Almost every day, Donald Trump attacks clean energy and climate action. He attacks electric vehicles, offshore wind and calls climate change a hoax. He is also slightly higher in the polls.
Everyone in and out of the clean energy and environmental movement knows this. So why, over two days at a conference hosted by the American Renewable Energy Council this week, bankers, investors, advocates and clean energy operators seemed pretty bullish about much of the Inflation Reduction Act and the policies of Other Biden Energy Surviving 2025 and Beyond?
Simply: Because there’s a lot of money being made — including in Republican-controlled states.
“Money is money,” said Gina McCarthy, former director of the Environmental Protection Agency and White House climate adviser, during an interview on stage. “Honestly, who’s going to pull the plug on investment from the Inflation Reduction Act without a big hit from each of the individual states and governors?”
“I’ve been telling my clients that it’s highly unlikely that we’ll see any substantial changes,” Mona Dajani, a partner at Baker Botts, told me. “There’s a lot of clean energy in traditionally Republican states. So do I see anything very material happening? No, I don’t. I think it would be very unlikely
Not surprisingly, lawyers and investment bankers would be bullish about the Inflation Reduction Act. Much of the bill’s spending is channeled through tax credits, which require lawyers and investment bankers to arrange and write agreements between developers and investors.
Whether this optimistic consensus will be reached in 2025 remains to be seen (of course), but that it exists at all now is evidence of a deliberate strategy. The legislation, along with the Bipartisan Infrastructure Act, gave a broad range of industries and regions a stake in the energy transition.
Even if it didn’t make these various elected officials and business leaders Democrats—Georgia Governor Brian Kemp, for example, seems to be opening a new battery factory every week and not endorsing Biden’s re-election. it might turn them into supporters of climate policy, or at least give them second thoughts about killing it.
At the core of the IRA are tax credits that, while soon to be “technology neutral,” will continue to benefit largely and are modeled on tax credits for wind and solar. These credits, the Production Tax Credit and the Investment Tax Credit, are decades old and have historically been positively extended under both Democratic and Republican presidents, when the status quo would mean their disappearance. To undo them under a second Trump administration would require Congress and the White House to affirmatively agree to throw them out.
“When I look at the makeup of Congress, even with a new administration, I think it’s going to be difficult to repeal it,” Mitt Buchanan, managing director of energy investments at JPMorgan Chase, said of the IRA during a panel at the conference. “There has been good support on both sides of the aisle for renewable energy in red and blue states. Job creation means a lot.”
Texas and Florida are two of the top states in clean energy investment, with Texas outpacing California utility-scale solar deployment and leads the country in wind production. Meanwhile, Florida has the third most installed solar power among US states.
Between the Inflation Reduction Act and the Bipartisan Infrastructure Act, however, there is spending that goes beyond wind and solar, including subsidies to the oil industry such as carbon capture and sequestration, and the development of hydrogen energy.
“Carbon and hydrogen sequestration brings in industries that were traditionally hostile to renewables,” Jordan Newman, managing director and renewables investment banker at Wells Fargo, said at the conference. A number of carbon sequestration infrastructure projects have emerged in Republican-leaning states, including a carbon dioxide pipeline project in Iowa, while significant planned hydrogen investments include a center in Houstonwhose partners are Chevron and ExxonMobil.
But the Biden administration and the regulatory agencies run by Biden appointees are certainly acting as if much of the administration’s climate policy is at risk. The Treasury Department, the Environmental Protection Agency and the Federal Energy Regulatory Commission have issued a series of rules and guidelines ahead of self-imposed deadlines later this year and in an effort to direct the ability of a Republican Congress and the White House to undo regulations through the Congressional Review Act.
“Our mission, and what we continue to do, is to seek to do as much of the guidance that is appropriate and effectively done in the most reasonable time frame that we can, and we will continue to do that all the way through end of this year, Ethan Zindler, climate adviser at the Treasury Department, told the audience.
Even if most of the energy tax credits and subsidies for specific technologies like hydrogen and carbon sequestration could survive a change in administration, other parts of the IRA could be at greater risk, particularly wind and ESPECIALLY especially offshore wind, which Trump seems to have a particular aversion.
“Offshore wind is challenging,” Meghan Schultz, chief financial officer of Invenergy, which won a contract for an offshore wind project off the coast of New Jersey earlier this year, told a panel.
She predicted a message for a possible second Trump administration, focusing on the industrial and job benefits of offshore wind: “If he is elected, it will be important that we are working as an industry to to educate this administration on the value that these projects will bring to clean energy and the creation of jobs and infrastructure.â€
No matter what happens, business people tend to be optimistic. Said Thomas de Swardt, chief commercial officer at DE Shaw Renewable Investments: “If it happens, we will sit around the table and talk about how we restructure and re-evaluate the deals.”
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