This article was published by ReTHINK Energy on Nov. 7, 2024.
The second Trump Administration will cut support for renewable energy just like the first one. Just as during the first Trump Administration, this will sharpen the contrast between those renewables which are cost-effective (or at least supported by state-level policies), and those which are not.
Under the first administration, the much-maligned Crescent Dunes concentrated solar power (CSP) project physically ceased production for two years, and CSP has not returned to the conversation yet in the US, if ever. But conventional photovoltaic solar capacity more than doubled across the nation.
This time around, the most obvious and biggest victim is offshore wind – the sector is going to do its best to hibernate for the next four years (or longer) – until a favorable policy environment returns. Unlike CSP, offshore wind will have its day in the sun eventually, still enjoying the same quality upgrades as photovoltaics.
The single biggest question is on trade. The Biden Administration has struck a balance between the tariff-reshoring agenda and the need to import, at least temporarily, both Chinese finished goods and Chinese upstream components. President Trump on the other hand will happily establish exclusionary tariffs, not just on China but even Europe, with much less care for the disruption they will inflict on both developers and the US’ nascent renewable energy equipment manufacturing supply chains.
There’s also concern about the scale of solar demand in future, even though onshore solar power is cost-competitive unlike offshore wind. First Solar’s stock is down 10 per cent, even though it is the solar manufacturer least dependent on imports.
It’s easy to observe that President Trump will push tariffs and cut government funding for renewables, starting with withdrawing IRA funds. The main impact will be to extend the life of fossil fuel plants.
What’s less clear is the new policy environment for EVs – certainly hostile to Chinese imports, but with Elon Musk by his side, we have to assume that for Tesla at least, there will be some ambiguity. Then there’s the fact that the 78-year-old is just one man. Most policy will be determined by the Republican Party and interest groups, and won’t be as radical as the sweeping statements Trump has made pillorying the energy transition. Expect another term in which renewables grow significantly, with only the most expensive and forward-thinking investments such as the offshore wind fleet killed off or put into stasis outright. The rest will merely be weakened.
When it comes to the aviation industry the election news won’t be welcomed here either. The sector is yet to fully recover after the supply chain issues inflicted by the COVID-19 pandemic, and is not set to flourish during Trump’s second term. With major manufacturers like Airbus and Boeing planning on ramping up product output, it looks like things won’t get any cheaper for them.
Airbus’ publicly stated goals of production rates are even more aggressive than those before 2020. And after plenty of lay-offs in staff, skilled labor will also be hard to come by. A sentiment shared by Boeing and even smaller manufacturers.
Clean-aviation specifically will also be dampened in the US as Trump’s tariffs will further hinder the cause. Companies looking to import raw materials needed for electrical components heavily prevalent in battery-electric or hydrogen fuel cell airplanes will most likely see a premium added to their bills.
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