Will Trump Quietly Supercharge America’s Clean Energy Revolution?

Trump’s return to the White House is often seen as a challenge to the clean energy transition, but recent evidence shows that the clean energy momentum now transcends partisan divides. Policies initiated under the Inflation Reduction Act (IRA) have anchored critical mineral and EV supply chain investments primarily in red states, bolstering employment and economic growth across the South and Midwest. Trump’s focus on economic independence aligns with the IRA’s foundational aim of building a domestic supply chain, particularly in Republican-majority regions.

The groundwork laid by the Biden administration, particularly in fostering net-zero investments in red states, has already catalyzed a clean energy boom in places like Texas, now the leading U.S. supplier of wind power. This momentum creates a unique opportunity for Trump’s focus on economic independence and ‘America First’ policies to build upon bipartisan gains, reinforcing domestic supply chains and energy security. Notably, Trump’s last four years in office, from 2016-2020, did not mark a slowdown in the deployment of renewables; instead, momentum built during his tenure, further illustrating how clean energy progress has become structurally embedded in the U.S. economy.

The key thesis of this paper is that, contrary to common assumptions, a second Trump administration could reinforce and even accelerate certain aspects of the U.S. energy transition by focusing on critical mineral independence, domestic manufacturing, and localised supply chain resilience. While Trump’s policy adjustments may shift emphasis away from consumer EV incentives, the structural elements of the IRA—particularly those benefiting critical mineral projects and red-state economies—align with his “America First” agenda. This synergy suggests that Trump’s policies could drive energy transition progress by bolstering U.S.-based production, reducing dependency on foreign (especially Chinese) imports, and creating a secure, bipartisan-supported clean energy economy.

In essence, Trump 2.0 might achieve a durable, America-centred energy strategy that leverages economic imperatives and national security concerns to advance clean energy goals, albeit through a different policy lens.

A Catalyst for Clean Energy in Red States

As of late 2023, the IRA had spurred approximately $110 billion in clean energy investments and created over 80,000 jobs across 142 announced projects, predominantly in states like Georgia, Ohio, Tennessee, and Texas. This pattern reflects how deeply embedded clean energy initiatives have become in regions that traditionally align with Trump’s policies.

For instance, up to 57.4% of U.S. battery production investment has centred on Republican-led states, creating a powerful coalition of economic and political interests that could support sustained energy progress under Trump’s leadership.

Cementing the U.S. as a Battery and EV Manufacturing Hub

The IRA’s 45x Production Tax Credit and associated incentives have catalysed domestic investments in critical minerals, prompting nearly $22 billion in U.S. mining projects focused on lithium, nickel, and cobalt. As global demand for these minerals grows, this development is essential for achieving supply chain independence, particularly as China controls over 90% of global refining capacity for key minerals.

Additionally, Trump’s emphasis on expanding the domestic critical mineral sector aligns with bipartisan support for reducing dependency on China. His administration is expected to reinforce FEOC (Foreign Entities of Concern) criteria, restricting foreign participation and deepening incentives for American-owned enterprises in the battery recycling and refining sectors.

Key Examples of U.S. Companies Leading This Shift:

• Redwood Materials: Through its advanced recycling technology, Redwood Materials can recover up to 95% of battery minerals from used cells. This recycled supply chain is projected to support 1.3 million EVs annually by 2028, offering a closed-loop system that minimises dependency on newly mined minerals.
• Retriev Technologies: Similarly, Retriev Technologies is building a network for sustainable battery recycling, supporting a circular economy that enhances the security of U.S.-based mineral supply chains.

The bipartisan appeal of critical mineral independence has prompted investments that have primarily benefited red states, where many gigafactories and mining projects are located. With projections for 90,000 new jobs by 2030 due to battery manufacturing expansion, states like Tennessee, Ohio, and Georgia stand to gain substantially, aligning with Trump’s objective of revitalising Middle America through industrial job creation.

This alignment of economic benefits and political support in Republican-majority states provides a powerful incentive to preserve IRA benefits, even as Trump reconfigures elements like the 30D EV tax credit to reduce reliance on direct consumer subsidies. Many Republican representatives may be reluctant to support full IRA repeal given the extensive job growth it has already brought to their constituencies.

