Wood Mackenzie’s analysis of the U.S. energy transition highlights the potential impact of Trump’s presidency, characterized by protectionist policies and deregulation of environmental standards. The return to policies favoring fossil fuels, along with a probable withdrawal from the Paris Agreement, could hinder progress toward net-zero goals.
Nevertheless, massive investments supported by the Inflation Reduction Act (IRA) will continue driving the growth of renewables and low-carbon technologies. Since its adoption, the IRA has generated over **$220 billion in investments**, primarily in Republican-led states, bolstering these regions’ role in the energy transition.
Inflation Reduction Act: Resilience Amid Potential Reforms
While President Trump plans amendments to the IRA, a full repeal seems unlikely. Advanced manufacturing credits, crucial for solar energy development, and investments in renewables enjoy bipartisan backing. Despite political uncertainties, Wood Mackenzie projects a growth of **243 GW in renewable capacity** between 2024 and 2030, even under a delayed transition scenario.
The tech sector, with its increasing energy demands, could benefit from Trump’s permitting reforms. Since 2023, over **51 GW of new data center projects** have been announced. These initiatives, concentrated in Republican states, stand to gain from stable manufacturing credits and enhanced energy infrastructure.
Key Sectors: Solar, Wind, and Energy Storage
**Solar:**
Demand for solar energy in the U.S. remains robust. The utility-scale project pipeline is nearing **100 GWdc**, while demand from residential and commercial sectors continues to grow. However, challenges like grid interconnection and transmission infrastructure bottlenecks limit immediate growth. Wood Mackenzie forecasts an average annual growth of **5% between 2028 and 2031**, reaching **50 GWdc** per year.
**Wind:**
Both offshore and onshore wind projects remain vulnerable to political decisions. Wood Mackenzie notes that reducing tax credits for domestic content could delay investments in offshore supply chains. Currently, around **25 GW of offshore projects** are in advanced or permitted stages. However, long-term projections could shrink by **30%** if Trump’s administration fails to issue guidance on tax incentives.
**Energy Storage:**
The energy storage sector, critical for balancing an increasingly decarbonized grid, is also sensitive to policy reforms. Tax credits for stand-alone storage projects are essential, and their potential removal poses a significant risk to this rapidly expanding segment.
Natural Gas, Nuclear Energy, and Emerging Technologies
**Natural Gas:**
Deregulation of the Environmental Protection Agency (EPA) is expected to support natural gas demand. Growing energy needs from data centers and manufacturing facilities will necessitate significant infrastructure investments. Wood Mackenzie anticipates annual average production to reach **13.6 million barrels per day by 2025**.
**Nuclear Energy:**
Small modular reactors (SMRs) will receive continued support as a tool for energy independence and U.S. technological competitiveness. Estimates range between **14 and 27 GW of nuclear capacity** by 2050, depending on the scenario.
**Emerging Technologies:**
Carbon capture and storage (CCUS) and low-carbon hydrogen remain key pillars for decarbonization. The 45Q credit for CCUS enjoys bipartisan support, safeguarding these investments from political disruptions. However, uncertainty over hydrogen guidance temporarily slows projects despite the U.S.’s globally competitive incentives.
Protectionism and Its Impact on Global Markets
The Trump administration plans to raise tariffs, with rates reaching **10% on global imports** and **60% on Chinese products**. This strategy aims to relocate industrial production but risks burdening U.S. consumers and businesses with additional costs estimated at **$450 billion by 2025**. Additionally, rising protectionism could intensify international competition for liquefied natural gas (LNG) and strategic metals.
Global Outlook for the Energy Sector
Despite political shifts, Wood Mackenzie emphasizes that market dynamics, private investments, and corporate climate goals will continue shaping the U.S. energy future. While renewables face uncertainties, they remain competitive due to declining costs and strong demand.
