprised about twenty three percent, but that compares to forty three percent last year, so it just goes to show that there's less interest. And the majority of that twenty three percent were tentative deals,

not firm deals. So you still have to you know that those are heads of agreement that you would have to turn into a sale and purchase agreement. So obviously when I say international competitors Qatar, Oman UAE, we saw a final investment decision taken on a UAE project this year. Other beneficiaries Mexico and Canada, they have that advantage the don't have to go through the Panama Canal. See more contracts signed with them as well. Other beneficiaries US projects

that are already operational. If it comes to it, the scarcity value of those assets right, but also de bottlenecking is an opportunity for growth without going through the extremely lengthy regulatory process. So for example, Shaner, the nameplate capacity of each of their trains was four and a half million tons. They've already found a way to extend that to five point one million tons a year, so you know,

other projects could do that. I say this with a caveat, but proposed projects with that already have export authorizations to non FDA countries. They have a leg up on projects that don't, obviously, But at the same time, many of those expire in twenty twenty six, twenty twenty seven, and it takes four years to build a project, so you know, naturally you're going to many of these projects are waiting

for more clarification. They don't want to invest billions take a final investment decision without an extension, so probably won't see those decisions until after the inaugura is age inauguration losers of this, you know, I just said it. Obviously, the proposed projects with with that lack the non FTA

export authorizations, you're already behind. Even if they do eventually get one, they may be so far behind with other projects in the US or globally that are moving forward, and there's a lack of demand there because realistically not all these projects are going to get built anyway, and I think that this freeze reduces that that number even further. And another loser of this is is the US's reputation

as a reliable LNG provider. You know, financial backers could become hesitant counterparties, maybe even trying to get out of of certain contracts. And realistically a lot of this we've seen it with the contracts signed this year. You're pushing demand and opportunities to other countries, and you could push it the countries that don't support your agenda, like Russia. So definitely, the US's reputation is so right.

And you know, I would just say to those of you who are listening right now, the courts are changing fairly quickly in the United States, and so this is an area that I think is really important especially if you're not in in the US, just to understand, because the courts are beginning because of what's known as the Chevron Difference and major questions doctrine, courts are going to

be increasingly involved in regulations. So just that being sided telling, can you just give your thoughts on what's happening over the DC Appeals Court.

first certificate overturned on on environmental grounds. Also, Commonwealth Energy had it not it's not as extreme as what happened with the other two projects, but they had THEIRS sent back to them to reassess also the climate impact of Commonwealth. And then Williams had the trans Co Expansion project regional energy access up in the Northeast. They had their FIRK certificate overturned as well, so they're dealing with a similar,

similar issue. It's all on environmental grounds and essentially, you know, if we use next decade as a as a case study, you know, they had to they recently just submitted an appeal and they can continue construction their in the appeals process and make take months. It could take a year. There's a decent chance that the appeal is denied and then it could go to the Supreme Court. It could take years. But this is a project, you know, it's

alarming for for other projects. What is this to stop from other other projects even that have crossed those lines and are under construction to be halted. So this one will be following very closely. You know, if if construction is halted, it could be devastating. I could hurt other projects. Venture Global CP two project has a has a target on its back. I wouldn't be surprised if that suffered a similar fate as the other two. So you know,

Rio Grand has to go undergo. They have to submit a new environmental impact study, a new public comment period, so they have to jump through all these hoops that they've you know, to keep the project going. But again it just it. It's a lot of risk on all energy infrastructure projects. So whether it's permitting reform or just tightening up and giving clarity to the industry in general as to you know, at what point does a permit become unappealable? You know, we have to speed up the process.

