Trump Claims Ignorance on Project 2025 as Potential Policy Impacts Loom

With Donald Trump becoming the 47th President, the potential impact of Project 2025 on U.S. environmental and energy policy looms large. The plan’s focus on deregulation and fossil fuel expansion may create a challenging landscape for companies already committed to sustainability and ESG goals. From Fortune 500 companies to emerging businesses, many have invested in reducing carbon footprints, promoting renewable energy, and aligning with global standards.

Faced with a potential rollback of federal environmental regulations, these companies may need to adapt their strategies to stay competitive, meet consumer expectations, and fulfill their climate commitments, even in a more fossil-fuel-focused economy. This shift could affect everything from corporate reputation to international trade and investment opportunities.

Department of Energy (DOE): A Return to Fossil Fuels

Project 2025 advocates a fundamental overhaul of the DOE, recommending policies that deprioritize renewable energy and emphasize fossil fuel production:

• Elimination of Clean Energy Offices: Project 2025 proposes dismantling key DOE offices central to the clean energy transition, including the Office of Energy Efficiency and Renewable Energy, the Loan Programs Office, and the Office of Clean Energy Demonstrations. Each office is instrumental in advancing clean energy technologies and managing federal investments to lower carbon emissions. For example, the Office of Clean Energy Demonstrations manages billions from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), supporting projects that help reduce emissions in industrial sectors.
• Reallocation Toward Fossil Fuels: The blueprint suggests redirecting resources to enhance oil and gas production, arguing that increasing domestic fossil fuel output will boost energy independence and stabilize fuel prices. Proponents of this strategy claim it will lower costs for American households and industries reliant on energy-intensive operations. However, critics caution that this shift could erode progress toward cleaner energy and worsen environmental degradation.

Environmental Protection Agency (EPA): Reduced Oversight and Rollbacks

Under Project 2025, the EPA would undergo substantial restructuring to limit its regulatory power and reduce environmental oversight. Key proposals include:

• Downsizing and Eliminating Key Divisions: Project 2025 recommends cutting the EPA workforce significantly and eliminating departments that address environmental disparities, such as the Office of Environmental Justice and External Civil Rights. This office addresses the disproportionate pollution burdens marginalized communities face, and its elimination could worsen environmental inequality​.
• Regulatory Rollbacks: Project 2025 supports repealing various regulations, such as limiting greenhouse gas emissions from vehicles and power plants and reversing the EPA’s 2009 “endangerment finding” that classifies carbon dioxide as harmful to public health. Without this classification, the EPA would lose its authority to regulate greenhouse gas emissions under the Clean Air Act, which could lead to increased emissions and potential public health consequences.

Potential Implications of Project 2025

Increased Greenhouse Gas Emissions

Critics warn that prioritizing fossil fuel production at the expense of renewable energy could significantly increase greenhouse gas emissions. An analysis by Energy Innovation, for instance, estimates that implementing Project 2025 policies could result in an additional 2.7 billion tons of carbon emissions by 2030—equivalent to India’s annual emissions. The plan’s focus on traditional energy sources is expected to entrench U.S. reliance on fossil fuels further, potentially stalling international efforts to reach global climate targets and limiting progress toward net-zero emissions.

Economic Costs and Energy Security

While supporters argue that Project 2025 would increase jobs in the fossil fuel sector and enhance U.S. energy independence, data suggests that these benefits may come at a cost. For example, Earthjustice projects that enacting Project 2025’s proposed rollbacks would increase household energy expenses by $32 billion per year and reduce GDP by $320 billion by 2030 due to higher health-related expenses and climate adaptation costs.

Public Health Risks

The proposed reductions in EPA oversight could lead to higher pollution levels, posing direct risks to public health. According to the American Lung Association, air pollution is a significant factor in health issues such as asthma, lung disease, and premature deaths. The Environmental Protection Network estimates that pollution standards prevent thousands of premature deaths annually and avoid millions of asthma attacks. Rolling back these protections could, therefore, impose additional healthcare costs and worsen existing health disparities, particularly in low-income and minority communities.

International Implications

Implementing Project 2025 could also impact U.S. relationships with international allies and trading partners committed to aggressive climate action:

• Loss of Climate Leadership and Trade Friction: Project 2025’s rollback of emissions standards may undermine U.S. credibility in global climate agreements such as the Paris Accord. Additionally, the EU’s Carbon Border Adjustment Mechanism, which imposes tariffs on imports from countries with lower emissions standards, could impact American exporters if the U.S. scales back climate regulations. This would make U.S. goods more costly in European markets, potentially disadvantaging American industries in favor of those from countries with stronger environmental protections.
• Reduced Participation in Climate Finance: The U.S. has historically contributed to international climate funds to support climate adaptation efforts in vulnerable nations. Project 2025’s cuts to renewable energy funding and reduced climate initiatives could weaken the U.S.’s participation in these funds, eroding trust and diplomatic relationships with allies in Europe, Asia, and Africa who view climate change as a critical global challenge.
• Lagging in the Global Green Economy: The global economy is moving rapidly toward sustainable energy, with investments in renewables exceeding $1 trillion in 2022. As countries like China and those in the EU prioritize green economic policies, Project 2025’s emphasis on fossil fuels could leave the U.S. isolated from profitable international clean energy markets. This shift may limit American companies’ ability to compete in sectors like renewable energy, electric vehicles, and sustainable manufacturing, potentially losing long-term economic opportunities in the burgeoning global green economy.

What Does This Mean for Businesses?

