Dealmakers Unconcerned About IRA’s Future
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The American Council on Renewable Energy’s conference revealed optimism among clean energy bankers, investors, lawyers, and operators regarding the longevity of Biden’s energy policies such as the Inflation Reduction Act. They believe it is unlikely that substantial changes will be made to these policies due to the amount of money being made in the clean energy sector, including in traditionally Republican states. While offshore wind projects may face challenges under a potential second Trump administration, industries such as carbon sequestration and hydrogen energy that traditionally opposed renewables are being drawn in by the current policies.
US Clean Energy Sector Unfazed by Trump’s Climate Policy Attacks
Despite Donald Trump frequently criticizing electric vehicles, offshore wind, and labeling climate change a hoax, the clean energy sector remains optimistic about Biden’s energy policies, like the Inflation Reduction Act. This buoyancy was evident at a conference hosted by the American Council on Renewable Energy.
One reason for this optimism is the substantial financial gains being made in the sector, including in Republican-dominated states. Former Environmental Protection Agency director and White House climate advisor, Gina McCarthy, expressed confidence in the Inflation Reduction Act’s investment potential, while Mona Dajani, a partner at Baker Botts, saw little chance of substantial changes in the future.
This sector’s optimism reflects a strategy to give a broad range of industries and regions a stake in the energy transition. Consequently, this could turn influential individuals into supporters of climate policy or at least make them reconsider its abolition.
The Inflation Reduction Act encompasses tax credits that benefit wind and solar energy. These credits, like the Production Tax Credit and the Investment Tax Credit, have typically been extended under both Democratic and Republican administrations. Therefore, eradication would require bipartisan agreement.
Energy investment director at JPMorgan Chase, Mit Buchanan, reaffirmed this sentiment citing strong bipartisan support for renewable energy. Texas and Florida, traditionally Republican states, are currently leading in solar and wind energy investments, respectively.
Furthermore, the Inflation Reduction Act and the Bipartisan Infrastructure Law include subsidies for oil industry favorites like carbon capture and sequestration, and hydrogen energy development. This has helped garner support from industries previously opposed to renewables.
However, the Biden administration is taking measures to protect its climate policy. Various regulatory agencies have rushed to issue rules and guidance before potential changes in Congress through the Congressional Review Act. There’s speculation that parts of the Inflation Reduction Act, especially wind energy, may be at risk under a future Trump administration.
In response to potential policy changes, businesses such as Invenergy are focusing on the industrial and job benefits of renewable energy, particularly offshore wind projects. Thomas de Swardt, chief commercial officer at D.E. Shaw Renewable Investments, expressed an optimistic outlook regardless of future changes, promising to adapt and reprice deals as required.
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