🌡 The future of US climate change and clean energy policy

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Easy prediction: If the next American president is Kamala Harris, it’s (almost certainly) going to be full-steam ahead for the Inflation Reduction Act and its massive spending to reduce US carbon emissions. The IRA is the signature climate achievement of the Biden-Harris administration. It directs a) nearly $400 billion in federal funding to clean energy, through a mix of tax incentives, grants, and loan guarantees and b) nearly $400 billion in loan guarantees in Department of Energy direction loans and guarantees.

McKinsey

But what if Donald Trump wins a second term? In a recent note, Goldman Sachs thinks the IRA would survive. The bank’s key reasons:

First, many IRA elements have bipartisan roots. Solar and wind credits, along with biofuel subsidies, enjoyed support across party lines before the IRA repackaged them. This historical backing creates inertia against wholesale repeal.

Second, political realities would constrain drastic action. Even in a Republican sweep, Congress would likely remain closely divided. The reconciliation process, necessary for major fiscal changes, would require near-unanimous GOP support. Yet several Republican lawmakers represent districts benefiting from IRA investments, such as clean energy manufacturing projects likely making them reluctant to axe the entire law.

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