Companies with established environmental, social, and governance (ESG) and sustainability goals may face significant challenges and strategic choices if Project 2025 policies take effect. The plan’s shift toward deregulation, fossil fuel prioritization, and reduced federal support for clean energy could create a more challenging environment for businesses committed to climate action and responsible environmental practices. Here are some likely ways companies may respond:

Accelerating Private Sector Climate Initiatives

Many companies, giant corporations with international operations, have integrated ESG standards into their core business strategies, responding to both consumer demand and investor expectations. With the potential rollback of federal environmental regulations, these companies may step up their sustainability efforts to ensure they meet both internal targets and international standards.

For instance, global brands like Apple, Google, and Walmart have committed to achieving net-zero emissions, with some even setting deadlines for 100% renewable energy usage. To maintain these commitments, businesses may:

• Increase Investments in Renewable Energy: Companies may expand their investments in clean energy to reduce reliance on fossil fuels, installing on-site solar or wind power sources or securing renewable energy through power purchase agreements (PPAs).
• Strengthen Supply Chain Requirements: Corporations with complex supply chains might impose stricter sustainability standards on their suppliers to meet both their internal ESG goals and international regulatory requirements. This includes minimizing emissions, using sustainable materials, and reducing waste.

Engaging in Policy Advocacy and Collaboration

Some companies may respond by taking a more active role in environmental policy advocacy, seeking to influence government regulations directly or through business alliances. Organizations like the Business Roundtable and the U.S. Climate Action Partnership have historically supported bipartisan climate solutions, and many businesses may see a need to advocate for stable, long-term policies that support their investments in sustainability.

• Forming or Joining Alliances: Corporations may join alliances and coalitions that promote sustainability goals. For instance, groups like the Renewable Energy Buyers Alliance (REBA) and the Climate Leadership Council unite companies committed to advocating for cleaner energy policies.
• Influencing State-Level Policies: In the absence of federal support, companies may direct their advocacy toward state and local governments, which often have their own environmental standards and renewable energy programs. California, New York, and other states are already implementing rigorous climate policies, and corporations with significant operations in these regions may find state-level support valuable in achieving their ESG goals.

Navigating International Compliance and Trade Barriers

Project 2025’s deregulatory approach could increase the risk of non-compliance with international standards for companies operating globally. Key trading partners, especially in the European Union, enforce strict environmental regulations and apply tariffs to imports from countries with lax emissions policies. U.S. companies may have to adapt to these standards regardless of domestic policy to remain competitive in these markets. But who will bear the burden of paying for these tariffs?

• Adopting Higher Global Standards: Companies may adhere to international standards, such as the EU’s emissions and sustainability regulations, to ensure compliance in foreign markets. This could involve adopting stricter carbon reduction targets, sustainable sourcing practices, and transparent emissions reporting.
• Mitigating Carbon Border Taxes: To avoid the cost of carbon border adjustments, companies with export operations may accelerate decarbonization efforts in production, reduce reliance on fossil fuels, and seek greener supply chains. Meeting these global standards could help them avoid the penalties for failing to address carbon emissions effectively.

Preparing for Financial and Reputational Impacts

In the financial sector, investors are increasingly prioritizing ESG factors in risk assessments. Under Project 2025, regulatory rollbacks and a renewed focus on fossil fuel expansion could make certain investments more volatile, especially as global markets shift toward sustainability. Businesses might anticipate these shifts by enhancing their ESG reporting and positioning themselves as sustainable to attract environmentally conscious investors.

• Strengthening ESG Reporting and Transparency: Public companies may feel pressure to maintain or enhance their ESG reporting, as many large asset managers and institutional investors increasingly require transparent reporting on sustainability practices. Meeting these expectations could help companies retain and attract investment from funds focused on sustainable growth.
• Addressing Consumer Expectations: Many consumers, especially younger generations, prefer to support companies with clear environmental commitments. Companies that shift away from sustainability may risk losing market share, particularly in sectors like consumer goods, retail, and technology, where brand reputation is critical.

Adjusting Long-Term Business Strategies

Businesses may re-evaluate their long-term strategies to account for the potential effects of Project 2025, particularly in industries heavily impacted by environmental policies, such as energy, automotive, manufacturing, and agriculture.

• Assessing Clean Technology Investments: Companies in sectors like automotive and manufacturing may need to reassess or accelerate investments in clean technology, such as electric vehicles or energy-efficient equipment, to future-proof their operations against market and regulatory changes.
• Exploring Opportunities in Renewable Energy Markets Abroad: As U.S. renewable energy investments potentially slow under Project 2025, companies committed to sustainability may look for growth opportunities in international markets that continue to prioritize clean energy. This could include expanding clean energy projects, green infrastructure, or sustainability partnerships in regions like the EU, Asia, and Latin America.

A Balancing Act Between Profit and Principle

Project 2025’s deregulatory stance on energy and environment presents U.S. businesses with complex decisions. While some companies may find short-term financial relief from reduced compliance costs, those with established ESG goals face pressure to maintain their commitments, meet international standards, and satisfy stakeholder expectations. For these companies, Project 2025 may lead to a more self-directed approach to sustainability, increased engagement with policy at the state or international levels, and an intensified focus on upholding climate commitments independently of federal support.

A Crossroads for U.S. Policy

In a world increasingly defined by sustainability expectations, U.S. companies may find that Project 2025 presents a unique crossroads. Those with established ESG and climate commitments must navigate the tension between federal deregulation and global standards that demand accountability. While some businesses may embrace reduced regulations as a cost-saving advantage, others are likely to intensify their private sustainability initiatives, advocate for state-level policies, and align with international standards to remain viable in domestic and global markets.

Ultimately, Project 2025 could drive a more divided corporate response, with some companies embracing its deregulatory benefits and others doubling down on independent sustainability goals to preserve market standing and brand integrity.