A victory by Donald Trump in this year's presidential election could result in sharply reduced spending on the energy transition and delay peak fossil fuel demand by about 10 years beyond current forecasts, energy analysis firm Wood Mackenzie said on Thursday.
While a Trump presidency is unlikely to result in the repeal of signature environmental investment legislation, including the Inflation Reduction Act and Infrastructure Investment and Jobs Act, that was enacted under the Biden administration, a second Trump term could result in changes to environmental rules adopted over the last four years and executive orders that would roll back Biden's environmental policies, Wood Makenzie said.
"This election cycle will really influence the pace of energy investment, both in the next five years and through 2050," said David Brown, director of Wood Mackenzie's Energy Transition Research.
Ongoing budget issues are also hanging over the country's ability to follow through on plans for significant investment to speed the energy transition, Wood Mackenzie added.
The Congressional Budget Office has estimated U.S. debt will rise to 109% of GDP by 2030 and 155% by 2050. The need to address the debt could limit government spending, the firm said.
While Wood Mackenzie projected investment in the energy sector will total $7.7 trillion from 2023 to 2050, less policy support for low-carbon energy and infrastructure improvements could cut that total by about $1 trillion, the firm said.
Lower investment in low-carbon energy could also lead to increased demand for natural gas, with Wood Mackenzie saying demand could increase its forecast by 6% or 6 Bcf/d by 2030.
The firm also tried to quantify the impact of lower policy support on various sectors of the economy. It said electric vehicle sales, which are already below expectation, would slow even more if emissions and fuel economy regulations are eased, leading to about a 50% reduction in the projected number of EVs on the road by 2050.
Further, the company said less federal financial support, continued tensions with China and fewer improvements to the electric grid could mean that U.S. wind, solar and energy storage capacity will increase to about 500 gigawatts by 2050, 25% below current forecasts.
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--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
05-17-24 1222ET
