Trump has dismissed President Joe Biden’s climate policy as a “new green bluff.” A new Trump administration is expected to reverse much of the climate policy Biden has implemented.
He may overturn the Inflation Reduction Act (IRA), which provides tax cuts and subsidies to companies investing in renewable energy, according to the news agency Reuters.
Opportunistic, polemical, and unpredictable
The IRA was enacted in 2022 and has provided strong motivation for European renewable energy companies to establish themselves in the USA. However, the prospects of a possible new presidential term for Donald Trump dampen investment enthusiasm.
“With Donald Trump being either very opportunistic, very polemical, or quite unpredictable, one must ask if it is sensible,” says Peter Roessner to Reuters. He is the CEO of the Luxembourg-based hydrogen company H2Apex.
With Biden’s Inflation Reduction Act, the company could have built a hydrogen plant on American soil for a third of the cost of $15 million. H2Apex canceled plans in February out of fear that Trump might be re-elected.
Trying to prepare for a Trump victory
After the assassination attempt on Trump on July 13, market analysts believe the chances of him winning are increasing. In recent polls, the upcoming Democratic candidate Kamala Harris has narrowed the lead Trump had over Joe Biden. Still, Peter Roessner’s statement shows that the European renewable energy industry fears a Trump victory and is trying to prepare for it.
The analysis firm Wood Mackenzie has concluded that $1 trillion worth of projects up to 2050 are at risk. Consultant at the company, Roland Berger, states that it is not possible to fully reverse the IRA.
“But a new Trump administration could destroy measures for electric vehicles, electric vehicle charging, solar power plants, and energy efficiency,” Berger tells Reuters.
Delaying investment decisions
The German solar company SMA Solar emphasizes in a stock market announcement that a change of government in the USA is one of the future risk factors.
The world’s largest solar panel manufacturer was scheduled to decide where in the USA to build a new solar panel factory by the end of June. However, the decision has been postponed.
“The uncertain outcome of the presidential election in the USA is now leading to some reluctance to invest in renewable energy,” the company stated to Reuters.
This hesitation is reflected in the stock price in the renewable sector. The Renixx index tracks the 30 largest renewable companies in the world. After the assassination attempt on Donald Trump, the performance of the index has been lower than that of global stocks.
The world’s largest offshore wind developer, Orsted, has been particularly hard-hit. The stock plummeted after Donald Trump stated in May that he would target this sector on day one if elected. Orsted declined to comment.
Staying put
Other renewable companies do not seem to be deterred by a Trump 2.0 administration.
The German wind turbine manufacturer Nordex stated in June that they would resume production at a factory in Iowa.
“The USA will still be a large and important market, regardless of the political development,” the company stated.
However, several companies are reporting delays due to partners who are now withholding funds.
The German hydrogen company ThyssenKrupp Nucera suggests that they will postpone investment decisions in the USA. The company says they will be present in the USA, but it is crucial how the IRA will look after the election.
More headaches
Companies outside the renewable sector are also being affected by the uncertainty surrounding the American election.
The German tool company Trumpf has experienced a 12 percent decline in sales in the American market over the past year. The decline is attributed to “geopolitical uncertainty,” causing their customers to be hesitant.
“The headaches have significantly increased in the boardrooms,” says Marcus Berret, who is the Director of Global Operations at the analysis company Roland Berger.