Trump Won't Kill Green Energy: A Resilient Sector in the Face of Political Change
Wednesday, Dec 11, 2024 4:01 pm ET
The election of Donald Trump as the next U.S. President has sparked concerns about the future of green energy, given his skepticism towards climate change and support for the fossil fuel industry. However, a closer look at market fundamentals and state-level policies suggests that the renewable energy sector is likely to remain resilient in the short term, despite potential regulatory challenges.
Current Market Observations
The U.S. renewable energy sector has witnessed remarkable growth in recent years, driven by falling technology costs and supportive policies. According to the International Energy Agency, the cost of solar photovoltaic (PV) has fallen by 89% since 2010, while onshore wind has dropped by 70%. This trend is expected to continue, with BloombergNEF predicting that solar PV will be cheaper than coal and natural gas in two-thirds of the world by 2030.
The Inflation Reduction Act (IRA), signed by President Biden, has significantly expanded tax credits for renewable energy, making it more attractive for investors. These incentives, including the Production Tax Credit (PTC) and Investment Tax Credit (ITC), are set to remain in place until 2025, providing a clear roadmap for investors. Additionally, many states have their own renewable energy targets and policies, which will continue to drive demand for clean energy.

Investment Strategy Insights
Despite Trump's victory, the green energy sector is expected to remain resilient in the short term due to strong market fundamentals and state-level policies. The IRA's $369 billion in clean energy and climate change investments will create jobs and stimulate economic growth. Moreover, companies like NextEra Energy and Enphase Energy are expanding their renewable energy portfolios, while utilities like Duke Energy and Xcel Energy are committing to 100% clean energy by 2050. These private sector investments, coupled with strong public support for renewable energy, will ensure that the green energy transition remains on track.
Potential Regulatory Challenges
While the renewable energy sector is expected to remain resilient, there are potential regulatory challenges that could arise under a Trump administration. Trump has promised to "drill, baby, drill," and his administration may roll back environmental regulations, making it easier to drill on federal land and approve new natural gas pipelines. However, any curtailment of renewable energy sources would face opposition, including from within the Republican party. The IRA's benefits have been felt in Republican areas, with estimates suggesting that 85% of the money has gone to districts that elected Republicans.
Conclusion and Recommendations
In conclusion, the renewable energy sector is likely to remain resilient in the face of political change, thanks to strong market fundamentals and state-level policies. While there may be potential regulatory challenges under a Trump administration, the sector's growth trajectory is expected to continue in the short term. Investors should maintain a balanced portfolio, combining growth and value stocks, and avoid hastily selling strong, enduring companies like Amazon and Apple during market downturns. As always, it is essential to stay informed about individual business operations and understand the broader market trends to make well-informed investment decisions.
