This research was authored by S&P Global Commodity Insights.
Published: November 15, 2024
The Republican sweep of the US presidency and both chambers of Congress ushers in a new period for US energy. The most likely trajectory for the next four years is one of looser regulation, tighter trade restrictions and championing of fossil fuels.
For cleantech, there is a central tension, and a big question, at the heart of the incoming administration’s agenda. President-elect Donald Trump has pledged to revitalize American industry through a combination of steep trade barriers and investment in domestic manufacturing, yet it is clean energy — a sector he has disparaged — that has powered the reindustrialization drive under the Inflation Reduction Act. How the administration resolves this contradiction will be crucial to the industry’s fate.
S&P Global analysis suggests that many provisions of the Inflation Reduction Act will be either legislatively difficult or politically unwise to repeal, and we expect the most important cleantech incentives to broadly remain in place, though some could be altered through the congressional budget reconciliation process. In contrast, programs over which the president exercises control, such as Energy Department loans and grants, are more vulnerable.
What this will mean for wind, solar photovoltaic, battery storage, carbon capture utilization and storage, and hydrogen outlooks, in concrete terms, will depend on the specifics and the nuances of policies, some of which we are likely to see in the early days of Trump’s term. But we see some important early indicators from the previous Trump administration, campaign pronouncements, and the past positions of incoming Cabinet members and other confidants (more on key players below) that can offer a guide to the likely direction of policies impacting cleantech.
The Republican sweep of the US presidency and both chambers of Congress ushers in a new period for US energy. The most likely trajectory for the next four years is one of looser regulation, tighter trade restrictions and championing of fossil fuels. Beyond that general framework, the realities of policy design will take time to take shape. And they will be heavily influenced by the personalities in the incoming administration, whose business interests sometimes conflict with each other or with promises made on the campaign trail.
For cleantech, there is a central tension, and a big question, at the heart of the incoming administration’s agenda. President-elect Donald Trump has pledged to revitalize American industry through a combination of steep trade barriers and investment in domestic manufacturing. Yet, since the passage of the Inflation Reduction Act (IRA), the reindustrialization drive has been powered by cleantech, an industry Trump has derided as part of the “Green New Scam” and part of the wider climate change “hoax.”
How the administration resolves this contradiction — whether by actively trying to remove incentives for cleantech to deter investment or by accepting it as an important part of reindustrialization efforts — will be crucial to the industry’s prospects.
S&P Global analysis suggests that many IRA provisions will be either legislatively difficult or politically unwise to repeal, and we expect the most important cleantech incentives to broadly remain in place, though some could be altered through the congressional budget reconciliation process. In contrast, programs over which the president exercises control, such as Energy Department loans and grants, are more vulnerable.
Trump has expressed opposition to wind in general, which would seem to augur poorly for the sector’s future. But onshore wind is already a widely used, cost-competitive source of power generation in some parts of the US, and it benefits from well-established, diversified supply chains. Offshore wind is more vulnerable, in part because it has yet to scale.
S&P Global’s capacity additions outlooks for US onshore wind have been on a decline since 2020, due in part to local opposition. Still, our forecasts show installations returning to growth after 2025, with gross capacity additions nearly doubling between 2025 and 2030. A lot of onshore wind is built on private land, which may challenge federal government efforts to halt development. Furthermore, onshore wind is likely to continue to benefit from IRA tax credits and from a more geographically diversified supply chain that would be less impacted by high tariffs on imports from China.
In contrast, Trump’s openly negative sentiments toward offshore wind may cause significant delays to its expansion, which requires approval to build in federal waters. Investors are already starting to react. Following the US election, Germany’s RWE cut its planned investment to €7 billion in 2025–2026 from €10 billion, specifically citing higher risks for offshore wind projects in the US. S&P Global sees three potential scenarios for the sector:
The Trump administration could impose a moratorium on all offshore wind construction activities. Projects currently under construction would be required to stop. We would expect no capacity additions until at least 2029, expiry of leases before construction even begins, and negative ripple effects through planned supply chain investments. The administration could also slow the permitting process, burdening projects with substantial additional costs due to delays, resulting in project cancellations and the return of leases to the Bureau of Ocean Energy Management. Consequently, we might see a lag in project construction post-2030.
