President-elect Donald J. Trump is expected to roll back many of the rules and subsidies that have attracted billions of dollars from the private sector to renewable energy and electric vehicles since the passage of the 2022 Inflation Reduction Act.
The big question looming now on Wall Street: Will President-elect Trump pull back enough of those subsidies and regulations to meaningfully change the economics of renewable energy?
Financial firms are making sure that new contracts include provisions that protect them against policy changes that could lower their returns. They will not invest when it’s unclear what the economics of the projects are, unless you’ve adjusted the pricing for the worst case and the deal still works.
Some experts think that macroeconomic factors may matter more than policy. Oil and gas companies won’t pump more unless global prices are high enough to justify doing so. Renewable energy investment rose even under the last Trump administration, largely because interest rates were so low that investors could make money even without deep subsidies.
However, losing some of Biden’s climate rules may not make that much of a difference. The Securities and Exchange Commission’s recent rule requiring public companies to disclose certain carbon emissions is tied up in court, and the new administration may simply drop it — but many companies already have to do similar reporting to comply with European Union regulations.
Europe is phasing in a “border adjustment mechanism,” or a kind of tariff for goods produced using a lot of carbon. This could be beneficial for young companies looking for the most friendly place to scale up operations, offering research assistance and other incentives.
One thing that is clear: Financial firms will likely stop trumpeting their investments as being about “climate” or “sustainability” or “E.S.G.” Instead, they will focus on words like “transition finance,” “resilience,” and even “critical technology.”
Source: https://www.nytimes.com/2024/12/25/business/energy-environment/trump-clean-energy-finance.html