News
04/11/24
Trump unlikely to fully end US clean energy policies
Houston, 4 November (Argus) — Although former US president Donald Trump has
promised to end climate policies enacted during the administration of President
Joe Biden, the political complications of reversing course make a full change of
direction unlikely should Trump return to the White House. Trump has frequently
criticized Inflation Reduction Act (IRA), promising to terminate the " Green New
Scam " and rescind all unspent funds in the Biden administration's climate
policy suite, if he is elected to a second term. But fulfilling that pledge may
be difficult for many reasons, not least of which is whether Republicans have
control of both chambers of Congress after Tuesday's election, including the
unlikely outcome of a 60-seat majority needed to bypass a Senate filibuster.
Beyond the math, Republican districts are benefiting from IRA funding, with some
lawmakers from Trump's party already opposing the turmoil that could arise from
an about-face on tax policy. "There's no way they're going to be able to replace
and repeal the IRA, in large part because so many of the dollars are flowing to
[Republican] states," said David Shepheard, a partner at consultant Baringa who
specializes in energy and resources. "I think the pieces of the IRA that are
most at risk are the [electric vehicle] tax credits, potentially some of the
stimulative pieces around offshore wind." The IRA established a host of federal
incentives to support clean electricity growth and the associated domestic
supply chain. Those include technology-agnostic production and investment tax
credits for electricity generators based on their emissions intensities. But the
law went well beyond the power sector and also established credits for hydrogen
production, electric vehicles and the manufacture of components needed by clean
electricity systems. Project developers are counting on a policy trajectory that
does not match Trump's rhetoric, which would allow some incentives to stay on
the books. Companies expect market forces, such as corporate demand, and state
mandates to continue to drive growth for solar and onshore wind and energy
storage, rather than national politics. But there is more trepidation around
offshore wind, a less mature sector for which the federal government is
effectively the landlord for project sites. "There is no doubt that the
trajectory of the US offshore wind industry will be impacted by the November
election," Liz Burdock, chief executive of offshore wind industry group Oceantic
Network, said. "Its outcome will influence how we maintain our momentum."
Uncertainty around the US presidential election has dampened private investment
in the sector this year, according to Oceantic. At the same time, companies say
the industry has come a long way since 2016, with a handful of projects now
operating, while recent macroeconomic challenges are subsiding. Furthermore,
demand for offshore wind would continue at the state level, and these factors
could make the industry more resilient to headwinds. Executive decisions Trump
still could use the executive branch to "stonewall" sectors helped by the IRA in
the absence of a repeal, including by influence the timing or distribution of
IRA funds, according to Shepheard. He could shift regulators' priorities to new
oil and gas development, which, along with other actions, could make resources
such as combined-cycle natural gas plants more attractive than renewables. "The
extent that renewables and other cleaner energy assets are competing with gas,
that'll be the big change from a Trump administration," Shepheard said. At the
same time, funding for onshore wind and solar is "relatively safe", and tax
credits for hydrogen and carbon capture are on comparably firm ground because of
support from the oil and gas industry, Shepheard said. Some companies have
expressed cautious optimism that some elements of the IRA, such as the advanced
manufacturing tax credit, will survive. The incentive is not only important for
the solar supply chain but also offshore wind, as state-level solicitations
often require developers to invest in local manufacturing. Republican states in
the US southeast have already benefited from new factories springing up on the
back of the credits. For example, Enel chose Oklahoma for a new new module plant
, First Solar located a factory in Alabama and Qcells has expanded production in
Georgia. Moreover, removing that carrot could leave the US solar industry
reliant on Chinese companies, which could run afoul of Trump's protectionist
trade instincts. Trump's campaign did not respond to multiple requests to
elaborate on his policy plans. By Patrick Zemanek Send comments and request more
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