The administration might halt project permitting but allow fully permitted projects to proceed with construction. This scenario would have the least impact on our outlook as the Biden administration successfully permitted more than 15 GW of projects over the last four years, creating a robust project pipeline. However, any effort to slow the permitting process or cancel lease sales could affect our outlooks post-2030.
The administration could also continue the status quo policy and facilitate new projects. US coastal states, utility companies, developers and original equipment manufacturers will all be lobbying the Trump administration to maintain offshore wind development. Significant investments have already been made in specialized vessels, upgrades to subsea cable, steel plate and monopile manufacturing facilities. The offshore wind industry also employs thousands of US workers, directly or indirectly, a key priority for the incoming administration.
Solar PV and battery storage in the US have been some of the biggest beneficiaries of two dynamics — generous support under the IRA and the rapid cost compression achieved through supply chain expansions in China and in Chinese-owned manufacturing facilities in third countries. The latter has allowed US developers to import at low cost. Growth rates for both solar PV and battery storage in the US will be impacted by any narrowing of subsidies or restrictions on imports, but we see any change in the status quo under the new administration as a matter of degree, not a matter of direction.
IRA incentives for solar-plus-storage projects and domestic manufacturing of solar and battery storage are protected by their alignment with the energy independence agenda and by the significant share of new job creation and economic benefits that have accrued to Republican-leaning states from IRA incentives supporting these industries.
The more pressing issue is how the Trump administration will approach tariffs on solar PV and lithium-ion battery imports from China and Southeast Asia. Further restrictions could disrupt the supply chain from 2026 onward. US developers would be forced to rely more heavily on domestic manufacturing and nascent (at best) supply chains, which are unlikely to reach the scale or cost advantages of competitors in China. US manufacturers are not yet in a position to meet domestic demand, and it remains unclear whether US module and cell manufacturers would be able to supplement their production with imported polysilicon, ingots or wafers.
A potential wild card in the Trump administration's approach to cleantech imports is Trump’s relationship with Tesla CEO Elon Musk, whose business interests are directly linked to the solar PV, battery storage and EV sectors and will likely advocate for supportive policy.
Trump’s framing of climate change as a “hoax” is highly unlikely to translate into a rollback of support for carbon capture, utilization and storage (CCUS). Oil companies, which are expected to be among favored industries under a second Trump administration, are making large investments backed by the value of the 45Q tax credit for capturing and sequestering CO2. His first administration signed a bill into law in 2020 that extended the 45Q tax credit for carbon capture projects.
The 45Q tax credit is central to the viability of large proposed industrial projects in the low-carbon hydrogen space such as CF Industries’ Donaldsonville blue ammonia plant and ExxonMobil’s Baytown low-carbon hydrogen and ammonia production facility. The Baytown facility has the potential to export to markets implementing low-carbon hydrogen demand-side incentives, such as Japan and Korea, and establish a foothold for US producers in a nascent industry. The 45V tax credit guidance governing electrolytic or “green” hydrogen could be revised to favor hydrogen with CCUS (“blue” hydrogen), impacting both sectors.
Furthermore, one of the most influential voices in the oil industry is likely to oppose any significant or sustained push to eliminate incentives for CCUS. By creating a financial incentive to capture and store CO2, the 45Q bolsters the value of Denbury Resources’ CO2 storage sites and pipeline network, which ExxonMobil bought in 2023 for $4.9 billion. The oil major has moved quickly to establish a dominant position in CO2 transportation and storage assets. In October it secured a lease from the Texas General Land Office to store CO2 in geological caverns beneath the Gulf of Mexico in what both are calling the largest CO2 storage lease in the US.
The biggest change to the CCUS industry may come from permitting reform, which has the potential to accelerate projects by reducing the regulatory burden for critical parts of the process, such as the drilling of storage wells. State-level impediments to building CCUS infrastructure may remain an obstacle. Any rollback of efforts to reduce emissions from power generation from coal and new natural gas plants may slow growth in those sectors, though the outlook for CCUS in power generation was already challenged by high costs.