Maintaining IRA’s Momentum with Strategic Tweaks

Although Trump may seek to modify the IRA, a complete repeal is unlikely due to bipartisan economic support. Republican-led states have already seen major economic gains from IRA-backed initiatives, which would make a wholesale rollback both politically and economically challenging. Instead, anticipated changes may include:

• Restructuring the 30D EV Tax Credit: Removing or reducing direct EV consumer subsidies aligns with Trump’s market-driven philosophy, though this shift would be counterbalanced by continued support for critical mineral projects and gigafactories that benefit U.S.-based companies.
• Reinforcing FEOC Restrictions in Section 45x: By tightening restrictions on foreign entities, Trump’s administration could deepen incentives for American-based mineral extraction, benefiting U.S.-owned enterprises.

The IRA’s design, with its open-ended tax credits for critical minerals, EVs, and renewable infrastructure, has led to unprecedented investment in clean energy projects with benefits that now span both political aisles. For instance, provisions supporting wind, solar, hydrogen, and nuclear energy have all garnered bipartisan approval as they directly stimulate local economies.

Implications of Tariffs on Domestic Clean Energy Stocks

In Trump’s first term, tariffs on Chinese solar panels and battery components fostered a more competitive market for U.S.-based manufacturers. Under Biden, some of these tariffs were retained, protecting companies like First Solar (FSLR), Enphase Energy (ENPH), and SunPower (SPWR), which benefited from reduced competition against low-cost Chinese imports.

The U.S. remains highly reliant on Chinese imports for battery components and critical minerals, with China controlling 70% of lithium refining and nearly 100% of natural graphite processing. A renewed emphasis on tariffs could have positive spillover effects for the clean energy sector, bolstering U.S. solar, wind, and battery production. Tariff protection has been particularly significant for U.S.-based companies producing wind turbine components and grid-scale energy storage technology, both of which are vital for a stable renewable grid.

Strategic alliances with countries like Canada and Australia could diversify U.S. mineral sources, further reducing reliance on China and aligning with Trump’s emphasis on “America First.” Through such partnerships, the U.S. could gain secure access to critical minerals without compromising national security.

The Stability of State-Led Clean Energy Commitments

Moreover, state governments (as opposed to the federal government) have played an outsized role in advancing the clean energy transition, with 30 states and the District of Columbia implementing Renewable Portfolio Standards. States like California and New York, with their ambitious clean energy targets, will likely continue to drive renewable deployment regardless of federal policy shifts.

California’s Ambition: Aiming for 100% clean electricity by 2045, California exemplifies state-level resilience, using policies that set the pace for other states and create a baseline demand for renewable technology that counterbalances potential changes in federal support.

The Power of Consumer Demand: A Driving Force for Clean Energy

Regardless of federal policy adjustments, U.S. consumer trends continue to underscore a strong appetite for clean energy solutions. EV adoption rates have surged, with EVs accounting for over 7% of new car sales in 2023, a significant leap from 2% in 2019. Similarly, residential solar installations have reached record highs, with over 5 GW of new capacity added in the first half of 2023 alone. These figures highlight a market-driven shift, as consumers increasingly prioritise sustainability and long-term cost savings. This growing demand provides a critical buffer against policy uncertainty, reinforcing that the clean energy transition is not merely a regulatory initiative but a consumer-led revolution.

Conclusion

The U.S. energy transition is advancing against a backdrop of intensifying climate impacts, which underscore the critical importance of maintaining momentum. Hurricanes in Florida, strengthened by rising ocean temperatures, and flash floods like those in Valencia demonstrate the growing pressures on energy systems. As these climate impacts intensify, they underline the importance of expanding America’s clean energy infrastructure to not only ensure reliability but also address surging energy demand.

This demand is driven by the simultaneous electrification of transportation and industrial systems and the rapid growth of AI-driven technologies, which are fundamentally reshaping the nation’s power needs. For the first time in decades, U.S. electricity consumption is expected to grow 4-5% annually, a structural shift that requires expanded energy capacity and distribution. Solar and nuclear power are central to meeting this demand, with utility-scale solar projects and rooftop installations rapidly growing across the country.

Federal leadership will be essential in addressing the systemic challenges accompanying this growth. Under Trump’s “America First” framework, policies that prioritise domestic production of critical energy components, streamline permitting processes, and modernize grid infrastructure could accelerate the deployment of renewable energy projects. By focusing on infrastructure that supports both energy independence and resilience against climate-related risks, Trump’s policies could complement existing state and market-driven progress. The bipartisan appeal of clean energy investments, particularly in Republican-led states benefiting from the IRA, further ensures that the energy transition continues to gain traction across political divides.

These challenges also present opportunities. The alignment of federal incentives with private sector and consumer demand ensures that the clean energy transition continues to evolve, even amidst shifting political priorities. Far from undermining the energy transition, Trump’s policies may drive its next phase, albeit through a lens of economic nationalism and localised resilience.