The upcoming US presidential election poses significant risks to global climate initiatives, with potential changes to key energy policies depending on the outcome, according to a report by BloombergNEF (BNEF). Former President Donald Trump, running as the Republican candidate, has vowed to repeal the Inflation Reduction Act (IRA), a major climate law passed under the Biden administration. Meanwhile, Vice President Kamala Harris and the Democratic Party aim to expand this legislation to boost clean energy investment and accelerate the energy transition

Despite the stark contrast between the two parties’ rhetoric, the practical impact on US energy policy may be less dramatic. The report states that the current clean energy boom and a closely divided Congress are likely to prevent major legislative changes, regardless of the election results. The IRA has driven substantial investment in clean energy, particularly in Republican-controlled districts, which may make it politically difficult for Republicans to roll back the law

The election will not only determine the direction of the presidency but also the control of Congress. Democrats are expected to lose control of the Senate, and Republicans risk losing the House of Representatives even if Trump wins. A divided Congress would limit either Harris or Trump’s ability to make sweeping changes to US climate laws without bipartisan support. More ambitious reforms could only be achieved if one party gains control of both houses and the presidency, a rare occurrence in modern US politics.

In accordance with BNEF, both candidates will face challenges in balancing energy priorities. Harris is focused on expanding the green economy but has also praised record oil and gas production to address concerns about fuel prices and employment in key states like Pennsylvania. Trump, while advocating for increased fossil fuel production, may face resistance from Republicans who have benefited from clean energy projects under the IRA.

The post-election period will likely see a battle over the future of tax policies and IRA-related programs. Tax cuts implemented during Trump’s first term expire in 2025, and Republicans may seek to offset those with cuts to clean energy tax credits. However, a growing number of Republican lawmakers have voiced caution against dismantling popular programs that have spurred job growth in their districts.

Regardless of the election outcome, US energy policy will likely continue to "muddle through," with neither candidate able to completely halt or accelerate the energy transition. According to BNEF, the US needs to significantly increase investment in clean energy to reach its net-zero goals by 2050, a challenge that will persist long after this election is decided.

Source: BloombergNEF