When can it not no longer be challenged? Because this is this is definitely a significant issue, and I'm not sure, you know, I think Trump, if he was elected, would put more energy into addressing this. But regardless of who gets in, I'm you know, this is an important topic that has to be fixed.

everything affecting that is. This election is is big because if Trump is is elected, then I think he you know, again, puts a lot of energy into dialing back the freeze, basically getting rid of it and trying to expedite you know, export authorizations and getting these projects to move forward. Whereas Harris, I think ultimately there's results, but more strict criteria. So that's the LNG issue right as far as midstream, it's

just a lot of there's a regulatory red tape. I think if Trump wins, he's going to try to deregulate. He may get some wins on you know, lightening up like making air emissions quality you know, less impactful to this sector, speeding up omitting, things like that, but something that significantly moves the needle I don't foresee. You know, Texas and Louisiana are the most friendly jurisdictions, and luckily for the sector, that's where LNG exports and exports in

general are are mostly you know concentrated. But you have Appalachia, for example, where there's a ton of gas and you know, you just can't build infrastructure there to get it out, So it's gonna limit growth there. It's gonna limit expansion of of the MP's, which I'm sure Vince will talk about So I think regardless of who gets elected, there's going to continue to be pressure. But if Trump gets elected, there may be some some small wins that help out the industry.

So let's take a look at since the nots. Let's take a look at since the two thousand election, and let's roll forward right. So, during a period where we had more restrictive production, where we didn't have that technological breakthrough. This was obviously during that commodity supercycle where that demand was relatively high, but that supply of hydro carbon was restricted.

Energy equities did fairly well. When we go to this period of drill, baby drill, that's when things become a little murkier because you had more supply enter the market. It's interesting that production oil bottomed in two thousand and eight and natural gas production bottomed in two thousand and five, and from that point on we saw a rise in the output of both hydrocarbons. And during that administration, Nathan who was the president after two.

from the ground and enable more production. And every year in the budget they were removed and every year they were put back in, and you have that production increase every year to new highs. And this was during a Democrat sitting in the White House. And sure enough what happened to prices. Prices came down, but also equity performance

came down. So whenever we have this view of drill, baby drill, it's not exactly positive for the investor because you have wider balances if you don't have that demand pickup. And during that time, which you also had was a decline in the growth rate of that demand, especially from the after effects of that commodity supercycle. But overall, what was the key ingredient for this increase in oil and gas production. It was technological innovation. It was unconventional drilling.

It was horizontal drilling, attacking the molecule under the ground in a different way to move more of that molecule above the ground. It had nothing to do with politics. It had nothing to do with who was in the

White House, who was in the legislature. It was really about the innovation in those rooms of the oil and gas companies coming up with different ways to produce, and that what that's what really needs to be understood more more fully is that over the long run, if the innovation of the oil and gas companies that is moving more molecules out of the ground, that is helping society more broadly, especially on the natural gas side. But we'll get into that much later on. So equity performance when

supply was much more restrictive did well. When you had more supply come out, you saw performance of let's call it the general industry. And we looked at the XCEL, which is the energy ETF that performance that were there was under performance both relative to the SMP and relative to other sectors that had more technol logical innovation during that time, like the technology ETF or the healthcare ETF.

So pay attention to the long run technological innovations, not so much who inhabits the White House.

So the idea that we have more output is good for society in general, but in this particular environment right now, we have a more modulated output growth for both oil and gas. The investor community is telling the oil companies, we want less of the stuff, and we want that excess cash back to us. So stop putting it in the ground, stop putting the capital on the ground, give it back to us, and let's level off the degree

of output. We don't want to see the high levels of production growth that we saw in the early part of the two thousands. We want that to be much more modulated. And because it's much more modulated, we probably have higher prices for both crude and also for gas for on road transport as well. The natural gas story is somewhat different, but it plays along those same lines

that we have significant levels of storage. Output growth has been steady, and that demand side of the equation because of seasonal cyclical factors, is keeping that gas price historically low, natural gas price historically low, and that's also helpful for the consumers on so many levels.

