A Republican victory in this year's U.S. presidential election could slow the country's energy transition and reverse decarbonization policies, Wood Mackenzie said.
A recent report by the analyst emphasized that $1 trillion in energy investments could be at risk of being lost if Donald Trump wins the November election. This would not only affect energy investments over the next five-year cycle, but also through 2050.
In the most basic scenario, investments in the energy sector would total about $7.7 trillion between 2023 and 2050, rising to $11.8 trillion in the net-zero emissions scenario.
However, Wood Mackenzie said that both the production (PTC) and investment tax credits (ITC) offered by the Inflation Reduction Act (IRA) are unlikely to be discontinued, despite support for the bill from the U.S. renewable energy sector.
David Brown, Head of Energy Transition Research at Wood Mackenzie, says: “The Inflation Reduction Act is unlikely to be repealed altogether.
However, if Trump is re-elected president, he is likely to issue an executive order dropping the 2035 net-zero emissions target for the power sector, setting more generous emissions targets for the Environmental Protection Agency (EPA), and issuing tax credits favoring blue hydrogen.
Deployment of solar PV, wind, and storage is likely to be 25% lower than the base case scenario, with installed capacity projected to reach 500 GW by 2050.The base case scenario, on the other hand, predicts a six-fold increase in solar and wind energy by 2050.
China-US trade tariffs
In addition to concerns that a Republican victory could change the pace of clean energy investment, the report cites the ongoing relationship between the U.S. and China.
Last week, the Biden administration announced several policy-based initiatives, most notably an increase in tariffs on solar panels from 25 percent to 50 percent under Section 301.
Additionally, the U.S. eliminated the exemption for bifacial modules under Section 201, and Biden reiterated that June 6, 2024 is the date when the tariff exemption for solar imports from Southeast Asia ends.
However, this isn't the last we'll hear of anti-dumping and countervailing duties (AD / CVD) as the Commerce Department last week launched an investigation into solar cell imports from Cambodia, Vietnam, Thailand and Malaysia.
The investigation was based on a petition filed by the American Alliance for Solar Manufacturing Trade Committee in April of this year. The organization consists of a number of solar manufacturers with bases in the United States, including cadmium telluride (CdTe) thin-film module producer First Solar and major silicon-based manufacturers Qcells and Meyer Burger, who called for an investigation into the manufacturing practices of the above four countries.
States carry the weight
Regardless of the state of the federal government, states can continue to be responsible for driving growth in the renewable energy sector.
State renewable portfolio standards and voluntary renewable energy goals have supported more than 13 percent average annual growth in solar and wind energy during Trump's first presidential term from 2016 to 2020.
Wood Mackenzie reports,“If Trump is re-elected, federal support for decarbonization will surely diminish, but states will pick up the baton.”
Source: PV-Tech