Even with Trump in Office, US Economy Will Keep Decarbonizing

CF Industries’ Donaldsonville Ammonia Production Facility Embraces Carbon Capture Technology

Myron Ebell, former head of the EPA transition team under Trump’s administration, has indicated that if Trump and the Republicans win the upcoming election, they aim to overturn existing climate regulations. A key target would be the Inflation Reduction Act, which supports clean energy initiatives and electric vehicles.

On the contrary, Andrew Obin, a managing director for equity research, believes that regardless of the election outcome, the US economy will continue its decarbonization efforts. During a recent industry forum, Mr. Obin highlighted the importance of energy transition and industrial sustainability.

Corporate Focus on Climate Issues

Publicly traded companies are increasingly prioritizing climate concerns due to shareholder pressure. According to Bank of America, climate-related issues are the top reason for shareholders to vote on proxies, enabling them to participate in crucial decisions remotely.

Rising Investments for Net-Zero Targets

Bank of America’s global equity research indicates that US public companies are expected to allocate an additional $2.4 trillion over the next five years to meet net-zero goals, with the energy sector leading the investments with nearly $500 billion in extra capital expenditure.

Impact of Industrial Policy

The surge in investments can be attributed to the increase in industrial policy spending, which has doubled to 0.8% of the GDP post the enactment of key legislations. The stimulus is set to peak in 2026 and continue until 2031.

Carbon Capture and Storage Incentives

The Inflation Reduction Act offers significant incentives for carbon capture and storage, including tax credits worth $85 per ton of captured carbon. For CF Industries’ Donaldsonville Ammonia Production facility, a $200 million investment in carbon capture could yield $100 million in annual benefits for several years.

Future of the Inflation Reduction Act

Despite the benefits, the Inflation Reduction Act faced strong opposition from Republicans during its passing. If Trump secures a victory and Republicans gain control of Congress, the fate of this legislation remains uncertain.

Job Creation and Industry Impact

Notably, the energy sector jobs and investments are concentrated in red states. The establishment of new carbon capture facilities will generate construction jobs primarily in these states, creating a dilemma for Republican representatives who benefit from the Act’s provisions.

Overall, the strategic design of the legislation ensures that the benefits, including tax subsidies, are difficult to revoke, presenting challenges for any potential attempts to dismantle the Inflation Reduction Act.