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Energy Transition, Carbon, Emissions, Renewables
November 26, 2024
HIGHLIGHTS
'Energy transition is in transition'
All-of-the-above energy approach necessary
A second Trump administration will likely not have major changes for renewables or the Inflation Reduction Act, President Joe Biden's landmark 2022 climate law, lawyers said at a media roundtable.
Substantially rising demand for electricity means an all-of-the-above energy approach is necessary, including a key role for renewables, even with President-elect Donald Trump back in the White House, experts from law firm Sidley Austin LLP said Nov. 21 during a media roundtable.
"Energy transition is not dead. I'd say energy transition is in transition," Cliff Vrielink, global leader of Sidley's energy, transportation and infrastructure practice, said during the event.
Trump has mixed views on renewables, calling himself a "big fan" of solar and saying he would slam the brakes on offshore wind development through a day-one executive order.
"Renewables are going to do all right, even offshore wind," said Ken Irvin, co-leader of Sidley's global energy practice. "If you're a new entrant and you've got nothing in there, it's maybe going to be hard because in the first Trump [term] we had a de-facto moratorium on new leases. But if you've got a lease, if you've got stuff underway, I think you're going to do all right. Even in Trump 1.0, we saw an acceleration of renewable energy."
Underpinning such optimism is the belief that renewables will be required to help meet surging energy demand from artificial intelligence, data centers and electrification.
"Because of all the new demand for electricity that we didn't even realize in Trump 1.0, we're going to need all the sources of generation," Irvin said. "We're still going to have [renewables] because extending the life of coal, extending the life of gas, reinvigorating nuclear just is still not going to be enough to meet all the demand that AI puts out there."
Offshore wind will likely still have an important role despite Trump's personal preference, Irvin added, pointing to states as responsible for the next phase of development.
"They're the ones procuring the power from those resources," Irvin said. "They've got to finalize their [power purchase agreements]. The states have to build the ports, build the whole infrastructure necessary to get the offshore wind in place. And so even if Uncle Sam's support for offshore wind kind of dissipates, I think the states will pick up and step forward, especially the states that have been big sponsors of offshore wind."
Sidley Austin's legal experts echoed widespread views among Washington, DC, insiders that Biden's Inflation Reduction Act will remain largely intact.
"Scalpels not sledgehammers," Irvin said. "So, Inflation Reduction Act tax credits, Inflation Reduction Act provisions for clean hydrogen, carbon sequestration, advanced manufacturing, biofuels, those all seem consonant with Trump 2.0 and the philosophy there."
Irvin said the EV tax credit could be in jeopardy and tax credits could be reduced. What happens with the appropriated dollars is also something to keep an eye on, he added.
"A lot of the appropriated dollars have been obligated, so for the new administration to try and pull that back implicates serious legal issues," Irvin said.
Irvin and Vrielink noted that a lot of the IRA funding has gone to "red states" and that a group of Republican lawmakers in August defended the IRA tax credits in a letter to House Speaker Mike Johnson.
"With the election, we think the political landscape in the US has changed," Vrielink said. "Is the Inflation Reduction Act dead? Is it going to get killed? No, we don't think that's likely."
Projects linked to the IRA have sparked major investments and job creation in Republican-leaning areas, which their representatives want to keep, Vrielink noted.
"I think for a lot of these politicians, there's a valid argument that a lot of money has been spent already. And so instead of throwing that away, we should continue with what is already underway," Vrielink added.
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