Renewables have been the darling of the U.S. energy sector over the past four years. Following the Inflation Reduction Act (IRA) passed in 2022, investment poured into wind, solar, and other green technologies amid federal promises to help foot the bill.
That may be about to change. Trump has poured scorn on the cost and efficacy of green technology spending, calling it “the greatest scam in the history of any country.” Although predictably unpredictable, his previous administration was undoubtedly more tolerant of fossil fuels than Joe Biden’s. There is every indication he could double down on policies promoting oil, natural gas, and coal, potentially sidelining renewable energy initiatives.
Trump’s policy proposals point to a resurgence of traditional energy sources. He has framed fossil fuels as essential for bolstering energy security and, during his previous tenure, showed he meant business: the U.S. became the world’s leading oil producer in 2018, a milestone he cites as evidence of his energy strategies’ success. The Energy Information Administration (EIA) reported that the U.S. produced over 12 million barrels of crude oil per day by 2019—an historic high.
On the campaign trail, Trump pledged to expedite federal drilling permits, reduce regulatory barriers, and expand exploration on public lands. His administration also plans to streamline approvals for natural gas pipelines. Meanwhile, with America’s green transition bolstered by favorable regulations and subsidies, it’s unclear what the future holds if these are swept away. A recalibration of the U.S. power sector is coming, with implications set to ripple through domestic and global energy markets.
The Renewable Energy Sector: A Shaky Outlook
The U.S. solar and wind industries have seen remarkable expansion over the past decade. Solar energy capacity, for instance, increased from 40 GW in 2016 to over 140 GW by 2023, supported by falling costs and growing consumer demand.
But future growth is in doubt. The IRA, emblematic of the divide between Trump and Biden, includes tax credits worth between $500 billion and $1 trillion for clean energy projects. Trump has criticized the IRA as wasteful and inefficient. While outright repeal is unlikely due to Republican support for certain provisions in GOP-dominated states, Trump’s approach may introduce delays and uncertainty, cooling investment in renewables. And with over 90% of IRA-related funds still unallocated, they are vulnerable to redirection under a Trump administration.
Additionally, Trump has promised a rollback of environmental regulations, which he argues have stifled economic growth. This includes weakening the Environmental Protection Agency (EPA) and revising carbon targets. These rollbacks are a double-edged sword: they could lower compliance costs for businesses and potentially reduce energy prices but also risk increasing carbon emissions and postponing the costs of reducing fossil fuel reliance.
The renewable energy landscape is not uniform. Market dynamics and state-level initiatives continue to drive much of the sector’s growth. California and Texas, for instance, have invested heavily in solar and wind projects; Texas alone accounts for nearly 50 major renewable energy projects currently under development. These local efforts, alongside corporate sustainability commitments, could buffer some impact from federal policy shifts. “The trajectory of the U.S. energy transition is now influenced by a broader array of stakeholders, including private sector investors, state governments, and international market forces,” says Rehaan Aleem Shiledar, a GlobalData energy analyst. “These entities are likely to continue prioritizing sustainability and clean energy, irrespective of federal policy changes.”
What of the momentum of specific renewable technologies? Consider electric vehicles (EVs). Trump’s criticism of EV incentives in the IRA, including tax credits worth up to $7,500 per vehicle, suggests a more challenging environment for EV adoption. Plans to impose 60% tariffs on Chinese imports—including EV components like batteries—could raise production costs and slow uptake. On the other hand, domestic manufacturing of EV components could receive a boost under Trump’s “America First” agenda. A localized supply chain could reduce reliance on imports, offering long-term resilience for the sector. And with Tesla CEO Elon Musk billed to become a member of Trump’s cabinet, the EV sector will have a spokesperson at the heart of government.
The hydrogen market faces similar uncertainty. Biden’s $9.5 billion allocation for low-carbon hydrogen in the 2021 Infrastructure Investment and Jobs Act helped turbocharge growth in the sector. Now, with 44% of U.S. hydrogen projects still in early development stages, political uncertainty threatens their future. But Republican-led states like Texas and Louisiana are major potential beneficiaries of hydrogen tax credits, meaning Trump would struggle to rescind them without courting controversy among his allies. Analysts are split: Trump’s disapproval of green initiatives casts doubt on sustained federal support, but many projects have progressed too far to simply unravel.
The Road Ahead
Despite the potential hurdles posed by a Trump presidency, it’s hard to imagine the U.S. energy transition grinding to a halt. Market forces continue to favor renewables, driven by declining costs, technological advancements, and increasing demand for clean energy. During Trump’s first term, solar and wind industries continued to grow healthily, even as federal policies prioritized fossil fuels. Private sector investment, coupled with state-level initiatives, suggests the renewable energy sector may withstand a temporary federal pivot toward fossil fuels. Additionally, geopolitical considerations—such as energy security concerns stemming from reliance on imported technologies—could spur innovation and investment in U.S.-based clean energy manufacturing.
Donald Trump’s return to the presidency will undoubtedly alter the trajectory of U.S. energy policy. But by how much, for how long, and precisely what America’s balance between fossil fuels and renewables will be by the end of his term is not clear-cut. Despite the dismissiveness of his supporters and the fears of his opponents, the momentum behind the energy transition appears robust enough to weather political shifts. Analysts will be keeping a close eye on the pace of progress to determine whether Trump’s policies live up to his bold rhetoric and what the long-term consequences are for the green transition.
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