With the U.S. presidential election coming up in November, many are wondering what will happen following three years of green progress if a Republican candidate wins the election. As per his campaign mandate, President Biden has focused heavily on decarbonising the U.S. economy and tackling climate change through the introduction of far-reaching climate policies, backed by federal funding. The Inflation Reduction Act (IRA) and other policies were created to help develop green energy capacity and advance clean technologies in the U.S., with financial incentives in place to spur private investment in the sector. However, much of the funding has yet to be distributed, with plans to continue allocating loans and grants for several years to come, to support the long-term transition. With the election scheduled for November, many are wondering what impact the appointment of a Republican candidate would have on the U.S. green transition.
President Biden has made several ambitious climate pledges since his electoral campaign. Biden pledged to pursue a more ambitious environmental agenda than any of his predecessors and he has made good on that promise. In 2022, the Biden administration introduced the IRA, the most far-reaching U.S. climate policy to date. The policy provides $391 billion in energy and climate spending and is expected to attract significantly more in private funding, with estimates of around $1.2 trillion over the next decade. This has been supported by other initiatives, such as the Bipartisan Infrastructure Law (BIL) – which offers funding for energy and sustainable infrastructure – and the CHIPS and Science Act, which aims to establish the U.S. as a major global semiconductor manufacturer. Over the last three years, there have been more than $200 billion in new investments in green energy projects in the U.S.
The Biden administration has made several ambitious climate pledges over the last few years, including reaching 100 percent carbon-free electricity production by 2035; delivering 40 percent of the benefits from federal investments in climate and clean energy to disadvantaged communities, and achieving net-zero carbon emissions by 2050. However, succeeding in these pledges will require decades of government dedication to decarbonisation, the increase of the U.S. green energy capacity, and research and development into clean technology. The Biden administration cannot achieve these goals alone, meaning that several administrations to follow will need to continue the work that Biden started if the U.S. is to achieve its current climate pledges.
Of course, the direction of U.S. climate efforts depends on which candidate is up for election, but several Republican politicians have criticised the Biden administration’s climate policies since his inauguration in 2021, suggesting that efforts to achieve a green transition could be thwarted under a Republican president. Former President Donald Trump, the front-runner for the Republican nomination, has criticised various aspects of the IRA on several occasions. This has led corporate executives to second guess their climate investments, which could potentially lead to a pause in private funding into green energy and related industries until the election is over and the investment environment is more certain.
Since the passing of the IRA in 2022, Republican lawmakers have, unsuccessfully, attempted to repeal much of the policy. While a Republican government is unlikely to revoke the whole policy, as it has been successful at creating jobs and boosting private investment, it may introduce regulatory changes to make it less far-reaching or control the companies and industries that benefit from the policy. Several aspects of the IRA could be altered if a Republican comes into office, such as electric vehicle (EV) tax credits.
At present, those who purchase an EV may be entitled to a $7,500 tax credit. Republican lawmakers have previously pushed for stricter limits on EV components, which could reduce the number of EVs eligible for the tax credit. This could, in turn, harm the government’s aim for EVs to contribute 50 percent of the country’s total car sales by 2030. Trump recently stated, “We are a nation whose leaders are demanding all-electric cars, despite the fact that they don’t go far, cost too much and whose batteries are produced in China,” demonstrating his opposition to the EV industry. He has also criticised wind energy for “ruin[ing] our plains and fields,” instead emphasising his support for natural gas operations.
Representative Frank Pallone Jr., the top Democrat on the House Energy and Commerce Committee believes, “We’ve got to win the presidency and both houses… Otherwise, it’s all going to be on the chopping block.” Several energy researchers and business groups also agree that a Republican win would likely lead to a rollback on certain parts of the law, particularly as the energy incentives from the IRA are thought to have doubled since its launch, owing to its popularity. However, some believe that the investment potential created by the IRA is too important for Republicans to overlook. The climate policy has supported the creation of tens of thousands of jobs in Republican districts, such as Indiana and Texas, as well as helped the U.S. become one of the most competitive world powers in green energy and clean technology, attracting billions in investment. Nevertheless, investment in the sector will likely falter in the run-up to the election as the investment environment remains uncertain.
By Felicity Bradstock for Oilprice.com
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