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By Jeff Young
Environment and Sustainability Editor
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President Donald Trump's first week in office was a muscular display of presidential power, especially regarding how the U.S. gets its power.
Trump has signed executive orders declaring an "energy emergency" and directing federal agencies to halt clean-energy spending and pause some new permits for wind and solar projects. As he did during his first term in office, Trump announced that the U.S. will pull out of the Paris Climate Agreement and encouraged more oil and gas exploration on federal lands.
Trump's White House is also seeking to force California to change its water management system and has raised the possibility of overriding endangered species protections that would be affected by redirecting the flow of some rivers in California.
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A memo released Monday by the White House is perhaps Trump's most audacious move yet. The memo from the powerful Office of Management and Budget (OMB) orders federal agencies to temporarily pause all "federal financial assistance" that might fall within Trump's executive orders, including spending related to the Green New Deal.
While the exact effect of that order is not clear, the potential to stop the flow of billions of dollars Congress had already appropriated sent shock waves around Washington.
"The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country," Democratic Senator Patty Murray of Washington and Democratic Representative Rosa DeLauro of Connecticut responded in a letter to the OMB.
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Experts in environmental law and the clean technology industry are sorting through what exactly Trump's orders mean for businesses and the regulatory and tax framework they'll operate under in the coming years.
Harvard Law professor Jody Freeman, who directs the school's environmental and energy law program, warned about "all the confusion and distress" likely to come from a White House freeze on federal grants. Additionally, Freeman said, the order is a direct challenge to constitutional separations of power.
"This is a test of whether Congress will wake up and defend its appropriations power," she told Newsweek.
Georgetown University law professor Steve Vladeck wrote on his Substack that the move by OMB to impound tens of billions of dollars of appropriated funds is "in direct conflict with Congress's constitutional power of the purse."
Vladeck and Freeman both indicated the issue would likely land before the Supreme Court.
A freeze on federal grants could have profound effects on energy projects and research that include federal money, Freeman said.
But Freeman said Trump's other executive orders relating to energy and climate change, such as his energy emergency declaration, are "mostly posturing" with little immediate impact.
"All told, this is really sort of a road map for a set of priorities, or a kind of press release, really, about where they intend to go," Freeman said. The orders instruct federal agencies to look for existing powers where they might carry out Trump's wishes, but "it will take many steps from all these agencies to get there, and there are a lot of uncertainties along the way," she said.
Litigation is almost certain to slow things down, she added.
Business leaders in the burgeoning renewable energy and clean tech sector are trying to navigate the uncertainties in the early days of Trump's second presidential term.
Alex Prather is director of ventures at Newlab, a New York-based incubator for tech startups that links clean tech entrepreneurs to investment capital, among other things.
Prather said there is "a lot of volatility" and some investors are waiting to see how things settle out, but she is not very impressed by Trump's actions so far.
"I personally think that this is a lot of bark without a bite," Prather told Newsweek. "A lot of this is Trump conveying those messages, especially to his political base, that he's delivering even though when it actually comes to policy and actual work to be done on Capitol Hill, it's not really going to translate."
Prather noted that Newlab has project sites in several cities around the country, including politically red states, and lawmakers in those places are unlikely to give up funding that's boosting local economies. A carbon management and hydrogen production project in Louisiana, for example, benefits from billions of dollars in federal support.
"To rescind that amount of capital from the state is pretty significant," Prather said. "I can't imagine that local as well as state officials would be on board with something like that."
Andrew Garraway is climate policy lead for Risilience, a research company that advises businesses on the financial impacts of climate-related risks and opportunities.
Garraway said he expects to see clean-energy and manufacturing jobs slow down compared to the growth under President Joe Biden's supportive policies over the past four years. But he agreed with Prather's argument that many of Biden's clean-energy policies Trump wants to repeal will have Republican supporters in Congress now that jobs are on the line.
"It's very difficult, from a political standpoint, to go in and pull the rug out from funding," he said. "So that's a really strong incentive for Republicans in Congress to keep in some form the sort of existing financial support."
Garraway said Risilience is advising companies to think about the longer-term risks and concrete realities of climate change, rather than the immediate shift in political winds.
"You don't need to take a particular political standpoint as a company on any matter to understand that this is about risk," he said, "and a sensible business minimizes risk."
However, markets and investors are not always entirely rational actors, as any behavioral economics text will tell you. Investors often make decisions that move stock prices based on emotion and headlines rather than reason and data.
Harvard's Freeman cautioned that this is where Trump's executive orders could have the greatest impact. Regardless of whether Trump's orders withstand legal challenges or wind up being countered by Congress, they can have an immediate public effect through what President Theodore Roosevelt called the "bully pulpit" of the presidency.
"What can they legally do in the end will be worked out over time in the courts; meanwhile, the impact on the market is just confusion, chaos and discouragement for clean-energy investors," Freeman said. "Maybe they don't have to follow through legally on everything if they scare the hell out of everybody."
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