With less than 50 days to the 2024 U.S. presidential election and the polls revealing a tight race, renewable energy leaders are stepping up to support vice-president Kamala Harris’ prospects by hosting donor events, financing advertising campaigns, and warning of the dangers another Trump presidency poses to the sector.
Last month, the Environmental Defense Fund along with two other climate groups--the League of Conservation Voters and Climate Power--launched a $55mn advertising campaign backing Harris in swing states.
“There is a very good chance that he’ll try to just kill the industry and try to shut things down and maybe even revoke permits,” Christopher MacRae Ham, manager of offshore wind at energyRe, has told the Financial Times.
Elaine Borseth, president of the Electric Vehicle Association, says Trump’s proposals to abolish new tailpipe emissions rules for cars as well as a $7,500 tax credit for EV buyers are “definitely a concern”. According to Borseth, removing government support for EVs would threaten domestic carmakers with a 1970s-style crisis, and the “Chinese will just take over in the EV market.”
Trump has never hidden his disdain towards clean energy, particularly ‘windmills’, calling climate change a ‘hoax’ and attacking Biden’s clean energy policies.
“Oil will be dead. Fossil fuel will be dead. We’ll go back to windmills and we’ll go back to solar, where they need a whole desert to get some energy to come out,” Trump recently said when debating Harris.
This is not empty rhetoric: back in May, energy analytics firm Wood Mackenzie predicted that a second Trump presidency could place a huge part of renewable energy investments at risk, increase carbon emissions by 1 billion tonnes more by 2050 and delay peak fossil fuel demand by 10 years beyond current forecasts. WoodMac projects ~$7.7T in overall spending by the U.S. energy sector through 2050 under current policies, a figure that could be cut by $1T under Trump through reduced policy support for low carbon energy and infrastructure improvements.
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The analysts have, however, predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030.
WoodMac says that whereas Trump would lack the power to unilaterally repeal the Inflation Reduction Act (IRA) enacted during the Biden presidency, he could bring changes to environmental rules and executive orders that would roll back many of Biden's environmental policies. The research firm also projects that the total number of EVs on U.S. roads in 2050 would be 50% lower than under current policies because automakers would likely favor production of hybrid vehicles over pure electric cars.
There’s a lot at stake here. The auto industry has unveiled more than $100 billion in EV investments, with the potential to create 100,000 American jobs.
Three years ago, the Biden administration signed the Infrastructure Investment and Jobs Act (IIJA), with the act authorizing $1.2 trillion in spending for transportation and infrastructure; $43 billion (not including loans and tax incentives) in flexible spending could be used for battery manufacturing, retooling auto industry facilities, retraining and rehiring existing auto workers and grid updates while more than $7.5 billion will support the buildout of EV infrastructure.
Wood Mackenzie has also noted the need to address U.S. debt, saying it could limit government spending in the future. The Congressional Budget Office has projected that the U.S. national debt will climb from 97% of GDP in 2023 to 109% of GDP by 2030 and 155% by 2050.
Charles Cherington, co-founder of private equity group Ara Partners, shares WoodMac’s sentiment on the IRA, “Even if Trump wins the election a lot of the IRA will probably survive because of the job creation it has delivered in Republican states.”
It’s likely that Trump might face pushback from his own party if he attempts to do away with the IRA: Last month 18 Republicans in the House of Representatives signed a letter to Speaker Mike Johnson, asking him not to work towards “prematurely repealing energy tax credits” supporting new IRA investments — the majority of which have gone to Republican states.’’
The battery belt and other Republican-led states have been claiming the lion’s share of IRA dollars despite the fact that not a single Republican voted for the bill. According to an analysis by American Clean Power, Republican-held congressional districts are now home to more than 80% of all utility-scale wind, solar farms and battery projects currently under development.
An RMI analysis has revealed that Texas could see $131 billion in IRA-linked investments this decade; Florida may see $62 billion while Georgia might realize $16 billion. Further, Republican-leaning states are also receiving larger climate investments per person than Democrat-led states.
Meanwhile, Georgia has billions of dollars of new clean energy investment and battery manufacturing already lined up:
“It seems like all roads are currently leading to Georgia, it’s really benefiting disproportionately from the Inflation Reduction Act right now,” Aaron Brickman, senior principal at energy research nonprofit RMI, has told the Guardian. Brickman says that the $370bn in clean energy incentives and tax credits are a complete game changer, ‘‘We’ve just frankly never had that before in this country. The IRA has transformed the landscape in a staggering way.
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That said, one corner of the clean energy universe is likely to come out on top regardless of who sits in the Oval Office in January 2025: The solar sector. Solar stocks have been rallying after Trump said in his presidential debate with Harris that he’s “a big fan of solar."
First Solar (NASDAQ:FSLR) jumped +9.6%; Sunrun (NASDAQ:RUN) +7.1%, Canadian Solar (NASDAQ:CSIQ) +8.3%, Shoals Technologies (NASDAQ:SHLS) +8.4%, Array Technologies (NASDAQ:ARRY) +8.6% and SolarEdge Technologies (NASDAQ:SEDG) +5.3%.
Last year, the International Energy Association predicted that the amount of capital investment flowing into the solar sector would overtake the amount of investment going into oil production for the first time in history. Speaking to CNBC, the IEA’s executive director Faith Birol said there was a “growing gap between the investment in fossil energy and investment [in] clean energy. Clean energy is moving fast--faster than many people realize. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels. For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy.”
However, the sector continues to face near-term headwinds, with solar growth expected to be flat this year and next, thanks in large part to high interest rates. The solar sector tends to be particularly susceptible to high interest rates. The U.S. solar industry installed a record 40 GW of power in 2023.
By Alex Kimani for Oilprice.com
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