Feature: US energy transition faces 'pivotal moment' in 2024 election

The US' energy transition has shifted into a higher gear under President Joe Biden, highlighted by the vast proliferation of solar arrays, wind farms and battery storage facilities across the country's far-flung electric grid.

The trio of technologies combined to deliver more than three-quarters of all US utility-scale capacity additions over the last four years and is on pace to account for nearly 90% of new resources in 2024, according to S&P Global Commodity Insights' latest Power Market Outlook.

But the electric utility sector faces a steep climb to realize Biden's vision for a fully decarbonized US electricity mix by 2035 and net-zero emissions across all sectors of the world's largest economy by midcentury. US elections in November, headlined by Biden's anticipated rematch with former President Donald Trump, could determine whether the energy transition continues to build momentum, stalls or takes a detour.

"The 2024 election is obviously going to be a pivotal moment for climate- and energy-related policy in the United States," said Anna Mosby, head of global climate policy at Commodity Insights. "We've got two candidates that are coming at the issue from very different perspectives, as they've shown throughout their respective presidencies."

Trump's White House was marked by efforts to roll back policies enacted by his predecessor, Barack Obama; exit the Paris Agreement on climate change; and boost the use of fossil fuels. Biden countered by immediately reupping US participation in the Paris accord, revoking a permit for the Keystone XL oil pipeline and enacting laws to drive the economy to deeper levels of decarbonization.

Biden and Trump appear more aligned on trade policy, with both promising a hard line on China and backing tariffs aimed at protecting domestic solar manufacturers.

A clearer picture of their energy and climate strategies could emerge from their first presidential election debate, scheduled for June 27. But whoever occupies the White House, they will need help to carry out their respective agendas.

"A lot of what the future holds will depend in part of what also happens in Congress," Mosby said, pointing to a "sweep" of the White House, Senate and House of Representatives by Republicans or Democrats as the two scenarios with the potential for maximum impact.

Red states going green

Biden's marquee climate and energy policy, the 2022 Inflation Reduction Act, includes roughly $800 billion to $1.2 trillion in tax incentives over 10 years for a wide range of low- to zero-carbon technologies, according to federal government and private sector estimates.

Trump has blasted elements of the IRA and his 2024 campaign website says he would "eliminate the socialist Green New Deal." A coalition of conservative groups led by former Trump administration officials is explicitly calling for full IRA repeal.

Barring a Republican sweep, however, the IRA appears "safe for a while," said Patrick Luckow, director of gas, power and climate solutions at Commodity Insights. "I think those tax credits over the next several years are probably pretty durable."

Even with a Republican sweep, Mosby and Luckow view full repeal of the IRA as unlikely, citing its considerable investments in Republican-leaning and swing states.

Texas, the leading US renewables market, has attracted roughly $75 billion in private sector and federal funding commitments for clean energy and transportation projects underpinned by the IRA and the 2021 Infrastructure Investment and Jobs Act, according to the White House.

Georgia, which is emerging as a solar and battery manufacturing hub, has lured $39 billion in clean technology funding announcements, more than California. Alabama, Arizona, Indiana, Kentucky, Louisiana, North Carolina, Ohio, South Carolina, Tennessee and West Virginia have also seen an influx of cleantech investment under Biden.

Offshore wind, EVs in Trump's crosshairs

Some technologies face greater risk if Trump secures a second term, as he is promising policy shifts on electric vehicles and offshore wind, among other environmentally-friendly energy technologies.

In the event of a second Trump administration, new offshore wind projects will likely not advance through the permitting process, Timothy Fox, managing director at research firm ClearView Energy Partners, said in an interview.

The Trump administration imposed an effective 10-year ban on offshore wind leasing in much of the US Southeast that went into effect in July 2022, although it was lifted when the IRA was enacted. The Biden administration, by contrast, has held four lease auctions and authorized eight projects with more than 10 GW of capacity combined -- including the latest, Orsted's 924-MW Sunrise Wind project in New York, announced June 21 -- aiming to have 30 GW of offshore wind energy powering the country by 2030.

Should Trump win, the best-case scenario for projects with permits is that they are "defended when they are challenged in court by the Justice Department," Fox said, while the worst-case scenario sees the administration filing motions for voluntary remand and vacating permits.

"Can the Trump administration kill offshore wind? I think it could," Fox said, adding that states in the Northeast would continue holding solicitations to meet their clean energy targets.

A Trump administration could also aim to revise the IRA, threatening the tax credits that help finance projects, he said.

Trump has repeatedly criticized the Biden administration's EV support, reportedly telling Republican lawmakers at a June 13 gathering that he plans to reverse Biden's EV policies if he wins in November. He reportedly also asked oil executives for a $1 billion campaign contribution to help accomplish that.

The IRA contains lucrative tax credits for EV purchases and manufacturing, while the infrastructure law included funds for a nationwide charging network. The Environmental Protection Agency in March finalized tailpipe emission rules to shift the light- and medium-duty fleet toward more EVs, though it weakened the standards after industry pushback.

Although US EV sales continue to rise and drive oil displacement higher, the IRA's market impact has "not yet come to fruition in a significant manner," said Suzanna Massingue, low carbon transportation analyst at Commodity Insights.

What appears safe

Policies supporting carbon capture and hydrogen projects appear to be less at risk, partly due to the technologies' complements with the oil and natural gas industry and broad political backing. "Blue" hydrogen, for example, requires gas as a feedstock, can potentially be transported and stored using existing gas infrastructure, and has similar applications to fossil fuels.

"I don't think we're going to be on their radar screen," Andy Marsh, president and CEO of hydrogen fuel cell company Plug Power, said of a potential Trump administration.

Other industry watchers point to Louisiana for an example of how a Republican administration could impact the energy transition. The state leads the nation in carbon storage permit applications, won a $600 million federal grant in 2023 to build a direct air capture "hub" and netted several multibillion-dollar hydrogen projects. Much of that development took place under former Governor John Bel Edwards, a Democrat, who was succeeded by Republican Jeff Landry in January.

So far, the impact on energy policy has been mostly semantic to Michael Hecht, CEO of the economic development organization Greater New Orleans Inc.

Under Edwards, the state's public-private energy agenda was titled "Louisiana's All-of-the-Above Clean Energy Future," a plan that included fossil fuels, renewables, hydrogen and nuclear power. "Under the new administration, we have the exact same portfolio, unchanged, and now we call it Louisiana's All-of-the-Above Energy Future," Hecht said.

Based on that experience, Hecht, an IRA backer, said he is "optimistic" the clean energy subsidies will remain.

"As long as there is a job and wealth creation opportunity that is leading the industry," he said, "it's going to be supported."