While federal energy policy may change during a second Trump administration, with greater emphasis on fossil fuel production, lawyers who work in the energy sector expect client demand to remain strong.

Significantly, lawyers said, the new administration’s policy may not put much of a crimp on clean energy projects spurred by the Inflation Reduction Act of 2022, which provides for tax credits for clean energy projects.

Elias Hinckley, a Baker Botts partner in Washington, D.C., said that the core piece of those tax credits will remain relatively stable under a Trump administration, because so much of the investment has been in primarily Republican-controlled districts.

He noted that a number of U.S. House Republicans recently wrote to Speaker Mike Johnson, asking him to not cut the IRA's clean energy tax credits if the party expands its House majority in the election.

Danielle Patterson, a co-head of Vinson & Elkins’ energy transactions practice, said lawyers working in the energy sector are squarely focused on what the Trump administration might do to the IRA. It’s probably a safe bet, she said, that Congress won’t pass any new legislation supporting energy transition. At the same time, she isn’t expecting the new administration to seek a repeal of the IRA.

What is possible, Patterson said, is some incremental chipping away of the provisions of the law that might have an impact on future clean energy project development.

Hinckley, the Baker Botts lawyer, said it is likely that the Trump administration will relax regulations on fossil fuel projects, which may lead to increased drilling. However, he also speculates that those relaxed regulations may result in a big potential for litigation around the issue.

As for M&A, Hinckley expects to see some changes in relative valuation, and some of the energy transition companies and assets may "look a little riskier." He also expects the appetite for liquified natural gas (LNG) assets to increase. For a time this year, under the Biden administration, the permitting process for new LNG export permits was paused.

Patterson, who focuses on M&A and joint ventures, points out that the upstream M&A market has been “very active” under the Biden administration, and there’s been a lot of consolidation of oil and gas companies over the last few years.

“It’s a pretty hot market,” she said.

Scott Segal, a co-chair of Bracewell’s policy resolution group, which is the firm’s government relations and strategic communications section, said there is a lot of capital chasing clean energy projects, and the incoming Trump administration is not necessarily opposed to clean energy projects.

However, he said, former President Donald Trump has a “much broader set of objectives,” that would affect energy, including reauthorization of the corporate tax rate reductions he championed during his first term.

On behalf of clients, Bracewell’s policy resolution group will demonstrate to lawmakers that maintaining clean energy tax incentives provides favorable economic results, particularly in red areas, Segal said.

The incoming administration is “committed to rather aggressive fossil fuel expansion,” which Segal said is likely to lead to expedited drilling permits on federal lands, and fast-tracking pipeline approvals.

Segal said it’s his view the incoming administration is “very bullish on energy,” but stresses a broader array of energy projects.

“I do not think the next administration will take actions that are inimical to clean energy development, but I do think they will add to the list,” he said.