US Election Outcome Could Hinder Energy Transition, Putting $1 Trillion Investment at Risk: Report

The Infrastructure Investment and Jobs Act (IIJA) of 2021 and the Inflation Reduction Act (IRA) of 2022 positioned the US as a leader in global decarbonization. However, a potential victory for former President Donald Trump in the 2024 election could alter this trajectory, according to a new report from Wood Mackenzie titled “Hitting the brakes: how the energy transition could decelerate in the US.”

The report suggests that while investments in low-carbon technologies may slow down, fossil fuel investments could see a resurgence, potentially delaying peak fossil fuel demand. David Brown, director of Wood Mackenzie’s Energy Transition Research, emphasized the critical influence of the upcoming election cycle on energy investments through 2050. A second Trump presidency might abandon the 2035 net-zero target for the power sector, favor softer EPA emissions goals, and favor blue hydrogen through tax credit regulations.

Fiscal challenges also loom, with the US debt-to-GDP ratio projected to reach 109% by 2030. Wood Mackenzie’s base case projects $7.7 trillion in energy sector investments from 2023 to 2050, but the delayed transition scenario could see a reduction of $1 trillion. This scenario also predicts higher natural gas demand and prolonged reliance on coal, with coal generation capacity potentially four times higher by 2040 than in the base case.

Sector-specific impacts include a significant reduction in EV adoption, with total stock by 2050 potentially 50% lower than expected. Renewable energy capacity could also suffer, with wind, solar, and storage capacity projected to be 25% lower by 2050.

Despite these challenges, state-level policies may continue to drive low-carbon investments independently of federal actions. States like California have significantly expanded their utility-scale battery capacity and maintain robust renewable portfolio standards.

The report concludes that while a slower transition for emerging technologies is likely, the US’s history of innovation provides a foundation for future resilience and adaptation in the energy sector.