Republican control in the US will likely shift energy policy away from net zero targets, but President-elect Trump's full agenda will face political and market opposition, according to Wood Mackenzie analysis.
The US may see lighter standards on emissions regulations, more protectionist trade policies, and withdrawal from the Paris Agreement, all moving US policy away from a net-zero trajectory. However, bipartisan support for the Inflation Reduction Act (IRA), competitive renewable power economics, and private sector net zero goals are expected to maintain the energy transition's momentum.
David Brown, Director of Energy Transition Service at Wood Mackenzie, stated, "The IRA has supported over USD 220 billion in manufacturing investment, much of it in Republican-led states. The likelihood of a full IRA repeal is low, but there could be amendments. Renewables investment might slow, but capacity is set to grow by 243 GW from 2024-2030 even in a delayed transition scenario."
President-elect Trump is expected to support Big Tech's growth aspirations, with over 51 GW of new data centre announcements since 2023, which may progress with Republican-supported permitting reform. Advanced manufacturing credits are likely to remain intact, with around 7 GW of solar manufacturing expected to proceed.
Brown noted that the election's impact will vary by sector, commodity, and technology, with some more at immediate risk than others.
Offshore and onshore wind: deployment risk arises from 2040
Wood Mackenzie anticipates the new administration will de-emphasize offshore wind development by restricting permitting resources and limiting new leases. However, these changes will not materially affect the 10-year outlook, as nearly 25 GW of projects under development are already permitted or in the late stages of permitting.
Stephen Maldonado, a research analyst at Wood Mackenzie, explained, "If the administration chooses not to issue guidance on the domestic content bonus credit for offshore wind, or pares back the 45X advanced manufacturing tax credit, investments in a domestic supply chain could be significantly delayed. While Wood Mackenzie’s base case outlook expects 27 GW of cumulative installed capacity by 2033, these constraints could lead to a 30% decrease over the same time frame."
A second Trump administration presents significant downside risk to onshore wind. If Congress seeks to repeal key mechanisms of the IRA or restructure an earlier phase-out of the production tax credit, deployment could slow significantly.
