Donald Trump's election victory in 2024 stands as one of the most momentous events of the year, influencing the global green energy transition. While it's anticipated that Trump's administration might pivot towards fossil fuels rather than focusing on green industries, it remains uncertain whether his climate skepticism could slow the green-tech movement or impact the efforts of influential figures like Elon Musk.
Trump's Embrace of Fossil Fuels
Support for fossil fuels has been a cornerstone of Trump's campaign with pledges such as “Drill, Baby, Drill” promising U.S. "energy dominance" primarily through increased natural gas production.
The pre-election promises include halting offshore wind development, abolishing energy efficiency standards, and repealing the Inflation Reduction Act, which provided $450 billion in tax breaks and subsidies for green energy.
The repeal of the Act could decrease new renewable capacity additions by 17% from 2025 to 2035, with offshore wind being hit hardest at a 45% drop, according to BloombergNEF.
However, Trump's ability to repeal the Act remains questionable, as a significant portion of benefits currently go to Republican congressional districts.
Wood Mackenzie, an energy-research firm, estimates that Trump's presidency might reduce investment in America's energy transition by $1 trillion by 2050, totalling $6 trillion. Although significant, this highlights the continuation of the energy transition, as many Republican districts benefit from existing policies.
The Legacy of Social Distancing Continues
A key element of Trump's election win was his stance on international cooperation, anticipating a withdrawal from the Paris Agreement and possibly the United Nations Framework Convention on Climate Change (UNFCCC).
Exiting the UNFCCC would remove the U.S. from vital global climate negotiations.
Most media have concentrated on Trump's tariff policies, including a promised 10% hike on tariffs against China, impacting electric vehicles (EVs), solar cells, and critical minerals. This stance raises concerns about potential hindrances to the global energy transition due to higher costs for necessary metals and minerals, as noted by BHP Chief Mike Henry.
Couple Trouble?
The budding alliance between Elon Musk and President Trump gained considerable media spotlight during the election campaign. Musk's support, through appearances at rallies and significant financial contributions, played a crucial role in the Republican victory.
Despite supporting the withdrawal of subsidies, Musk believes it will benefit Tesla due to competitive advantages, as Tesla remains the only profitable EV manufacturer in the U.S.
With Musk's potential influence in reducing government regulations, Tesla might see improved economic success in a Trump administration. However, whether this benefits the larger energy transition is uncertain.
Conclusion
The return of Donald Trump to the global political arena will undeniably impact the fight against climate change. While his grip on political power appears secure with control over the House, Congress, and his party, the green tech movement in the U.S. continues to gain momentum. Whether Trump will invest political capital to reverse this trend remains an open question. What is certain, however, is that America might navigate the climate solution independently, raising the question of whether an 'America First' approach will secure a leading position in the global green tech race.