Trump’s Energy Agenda – What Do Republicans Have Planned on Climate?
The first weeks of the Trump Administration has seen a flurry of activity. The delayed TikTok ban. The constant threat of tariffs. The temporary freeze on all public grants and loans. The attempted shuttering of USAID. The pace at which the Administration has moved has led to notable policy decisions being under-covered and under-discussed. Take much of what Trump has done on climate.
In his first 30 days, Trump has ordered the US withdrawal from the Paris Climate Agreement—as he did during his first term—paused the development of renewable energy development on public lands, and rescinded a host of Biden-era executive orders, from climate-related financial risk assessments to protections for the Arctic. This all fits quite neatly under Trumps promise—his Administration’s guiding environmental ethos—to ‘drill, baby, drill’. But while Trump has moved aggressively via executive action—signing over 60 so far—his Administration has shown little appetite for working with Congress to entrench policy wins, and he cannot ‘executive order’ away significant climate policy enacted in the Biden era. But, after a quiet start to the 119th Congress, Republicans are finally beginning to print their legislative agenda.
Will Republicans Gut the Inflation Reduction Act?
The Inflation Reduction Act—President Biden and Congressional Democrats flagship climate law—has been in Republican crosshairs since its passage in 2022. The law provided an estimated $369 million in clean energy subsidies via direct payments and tax credits. Because many of the credits were uncapped, a more recent forecast from Goldman Sachs estimates the law could actually provide $1.2 trillion in incentives. But all this federal spending has to be paired with aggressive and sustained regulatory action by government to drive down the US emissions curve at the pace science demands. Trump, unfortunately, has no such plans.
Trump promised to repeal much of the IRA and rescind unspent funds while running for office in 2024. Following through on this campaign promise would mean rolling back significant federal support that today makes clean energy technologies more affordable for businesses and homeowners. It would also mean manoeuvring legislation through a three-seat House majority (the smallest margin since 1931) and a 53-seat Senate via budget reconciliation, the process that allows lawmakers to pass certain tax-and-spend legislation via a simple majority. While Republican opposition to the IRA is largely uniform, key parts of their coalition have indicated support for the law. In 2024, a group of Republicans signed a letter opposed to a full repeal of IRA tax credits. Maybe more importantly, Republican districts have been big winners since IRA passage. Some stats: about 80% of investment spurred by the law has been in to Republican congressional districts, resulting in 405 clean energy projects and over 216,000 jobs created. Many Republican members may not like the legislation, but they like the jobs and investment it brings their districts. While Trump could certainly try to steamroll them in a repeal effort, it would put large portions of his caucus on the hook for difficult votes to explain to constituents. The theory of the case when Democrats passed the IRA was its commitment to industrial capacity building: manufacture and deploy clean energy technologies in both Republican and Democratic districts across the country, and a bipartisan political coalition would emerge to protect its interests. That theory is about to be put to the test.
What Does This Mean for the UK?
Trumps actions and stated policy goals have created uncertainty for those seeking a stable investment environment to deploy clean energy technologies. And to be clear, the US receding from the global climate fight is a loss for the planet. It creates a permission structure for other nations to continue to pollute and will slow US decarbonisation efforts. But it no doubt presents the UK with an opportunity. The nation has robust domestic net-zero commitments in statute and a government with a clear vision for decarbonisation. Its reductions in emissions to date allow it to speak from a position of strength on the global stage. It can codify that position by aggressively pursuing climate capital that today may be second guessing the American investment outlook. A 2024 report from the Net Zero Industrial Policy lab estimated that a full repeal of the IRA would create $80 billion in investment opportunities for other countries.
The UK can no doubt attract portions of that investment. It has the potential to be a clean energy superpower, and can unlock that energy capacity with the right policy landscape to deliver on Labours mandate for growth. Reforms to the planning and grid queuing systems are steps in the right direction. The US is unfortunately backsliding on its climate commitments. The UK can prove that growth and a net-zero future are not at odds with one another.