Pennsylvania Center race and the national race. So obviously you're one of the you know, one hundred thousand or so Americans that may ultimately decide who the next president is amongst those seven swing states. You know, what are the regional issues that we should be thinking about in terms of the energy sector as the production moves forward?

areas have had some difficulty bringing infrastructure. On the matter Horn pipeline down in Texas that is slowly ramping up. That'll help prices as well for the producers. Right now, WAHA prices are negative, so that is a disincentive. With Mattterhorn coming online, that should be helpful for the producers to move additional molecules from the producing areas into the

consumption areas. Places like New York, Pennsylvania, places along the Northeast and the Middle Atlantic, they will always be somewhat more difficult to build infrastructure, and a lot of times it's really the civic backlash, the civic organizations that want

to prevent that degree of investment. Unfortunately, when you prevent molecules from getting where they need to be and you restrict that, your price prices for utilities, prices for the underlying natural gas that can spike as well, especially when you have periods of a deep, deep cold, similar to what we saw in places like New England over the years, where those molecules can't get to what to where they need to be and you still have to import from

overseas when you're just a few states away. Great. Actually, the infrastructure side that is going to be the driver for the ultimate price to the consumer.

referring to. But we can take an educated guess, and I think the best place to start and start doing that is to look at at what the Biden administration has done over the last four years and see the ability for a prospective Trump administration to roll that back, and so I think probably the clearest element of what would be a drill baby drill policy would be a rollback of the federal oil and gas leasing auction pace. So Biden has has instituted a very slow pace of leasings.

He's proposed only three oil and gas lead sales in the Gulf of Mexico for twenty twenty five, in twenty twenty seven and twenty twenty nine, and obviously there's none at all in the Atlantic, Pacific or Alaskan waters. I think it's important here to note as well that this is the lowest number of oil and gas leases that the Biden administration can offer in order to enable a corresponding amount of offshore wind leases as well, which is

determined by the Inflation Production Act. So the current program under the Biden administration is a pretty big drop compared to the previous Trump administration, which had forty seven lease sales off all the coastal areas of the US. So I think it's safe to say that a drill baby drill policy would likely comprise a big acceleration in lease

sale activity. Further onto that, we also think there could be swift action by a prospective Trump presidency to remove restrictions placed on some of the leasing auctions which the Biden administration did. So this could include something like executive actions for the BOEM the Bureau of Ocean Energy Management to conduct newly sales to the maximum extent permitted, and so this could potentially be on an accelerated quarterly schedule, and and in new areas which which haven't been previously

leased before. I think one special policy area really stands out with drill Baby Drill, and this is Alaska. And some listeners might might recall that this was a big focus of the Biden administration to restrict oil and gas development and exploration activity. So specifically, the Biden administration directed the Department of the Interior to cancel multiple and war leases in twenty twenty three. This is the Arctic National Wildlife Refuge, and so we think that a drill Baby

Drill would likely start reopening Alaska. There's about thirteen million acres of the National Petroleum Reserve of Alaska that the Biden administration barred from development, so we think that could also come back. But I think what's the impact here with Alaska specifically, I personally think that this is somewhat of a poison chalice for most oil and gas companies. We've actually seen an exit and divestment from many major

companies over the last few years. Some quite recently we've seen any shell BP all exit their activity, and this is largely due to what we think is it's quite clearly ecological risk, environmental risk, but also increasing reputational risk given given the upside on resource, given the very limited annual operating window that you actually have in Alaska offshore, and of course a what you're facing a multi year payback period for a relatively high risk project, and ongoing

reputational risk from the public markets and investors. So we think that Alaska's probably won't factor in for many of the larger companies. But of course BP sold on all of their North Slope development and Alaska portfolio to Hillcore, which is one of the largest private companies in the US, and so that would probably be be a key beneficiary of a policy like this. So essentially it boils down

to where the offshore leasing will be. The pace of the offshore leasing and Alaska are the three major areas. So I would just finally note that I would be surprised if a new President Trump would would open up offshore leasing off the coast of Florida.

It's important. But you know, Vice President Harris is always, you know, I think historically indicated an opposition of fracking. You know, what's the outlook for this in the event of her winning the election.

the country. So I I think the the key part here is is that for for Harris, as as it relates to two energy policy tracking will will almost certainly remain untouched. But the e p a's rules, I think are there are probably the area that is most important for for a prospective Harris administration. There are key methane fees and uh and and restrictions that that were included in the Inflation Production Act. These these include the the

