IEEJ：January 2017ｃ IEEJ 2017
○Special Bulletin
A Japanese Perspective on the International Energy Landscape (307)January 19, 2017

Trump Administration to Kick Off January 20
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn January 20, Donald Trump will become the 45th U.S. president. The world is greatlyinterested in how new President Trump will lead the United States, the only superpower boasting theworld’s largest economic and military power, and deal with the rest of the world.
A ceremony to mark a new president’s inauguration is usually filled with a celebratory mood
where hopes grow on the new leader and the new age. For the honeymoon period lasting for 100
days after the inauguration, citizens warmly watch the new president and administration while
placing big hopes on the new leader. However, Trump’s presidential inauguration is likely to differ
somewhat from such usual one. His radical, controversial remarks and rhetoric during thepresidential election campaign have widened a divide between Trump supporters and opponents,
creating a serious rift between Americans. As other countries cannot anticipate how the newadministration’s policies would affect them, the world seems filled with anxiety.
Favorability ratings for new President Trump are as low as 40%, according to CNN and otherpolls. The ratings are unusually low for a new president, compared with 84% for Barack Obama in
2009, 61% for George W. Bush in 2001 and 63% for Bill Clinton in 1993. About 60 Democraticlawmakers have vowed not to attend the presidential inauguration ceremony. Both Trump supporters
and opponents have announced plans to stage large-scale demonstrations on the inauguration day.
Irrespective of the accuracy of favorability ratings doubted by the new administration side, theTrump administration is making an unusual start.
The philosophy and basic attitude of the leader of the United States, the most important country
in the world, for dealing with difficult problems at home and abroad in foreign policy, nationalsecurity, economic and trade areas are important for shaping the future course of the world as well as
the United States. Details of policies based on the philosophy and basic attitude remain uncertain. I
am really hoping that the new U.S. administration will make sufficient arrangements and a good startduring the start-up period.
I am naturally and greatly interested in the energy and environmental policies of the new U.S.
administration. This is because the United States is the most important player regarding global
energy and environmental problems, because U.S. domestic policies and conditions directly andindirectly shake the international energy situation and because U.S. foreign and national security
policies exert great influences on the stability of the international energy market and the fate ofclimate change.
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○However, the whole picture or specifics of energy and environmental policies remain unknown.
They have been little openly discussed. Information on energy conservation, nuclear energy andrenewable energy policies is very limited. The whole picture of consistent policies in fossil fuel andenvironmental areas has yet to be developed. So far, however, some “key words” have indicatedsome policy directions or outlines.
One key word is “anti-Obama.” Trump has indicated negative stances on the Paris Agreement,
the Clean Power Plan and the Iran nuclear agreement known as the legacy of the Obamaadministration in energy and environmental areas. The keyword, “energy dominance,” used forenergy policies may have to be considered along with other keywords including “priority on fossilfuels,” “America first” and “make America great again.”
The new administration’s attitude and policies on U.S. and foreign climate change measures
cannot be predicted precisely at present. In their testimony at Congress, state secretary nominee Rex
Tillerson and Environment Protection Agency administrator nominee Scott Pruitt (reported as
skeptical about global warming), have admitted that global warming exists. However, Pruittcriticized the Obama administration’s enhanced climate change measures as affecting the industry
sector and emphasized the significance of combining economic growth and environmental protection.
The key point for the future is how the U.S. federal government, state governments, the industry andcitizens would voluntarily work for the Paris Agreement and the Clean Power Plan. At the federal
government level, new environment policies may differ far from those under the Obamaadministration.
Meanwhile, the new administration may clearly promote the expansion of shale and other oiland gas production. It will ease or repeal relevant regulations and promote pipeline and otherinfrastructure development projects, including those the Obama administration disapproved. The
Trump administration will also open federal land for oil and gas development and production. In thisrespect, interior secretary nominee Ryan Zinke in his congressional testimony has vowed to review
regulations on federal land and expand areas for oil and gas development. How oil and gas
production will increase under policies of the new administration remains unknown. Some experts
deny any major effect on oil and gas production. At least, however, new policies will contribute toexpanding oil and gas production as a direction. While oil prices have remained weak, U.S. shale oil
producers have lowered costs and enhanced their resistance to weak oil prices. Therefore, they could
expand production further under the new administration. This possibility could be priced into themarket to affect crude oil prices. I would like to pay much attention to actual policies and theirimpacts.
Even under the new administration’s priority on fossil fuels, however, the market environment
for coal will remain severe. The market mechanism rather than policies has dominant influences onthe U.S. energy market in some respects. It may not be easy to revive coal that has lost pricecompetitiveness to gas under the shale revolution.

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○Specific foreign policy developments will also be very important. These developments could
exert direct influences on the energy market. At present, however, any consistent foreign policy
framework is unpredictable. In his congressional testimony, defense secretary nominee James Mattis
indicated some support for the Iran nuclear agreement but described Iran as a destabilizer in theMiddle East in a manner to hint at his stern attitude against Iran. Views on Russia and China havealso been taken up in congressional confirmation hearings, indicating that new President Trump andhis major nominees do not necessarily have the same views. Their remarks have led observers to pay
more attention to details of policies. In the start-up period, every action of the new administration
will attract global attention.
Contact: report@tky.ieej.or.jp
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