How the Democratic sweep could change US energy policy
XLE•Democratic victories could reshape US energy policy, with potential changes to war funding, permitting, data center oversight, clean energy tax credits and state regulation. TD Cowen cut its estimate for the permitting bill’s success from about 40% to about 25%.
1. Congressional priorities
Democrats taking control of the Senate and House in January could use spending conditions, resolutions and delayed confirmations to pressure the administration to reach a deal to keep the Strait of Hormuz open. They could also launch investigations into administration energy policies, including oil deals with Venezuela and a diesel deal with Russia. TD Cowen lowered its outlook for passage of a bipartisan permitting bill from about 40% to about 25%.
2. Energy investments and oversight
The election results could make Japan and South Korea more hesitant to commit to US projects, including the proposed Alaska LNG project, valued at up to $54.4 billion. South Korea confirmed plans to invest $22.3 billion in a Texas gas project and $120 billion to build eight US nuclear reactors, but the agreements are not binding. Democrats may also push for more scrutiny of data centers, protections for utility ratepayers and stricter energy-use and pollution reporting.
3. State regulation and subsidies
Some industry advocates see a possible path to extending or reviving wind and solar tax credits, as well as a clean energy manufacturing credit. In Georgia, Democrats won a majority on the Public Service Commission for the first time in 31 years. In Texas, Democrat Jon Rosenthal won a seat on the Railroad Commission, becoming its first Democratic member since 1990, though Republicans retain a majority.