Methane and Emissions Reduction Program. There's a waste emissions charge as well, which applies to certain emissions above above thresholds for oil and gas operations, and and of course increased reporting requirements. There's elimination of routine flaring uh and and and increased monitoring requirements as well. So so some sort of variations of these under the RA could be you know, could it could be set status quo even but but

but it could even be strengthened as well. So I do think that the fracking is has played a lot less of a role than it has maybe in previous campaigns, and I think given the how important Pennsylvania is and and the Marcellus there is, uh it, maybe that's that's unsurprising.

and stabilize and support global pricing. We've just seen today that a pretty big move down in oil prices as a geopolitical risk premium is fading now given there was some concern that Israel would retaliate on Iranian oil facilities, that looks like it's that that risk vector is dissipating at the moment. So we're seeing a lot of pressure on oil prices, we're all. And this comes alongside you know,

pretty soft demand data out of China as well. So overall, this this paints a pretty bearish picture into next year for oil pricing. And on top of that, it's very clear that OPEC plus is getting increasingly uncomfortable with their level of cuts. And so we think there's going to become We're going to see some renewed urgency from members to UH to start tapering these cuts. And and you know, there's not much room for extra OPEC barrels in the market right now. UH and and so so we see

this as a potential downside catalyst for pricing. How this relates to to the U S election, Well, once again, it's sort of tricky tricky to tell with with with Trump, but we can look back into his first into his first term to to see where where he might go. And in his first administration he needed a habit of

pressuring OPEC to do his bidding. And though in which direction remains remains to be seen, really because because because he actually did both, and I think it's import I think the reason why is and it's important to touch on this is that there exists sort of a clear tension I think between a protecting the US energy complex

with you know, with supporting high price higher prices. And then also there's a very clear benefit to political benefit to having low energy prices and particularly low gasoline prices for for American consumers. So I wouldn't be surprised to see that sort of ebb and flow throughout throughout a potential Trump presidency, which which might sort of ramp up during times where, uh, maybe the mid terms, you could see more pressure on more barrels into the market from OPEC.

and volumes have been set out until twenty twenty five. However, after twenty twenty two, the EPA has more authority and setting mandates going forward, so change an the EPA administrator who's appointed by the President could alter the approach to twenty twenty six mandate. Then, outside of appeal to the IRA, which I know Nathan, you and your team have done a lot of work on discussing the likelihood of that, there are tax credits that are still awaiting official guidelines.

So one of the pressing priorities for the biofuels industry is a tax code forty five Z within the Inflation Reduction Act, which takes effect January first. The lack of formalized carbon intensity calculations leaves room for post election adjustments, so this is something of a particular note or a lot of folks are tracking with the outcome of next Tuesday.

While we believe biofuel policy is broadly durable regardless of who is elected, feet sucks election specific pathway targets and how imports are included in these policies are at hand. Then the question on how Trump specifically could alter the existing policy landscape. I think there's five things to consider. The first of which, again is an IRA repeal, because it's one of those two key policies that biofuel the biocule industry depends on. A wholesale repeal would obviously be

negative for the renewable fuels industry. Another one that you touched on at the top with tariffs. The second is promote US agriculture, third of which is small refinery exemptions, and the last is how the president or Trump in this case would support evs. But just going into each of them briefly, the IRA repeal, the note that the policy team Nathan yu All put out assigns a ten percent chance of a full repeal, so again it's not

necessarily in our base case. One thing to note and a partial repeal is energy or clean energy specific credits, which I'm sure Rob will get into, and a bit have been called out specifically as sources of potential funding as they consider, you know, new tax bills or things

under Trump presidency. The second of which tariffs, So tariffs could make it harder for US domestically to meet obligations, which could make some of these credit prices jump and then tariffs has a particular impact on the sourcing of feedstocks. The reason as there's been an uptick the past year of using China based use cooking oil to make some of the biofuels, and the reason being is that use cooking oil has a carbon intensity advantage, so you get

more credits. If there are broad tariffs on Chinese goods, this would limit the amount of Chinese uko into into the US, would force bio fuels producers to rely more on domestic based feedstuck. The next one of how it could how a Trump presidency could promote US agriculture, so aside from the tariffs which I mentioned, have the potential impact to promote domestic feedsuck usage policy in general could

cater to US agriculture. So of the top five states that we've looked at, from corn production, solviean production by cross capacity, ethanol production, renewal, diesel, biodiesel the key components of biofuels in general. From market participants, seventy seven percent of those were won by the GOP in twenty twenty. So if you exclude Texas and Louisiana not necessarily who

you'd consider ag specific state. The other eight states total fifty eight electoral votes, so under Trump presidency, policy could lean a little bit more towards the agricultural base. The next is small refinery exemptions. So this is something where in setting the policies you essentially could remove the obligated fuel within that by removing small refiners from those mandates.

