Impact of Upcoming US Elections on Clean Energy Industry
As the 2024 US elections draw near, the clean energy industry is facing a sense of uncertainty and potential risk. The looming question of whether a Trump presidency would negatively impact clean energy in the US, particularly through the potential repeal of the Inflation Reduction Act (IRA), has investors on edge.
However, there are reasons for optimism in the face of this uncertainty. Clean energy enjoys bipartisan support in the US, and the IRA benefits red states significantly, with Florida and Texas being the largest beneficiaries. Any repeal of the IRA would face strong local resistance due to the substantial investments already underway in these states.
Moreover, the IRA is not just an energy policy but also an industrial policy that supports domestic manufacturing facilities through tax credits, a feature that is popular across party lines. This makes it difficult to simply eliminate the IRA based on this aspect alone.
Additionally, the US political system is designed for inaction, requiring control of the Senate and the House of Representatives in addition to the presidency to push through major changes. Forecasts show that Democrats are likely to control the House of Representatives, further complicating any potential repeal of the IRA.
Despite the uncertainty surrounding the upcoming elections, the clean energy industry has shown resilience to macro and policy changes in the past. With strong demand for clean energy persisting, long-term infrastructure investors can remain optimistic about the industry’s future, looking beyond short-term political fluctuations.