Trump will challenge American clean energy | Donald Trump News

The recent re-election of Donald Trump as the next president of the United States has dented the prospects for clean energy in the country. A climate skeptic, Trump has promised to boost the US fossil fuel sector and end offshore wind projects on the first day of his presidency.

On the campaign trail, he repeatedly criticized President Joe Biden's flagship climate bill, the Inflation Reduction Act (IRA). He called the $370 billion federal program the new green scam and pledged to end it.

Some clean energy projects, planned or underway, have been halted, including Canadian solar manufacturer Heliene, which suspended a $150 million plan to make solar cells in Minneapolis, Minnesota.

The election caused renewable stocks to fall. NextEra, the largest U.S. clean energy company, fell 5 percent. Plug Power, a hydrogen fuel cell developer, lost a fifth of its value, while solar company Sunrun fell almost 30%.

Stock prices have fallen because the market expects less policy support for clean energy, says Derrick Flakoll, North America policy associate at Bloomberg New Energy Finance (BNEF).

While Biden has made the energy transition a key part of his agenda, Flakoll believes Trump will focus more on energy security and resilience, which does not necessarily coincide with renewable energy.

Trump has suggested he will make deep cuts to climate-focused government agencies, like the Environmental Protection Agency and the Interior Department.

On Dec. 10, he also said he would expedite federal regulatory approvals, including all environmental permits, for any person or company proposing to invest $1 billion or more. The move is widely seen as a boon for the oil and gas industry.

Biden's green push

President Biden signed the IRA into law in August 2022. In addition to provisions to reduce drug prices, the bipartisan bill allocated $369 billion to reduce greenhouse gas emissions. To date, it is the largest climate legislation in U.S. federal history.

Most of the IRA's funding has gone to low-carbon energy projects like wind, solar and nuclear power. It also includes tax cuts for households and businesses wishing to purchase electric vehicles (EVs), heat pumps and electric cookers.

The bill successfully sparked a boom in green energy activity, generating nearly $450 billion in private investment. In 2023, spending on low-carbon technologies increased by 38% (or $239 billion) compared to 2022 levels.

Jobs in the clean energy sector grew 4.2 percent last year, twice the national employment rate.

According to a Carbon Brief study, the IRA was expected to reduce US emissions by almost 40% by 2035, compared to 2005 levels. Trump's re-election appears to have an impact on this change.

The green energy transition is already underway

Although President-elect Trump has publicly called the IRA a waste, he has not yet clarified which parts he will cut. Some analysts view this as encouraging. They also highlight the growth of renewable energy during his first presidency.

From 2017 to 2020, Trump renewed Obama-era tax credits for green energy projects. Solar and wind installations increased 32 percent and 69 percent, and sales of electric vehicles more than doubled during this period.

Trump isn't opposed to anything that actually makes money, says Edward Hirs, an energy researcher at the University of Houston.

Hirs also pointed out that a disproportionate amount of IRA funding, about three-quarters, has so far gone to Republican-led states.

Now that the presidential elections are over, all eyes are on the 2026 midterm elections, Hirs said. Given the concentration of IRAs in Republican districts, it may prove impossible for Trump to defeat the bill.

In August, 18 congressional Republicans called on House Speaker Mike Johnson to spare their efforts to repeal the IRA. They warned that such measures could upend ongoing investments in their states.

Due to Republicans' narrow majority in the House, these votes could be enough to save key parts of the bill.

Elsewhere, many U.S.-based companies pursued their own climate plans during the first Trump presidency. This situation is expected to continue, as changes to accounting systems (particularly in Europe and California) now require companies to report their emissions.

Hirs told Al Jazeera: “The problem for Trump is that the green energy transition is already underway.

Unwinding of incentives

David Brown, director of the energy transition practice at energy consultancy Wood Mackenzie, said it was very unlikely the IRA would be repealed completely.

But while all the Trumps are touting IRA changes, like cutting tax credits and strengthening requirements for clean energy production, Wood Mackenzie predicts a third less green energy will be produced in the United States over the next decade.

Indeed, Brown believes that several parts of the IRA will be changed, which would undo the entire chain of incentives that underpinned the IRA. [green energy] market growth in recent years.

Outside of the IRA, offshore wind projects are threatened by federal permitting requirements, something Trump has said he will deny. Meanwhile, the United States' nascent solar and battery sectors face risks from tariffs imposed on China, a key parts supplier.

Although Brown remains optimistic about the future of low-carbon technologies in the United States, he admitted that there are concerns that the sector will be hampered as it gets off the ground. The focus on reaching net zero won't be there in Trump's second term, he said.

Losing global influence

The IRA was designed, in part, to help American companies compete with China in clean energy markets. Going forward, Trump's climate denial could solidify Beijing's leadership in the sector.

China already has a head start, believes Flakoll, analyst at BNEF. Thanks to state support, the country is home to 80% of the global solar panel supply chain and is expected to make $675 billion in clean energy investments this year, roughly the same amount as the Europe and the United States combined.

Flakoll also expects Trump's election to expand China's global order book. According to Johns Hopkins University, the IRA consolidation would cost the United States up to $50 billion in lost exports and generate $80 billion in green energy investments abroad.

China is well positioned to fill this void. Over the past decade, Xi Jinping's Belt and Road Initiative has deployed more than $1 trillion in investments in modern infrastructure in exchange for natural resources and access to businesses, particularly in developing countries.

Trump is taking a more isolationist approach, Flakoll believes. Where possible, he wants to offshore supply chains.

Flakoll also believes Trump will retreat from global climate finance and diplomacy.

The president-elect is considering withdrawing from the UN Paris Agreement. It could even withdraw from the United Nations Framework Convention on Climate Change (UNFCCC).

Compared to the United States, China has a more precise and comprehensive set of climate policies, Flakoll says. In addition to losing billions of dollars in green energy exports, Trump risks losing geopolitical influence to China if he abandons the fight against climate change.

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