President-elect Donald Trump has publicly criticised the Inflation Reduction Act, the Biden administration’s signature climate law. Data shows that removing the IRA and other Biden administration climate incentives could create an additional 4 billion tonnes of greenhouse gas emissions by 2030.
But it could also deal a significant blow to the US economy.
New research out of the Net Zero Industrial Policy Lab at Johns Hopkins University shows how the clean energy retreat promised by Trump would amount to an act of self-sabotage for the US economy—one that would create tens of billions of dollars in new opportunities for other countries and regions, including competitors like China. A US retreat on clean energy, the report finds, could yield up to $80 billion investment opportunity for other countries while costing US companies up to $50 billion in lost export revenue.
“The abdication of US leadership on climate technology will hurt the United States more than it hurts other countries,” said Bentley Allan, co-director of the Net Zero Industrial Policy Lab. “At this point, the climate transition is inevitable. Europe, China, Japan, South Korea, and other countries have put their economies all-in on the energy transition. A Trump Presidency with Republican-controlled House will only delay and create problems for the energy transition. It can’t prevent it, and therefore it can only harm the American public in both the short term and in the long term.”
The report looks at three scenarios of clean energy retreat and assesses opportunities for other countries, as well as lost export revenue for US companies. Authors Allan and Tim Sahay, a nonresident senior fellow at the Atlantic Council and Hopkins researcher, find that China, Korea, the EU, Morocco, Japan, India, Canada, and Mexico, among other countries, would be able to capitalise on US retreat in battery and solar supply supply chains, should the incentives under the US Inflation Reduction Act be reduced or repealed. By abandoning growing clean energy supply chains, the US cedes tens of billions of dollars in opportunities to other countries.
The IRA has, to date, created more than $200 billion in clean energy investment across the US. Its impacts have been roundly bipartisan: more than 70% of the investments that have been announced or planned under the law have been in Republican districts around the country. Much of that investment was for solar and battery manufacturing. It’s also had real benefits for American allies making investments in the US. More than 45% of investment in IRA-funded projects has been from foreign companies. (Japan and South Korea lead the pack with the largest investments, mostly in batteries and electric vehicle manufacturing.)
To examine a world without the IRA, the researchers created several scenarios modelling the impacts of changes in demand and supply for solar panels and batteries within the US in the event of an IRA repeal. The scenarios also demonstrate how other countries will be well-poised to supply both the US and the world with both solar panels and batteries as US manufacturing declines.
In its most aggressive scenario—which eliminates all planned production facilities in the US that have not yet been built, as well as 50% of those currently under construction—the modelling shows that the repeal of the IRA opens the door for up to $80 billion in overseas investment. In a separate scenario, the US could lose more than $50 billion in lost exports if Trump policies roll back national clean energy manufacturing.
“There’s a massive energy/industrial opportunity waiting for the Global South, and this is their moment to seize it,” said Sahay, co-directorof the Net Zero Industrial Policy Lab at Johns Hopkins and co-editor of The Polycrisis. “We may see a kind of reversal of what happened after the IRA passed, where key US allies and competitors will capitalize on jobs and industries, while the US ‘boils in its own oil.’ By supercharging green industrial policy globally, strong industrial powers will be able to feed the beast of US demand while growing their own clean energy base.”
The authors of the Johns Hopkins report, who run the Net Zero Industrial Policy Lab at Hopkins, caution that, despite all the rhetoric from the Trump campaign, repealing the IRA wholesale may be difficult. House Republicans in August signed a letter in support of the legislation, asking Speaker Mike Johnson to consider the benefits it has spurred in their communities. Powerful business groups—including utility and renewable energy lobbies, the US Chamber of Commerce, the National Association of Manufacturers, and the National Mining Association—are expected to defend the legislation that benefits their interests. Even the oil and gas industry’s lobbying arm, the American Petroleum Institute, has rallied to defend parts of the IRA that provide tax credits for carbon capture.
And there’s real economic headwinds pointing towards the inevitability of the energy transition. The global clean energy sector now looks quite different than it did the last time Trump took office in 2017. Last year, China sold more electric vehicles than the US has over the past 30 years, while in 2020, solar energy surpassed coal as the “cheapest electricity in history,” according to the International Energy Agency.
In a research brief released Wednesday, research firm Zero Carbon Analytics also found that, if the US were to pull back on clean energy manufacturing and investment, it would create a significant opportunity gap for other countries to step in. Clean technology, the brief lays out, accounts for 10% of global GDP growth—thanks in large part to rapid renewables deployment in the Global South—and the sector is set to reach $2 trillion by 2030. China, which is already the leader in clean energy manufacturing, is well-positioned to meet this growing demand.
“Other countries may benefit from US backpedalling,” the brief states. “Brazil pulled in USD 35 billion in energy transition investment in 2023, ranking sixth globally, and India could flip from being a net importer of clean technologies to net exporter by 2035.”
