The recent re-election of Donald Trump as the next president of the United States has dimmed the country’s clean energy prospects. As a climate skeptic, Trump has promised to tax America’s fossil fuel industry and end offshore wind projects on “day one” of his presidency.
During his campaign, he repeatedly criticized President Joe Biden’s climate bill – the Inflation Reduction Act (IRA). He called the government’s 370 billion scheme a “new green scam”, and vowed to “end it”.
Other clean energy projects – both planned and ongoing – have been put on hold, including Canadian solar manufacturer Heliene, which has halted a $150m solar cell production plan in Minneapolis, Minnesota.
The election sent renewable shares tumbling. NextEra, America’s largest clean energy company, fell 5 percent. Plug Power – a hydrogen fuel cell developer – shed a fifth of its value, while solar company Sunrun fell by around 30 per cent.
“Stock prices are falling because the market expects less policy support for clean energy,” said Derrick Flakoll, North American policy associate at Bloomberg New Energy Finance (BNEF).
Where Biden made energy transition an important part of his agenda, Flakoll believes that “Trump will focus more on energy security and energy sustainability … which is not compatible with renewables”.
Trump has suggested that he will introduce major cuts to government agencies focused on climate, such as the Environmental Protection Agency and the Department of the Interior.
On December 10, he also said he would speed up federal regulatory approvals, including all environmental permits, for any person or company proposing to invest $1bn or more. The move is widely seen as a boon to the oil and gas industry.
Biden’s green push
President Biden signed the IRA into law in August 2022. Along with provisions to lower drug prices, the bipartisan bill allocated $369bn to reduce greenhouse gas emissions. To date, it represents the largest piece of climate legislation in US federal history.
Most of the IRA’s funding is directed towards low-carbon energy projects such as wind, solar and nuclear power. It also includes tax rebates for households and businesses to purchase electric vehicles (EVs), heat pumps and electric stoves.
The bill effectively exposed the growth of green energy activity, which led to nearly $450bn in private investment. By 2023, spending on low-carbon technologies has increased by 38 percent (or $239bn) from 2022 levels.
Clean energy jobs grew 4.2 percent last year – twice the national employment rate.
According to Carbon Brief research, the IRA was expected to reduce US greenhouse gas emissions by nearly 40 percent by 2035, from 2005 levels. Trump’s re-election looks set to influence that change.
The green energy revolution has ‘begun’
Although President-elect Trump has publicly called the IRA “trash”, he has yet to specify which parts of it he will cut. Some analysts see that as encouraging. They also pointed to the growth of renewables during his first presidency.
From 2017-2020, Trump renewed Obama-era tax credits for green energy projects. Solar and wind installations grew by 32 percent and 69 percent, and EV sales more than doubled during that time.
“Trump is not against anything that makes money,” said Edward Hirs, an energy fellow at the University of Houston.
Hirs also pointed out that a disproportionate amount of IRA funding — about three-quarters — has gone to Republican-led states.
“Now that the presidential election is over, all eyes are on the 2026 midterms,” Hirs said. “Given the IRA’s concentration in Republican districts, it may seem unlikely that Trump will kill the bill.”
In August, 18 Republicans asked House Speaker Mike Johnson to stop efforts to end the IRA. They warned that such a move could increase further investment in their states.
Because of the small Republican majority in the legislature, these votes may be enough to save important parts of the bill.
Elsewhere, many US-based companies moved forward with their climate initiatives during Trump’s first presidency. That is likely to continue, as changes in accounting systems (especially in Europe and California) now require firms to report their emissions.
Hirs told Al Jazeera, “Trump’s problem is that the green energy revolution has already begun.”
Reducing incentives
David Brown, director of the energy transition practice at energy firm Wood Mackenzie, said “it is unlikely that the IRA will be fully abolished”.
But if all of Trump’s IRA reforms — such as tax credit cuts and tougher requirements for clean energy production — are implemented, Wood Mackenzie expects that less than one-third of green energy will be produced in the US over the next decade.
Indeed, Brown thinks that “there will be amendments to many parts of the IRA”, which will reverse “a whole series of incentives that have supported. [green energy] market growth in recent years”.
Apart from the IRA, offshore wind projects are vulnerable to federal permit requirements, which Trump has said he will deny. Meanwhile, the fledgling US solar and battery industry faces risks from trade tariffs in China – a key supplier of components.
While Brown remains optimistic about the future of low-carbon technology in the US, he admitted there is “concern” that the sector will be disrupted as it progresses. “The focus on achieving net zero will not exist in Trump’s second term,” he said.
Losing world influence
The IRA was designed, in part, to help US companies compete with China in clean energy markets. Looking ahead, Trump’s climate denial could strengthen Beijing’s leadership in this field.
“China already has a head start,” said Flakoll, a BNEF analyst. Thanks to government support, it is home to 80 per cent of the world’s solar panel supply chain and is expected to make $675bn in clean energy investment this year – almost as much as Europe and the US combined.
Flakoll also expects Trump’s election to “expand China’s order book”. According to Johns Hopkins University, annexing the IRA would cost the US up to $50bn in lost sales and drive $80bn of green energy investment abroad.
China is well placed to fill the gap. Over the past decade, Xi Jinping’s Belt and Road Initiative has released more than $1 billion in investment in modern infrastructure to trade natural resources and business access, especially in developing countries.
Trump is taking an isolationist approach, Flakoll said. As much as he can, he “wants to buy chains in the sea”.
Flakoll also thinks that Trump will “withdraw from climate finance and negotiations”.
The president-elect plans to withdraw from the UN Paris Agreement. He may even withdraw from the United Nations Framework Convention on Climate Change (UNFCCC).
Compared to the US, “China has a more assertive and comprehensive set of climate policies”, Flakoll said. In addition to losing billions of dollars in green energy sales, Trump risks losing China’s international influence if he stops fighting climate change.
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