News
21/10/24
US elections offer energy transition juncture
Washington, 21 October (Argus) — The 5 November elections are likely to have an
outsized effect on the trajectory of US renewable energy growth, electrification
of its economy, and investment in climate-related technologies, such as carbon
sequestration and clean hydrogen. Vice-president Kamala Harris, the Democratic
presidential nominee, has embraced the energy transition and backed policies
meant to support a "thriving clean energy economy". In 2022, she cast the
tie-breaking vote for the Inflation Reduction Act (IRA) and its vast spending on
clean energy, while serving alongside President Joe Biden to support regulations
that would cut down on CO2 from power plants and accelerate the transition to
electric vehicles (EVs). If elected, Harris would continue to enforce those
climate-focused regulations and defend them from challenges in court. Those
policy views are anathema to former president Donald Trump, who has made mocking
the energy transition a recurring part of his stump speech. Wind energy is
"bullshit" and responsible for causing cancer and killing whales, Trump claims
without evidence. He wants to curtail government support for EVs, which he says
are straining the grid and wasting taxpayer support, and to "terminate" the
clean energy spending in the IRA. And he sees investment in batteries as a boon
for China and is sceptical of using hydrogen in transport because he says the
fuel is likely to "blow up". Trump plans to again pull the US out of the
"horrendously unfair" Paris climate accord and "immediately stop" enforcement of
Biden-era energy efficiency rules, his campaign says. Harris and Trump can
unilaterally advance some of their related to clean energy through executive
orders and regulatory action, such as revising which energy projects will
qualify for billions of dollars in IRA tax credits. But fully repealing clean
energy spending or overhauling permitting laws will hinge on control of the US
Congress, which polls suggest could again end up with slim majorities in both
chambers. Clean energy tax credits at risk The White House estimates that more
than $265bn in clean energy investment has been announced since the passing of
the IRA more than two years ago, with further energy spending backed by the 2021
bipartisan infrastructure law. Those laws will deliver a combined $1 trillion or
more in federal funding and tax credits for renewable energy, batteries,
electric transmission, clean energy manufacturing, EVs and other climate-related
spending over 10 years, according to some estimates. Harris has committed to
carry through with that industrial policy and "expand our lead in clean energy
innovation and manufacturing", her campaign says, with a goal of building a
workforce that will benefit from addressing climate change. Harris wants to
finish clean energy projects quickly and efficiently by "cutting red tape". If
elected, Trump plans to "terminate the Green New Deal" and rescind all unspent
funds in the IRA, which would free up revenue that could go to other priorities
such as tax cuts. But he would face stiff opposition from the industry groups
and Republican-led districts that are seeing billions of dollars of investments
as a result of the law. In September, 18 House Republicans urged against a "full
repeal" that they say would waste billions of dollars and undermine growth in
their districts. "I hope we look at it in a surgical way and not just take a
sledgehammer to it," Georgia representative Buddy Carter says. Oil industry
officials back some tax credits in the IRA, such as the 45V tax credit for
producing low-carbon hydrogen and an expanded tax credit for sequestering
carbon. The hydrogen tax credit is driving "a lot of investment" across
Republican-led states, ExxonMobil Low Carbon Solutions vice-president of
advocacy Erik Oswald says. In the US, battery-only EVs are expected to account
for more than half of car and passenger truck sales within eight years, under
tailpipe standards that environmental regulator EPA finalised this year for
model years 2027-32. The rule will require automakers to meet increasingly
stringent CO2 limits through options such as more efficient engines and selling
a greater share of hybrids and EVs. A tax credit of up to $7,500/vehicle from
the IRA will support that regulatory goal, lowering the cost of purchasing EVs
that are made in the US. But Trump says the tailpipe rule — which is being
challenged by states and industry groups in court — is an "EV mandate" that will
wipe out auto industry jobs and "end" the use of gasoline-powered vehicles.
Trump regularly attacks EVs over what he says is the difficulty of finding
charging stations, the added weight of batteries, their limited range and their
use of imported parts from China. He previously rolled back fuel-economy
standards for model year 2022-26 vehicles during his first term. Predictably,
oil groups also oppose the EV tax credit. "We don't think it needs this level of
support from taxpayers," refiner group American Fuel & Petrochemical
Manufacturers president Chet Thompson says. Harris has yet to say if she wants
to change the tailpipe rule, but she rejects its characterisation as a mandate
to go electric. "I will never tell you what kind of car you have to drive," she
says. With EVs gaining market share globally, Harris says the US needs to
develop its manufacturing capacity so it can remain competitive, something she
says did not occur when Trump was in the White House. "When it came to building
the cars of the future, Donald Trump sat on the sidelines and let China
dominate," Harris says. A rare area of agreement between the campaigns is the
threat that EV imports from China — some of which sell for less than $10,000 in
China — could pose to US automakers. This year, the Biden-Harris administration
issued a 100pc tariff on Chinese EVs in response to alleged "unfair trade
practices". Trump says he will go further by imposing a "100pc, 200pc, 2,000pc
tariff". And, if elected, Trump says he will tell Mexico and Canada that he
wants to renegotiate his own trade agreement, the USMCA, as a way to block
Chinese auto parts from being brought into the US through their borders without
being subjected to tariffs. Regulatory deja vu In his first term, Trump
dismantled climate regulations such as the Clean Power Plan, which attempted to
cut CO2 emissions from existing power plants primarily by reducing how
frequently coal and inefficient gas-fired generators would operate. If
re-elected, Trump would again work to dismantle replacement regulations from the
Biden administration, which would require most existing coal-fired plants to add
carbon capture systems or retire by 2032. Harris is "shutting down power plants
and destroying our electric grid", Trump says. Harris has yet to speak in depth
on the power sector regulations, but offered support for "tackling the climate
crisis" and holding "polluters accountable", her campaign says. If elected, she
would be responsible for defending the regulations in court and issuing a
replacement rule if it fails to survive litigation. Trump's push to dismantle
vast numbers of environmental rules would occur in a relatively untested legal
landscape, after the US Supreme Court this summer overturned the decades-old
‘Chevron doctrine' that tended to give federal agencies a built-in advantage in
court. The Supreme Court in a separate ruling opened up the possibility of
lawsuits against decades-old rules — a possible opening for a Trump
administration to work with industry to chip away at long-standing regulations.
By Chris Knight Send comments and request more information at
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