This is something that under Trump's previous presidency in twenty seventeen that were the most small refinery exemptions granted in any year. The one thing that we like to note with that too is exemptions don't necessarily mean that there will be less biofueld demand if they're included in the planning process ahead of So this becomes more of an issue when they set the twenty twenty six com mandate, But anything retroactive would reduce the amount of obligations or

the demand for biofueld so to speak. The last part on a Trump presidency is any slower ed adoption in the form of policy actually preserves the biofuel addressable market, which would be supportive for biofields in general.

can see further expansion of this. Under these schemes, fuels without blend restrictions that are generated from waste based speed stocks are the most advantaged. And then any extension of EV policy support is an overhang longer term renewable fuels and could steer policy more towards sustainable aviation fuel or other hard to abate transportation sectors.

under Trump. So we've had a precipitous decline under Biden and a massive rally under the trumpet prior Trump administration for solar stocks, I think, you know, if you were only paying attention to policy, you'd probably think the opposite would be true, because there's been so much positive, sort of almost moral cheerlyaing under the bind administration. There is the IRA things like that, and so you know, my general sense is that the wind and solar industry probably

chugs along no matter who the president is. Will you get slightly more favorable terms under a Harris presidency than a Trump presidency?

year in the US. Potentially that figure goes up to eighty gigawatts a year by say twenty thirty. Will it move in that direction independent of who the president is. Probably it's going to trend up independent of whether IRA even stays or not. And of course, if you're a manufacturer and you are producing in the US, you want the IRA to say why, you'd be irrational not to

want to keep it. But I think that the sort of general trend of more renewable power flowing into the electric power landscape is sort of an unstoppable force at this point.

they decide to start chipping away at the IRA. In your scenario analysis where you go from repeal and so forth, what does it mean for the US clean energy manufacturers?

within the IRA. If you get rid of that, I think they fall to, you know, a much more humble

and a twenty twenty five percent gross margin business. And so you know, and this is every company that's in the US, whether you are domiciled in the US or a foreign entity that's built manufacturing facilities in the US, you get to take advantage of this credit if you're made here so or if you're making your modules in the US, and so you know, generally, the US has given a very nice subsidy to encourage not just a solar demand, which which I've already mentioned is strong, but

to say don't don't import the modules, make them here in the US. And I think if you get rid of these provisions, it's a it's a very difficult operating environment for a lot of the folks who have built out cap X are built manufacturing facilities here as as as you've noted, and as we often like to discuss, all of those facilities are in red states and red districts. So if you go and you yank some of the manufacturing provisions within the IRA, you might render some of

these manufacturing facilities no longer competitive. Because I will tell you the global solar business is a tough one. Chinese players can do modules for way cheaper than we can do them here in the US, and so you open these guys potentially up to global competition if you get rid of the IRA, which would possibly be quite painful for some of the players.

of the underlying support structure? I'm not saying possibly that they would, they don't hurt to give you a sense.

I mean, tariffs are a bit complicated mathematically to characterize because they are they're often applied uh at two individual importers, individual companies that are in the business, but globally solar modules, you can buy a solar module wholesale for about tens and a want in the US, you're going to pay anywhere from the best best case scenario, maybe you can get one for twenty cents a whit, but maybe up

to sixty cents a while. There's a big range, and so in the US the consumers ultimately paying a higher price. And largely that is because if you've got a ten cent panel coming in from China, you're probably going to pay one hundred percent ish tariff. So you get that ten cent, you're gonna be much closer to twenty cents a walt what the consumer would pay, and possibly even higher depending on which specific tariffs you get hit with.