The change of presidential administration in January 2025 is unlikely to materially change demand for lithium, nickel, copper or cobalt, given the durability of existing and ongoing investments in cleantech and other sectors.
S&P Global does see limited upside potential for raw material and construction-driven demand linked to permitting reforms or deregulation as well as for future mined and refined supply of lithium, copper, nickel and rarer elements, such as antimony. However, this upside is unlikely to materialize until either late in the next four-year term or under the following administration, especially if project construction is not already underway.
Nuclear occupies a shaky middle ground in the cleantech universe and in the Republican-Democratic divide in US politics. It is a domestically available, zero-emissions source of electricity that, unlike wind and solar, is available 24/7. However, nuclear waste handling and disposal remains an environmental concern, costs for new and refurbished nuclear capacity are higher than for other energy sources, and the potential for meltdowns is a source of ongoing public concern.
The Biden administration’s plan to triple nuclear power capacity by 2050 — adding 200 GW of new capacity, plant restarts and upgrades to existing capacity — is less likely to face strong opposition in the next administration compared to support for wind and solar, though its funding levels may be pared back. The incoming president has included references to approving new nuclear reactors in campaign remarks. Expanding the nuclear fleet aligns with promises to add all-of-the-above domestic energy production capacity, and the first Trump administration was broadly supportive of advanced nuclear energy. Prior to Trump leaving office in 2020, the Energy Department listed the siting of the country’s first small modular reactor at Idaho National Laboratory as one of its successes in the sector, though that project was canceled in November 2023 after its costs rose sharply and it failed to secure enough buyers.
Trump also acknowledged the high cost of nuclear in a preelection interview, suggesting that support might be linked to its economic viability. It remains to be seen whether a desire to promote the expansion of all domestic energy sources will lead to policies that provide financial backing for the sector’s expansion.
Insight on the likely direction of policy under a second Trump administration can be gleaned from past statements and policy positions of individuals close to the president, including, but not limited to:
Doug Burgum, governor of North Dakota, is Trump’s pick for interior secretary, with implications for oil and gas leasing on federal lands and in federal waters. Burgum is a staunch supporter of the oil and gas industry and oversaw part of North Dakota’s Bakken Shale boom. Burgum has also backed oil and gas industry efforts to cut emissions through CCUS and, along with other state leaders, successfully lobbied the Biden administration for funding to bring a low-carbon hydrogen hub to the region. Also noteworthy is North Dakota’s status as a major wind energy producer; wind comprised more than a third of the state’s power generation in 2023.
Elon Musk has been named to a newly created role as co-head of the Department of Government Efficiency, the parameters of which have yet to be defined. Musk is CEO of Tesla, which is best known for its electric vehicles but also provides distributed solar and battery storage. China is a critical market for Tesla; the site of one of Tesla’s EV production facilities and a major battery energy storage factory; and the world’s largest source of high-quality, low-cost solar PV modules and lithium-ion batteries. Onerous tariffs on imports from China, and a sharp increase in US-China trade tensions more broadly, would augur poorly for Tesla, as would elimination of regulations that favor EVs, such as purchase incentives and stricter fuel economy standards.
Marco Rubio, in the running to be the next secretary of state, is a well-known China hawk. But while he may support and encourage the use of tariffs on imports from China as a pressure tactic, he would not bear responsibility for implementing them. That would fall to the incoming US trade representative, a role for which no candidate has been announced. Rubio has publicly expressed uncertainty about whether human activity contributes to climate change. While that view is unlikely to impact policies that drive profitable investments in cleantech in the US, we can expect the US to pull back on any initiatives intended to mobilize global investment in zero-emissions energy or technologies.
Jamieson Greer, nominee for US Trade Representative, is a protégé of Robert Lighthizer, who held the post in Trump’s first term. Lighthizer advanced protectionist trade policies generally, including the implementation of tariffs on imports from China and efforts to reinvigorate domestic industrial activity, and Greer is expected to follow suit.
A version of this research originally published on the S&P Global Commodity Insights Connect platform on Nov. 15, 2024. It has been updated as of Dec. 16, 2024.
