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    RESEARCH  |  3 POINT PERSPECTIVE  |  SOLVING SUSTAINABLE

    Will green investment speed-up, swerve, or slow down post-US elections?

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    Contributors: Maggie O'Neal & Michael Mclean

    18 Mar 2024

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    US legislation meant to encourage the economy's green transition is boosting clean tech investment. But with the US elections on the horizon, could a shift in the political landscape change trajectory? Our Research team explores potential outcomes. 

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    Contributors: Maggie O'Neal & Michael Mclean

    18 Mar 2024

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    In recent years, the Biden administration worked with Congress to enact a series of laws – such as the Inflation Reduction Act (IRA) – to encourage the US economy’s green transition, providing government subsidies for and incentives to invest in clean energy technologies.

    The future trajectory of that policy – and the transition more broadly – could change as a result of the upcoming 2024 elections. Former President Donald Trump has promised to revisit at least some of these policies, should he win the presidential election in November.

    Our independent Research analysts consider the possibility of these laws’ future, post November 2024.

    Costing the Earth: What will it take to make the green transition work?

    How much investment will it take to reach global net zero targets? We look at three considerations for economies going green.

    1. US legislative changes are boosting green investment

    New laws have actively encouraged investment in clean technologies, with $213 billion invested from mid-2022 to mid-2023, a figure 37% higher than the previous 12 months and triple the level in 2018-19.

    The retail sector made the largest share of clean tech investments in 2022-23, followed by the energy and industry, and manufacturing sectors.

    These laws, accompanied by proposed environmental regulations, could shrink US net greenhouse gas emissions by as much as 50% below 2005 levels by 2030*, putting the country's commitments under the Paris Agreement within reach. However, much of the work is yet to be implemented – with surplus funds to be spent and rules to be written to aid implementation.

    *Source: Rhodium Group/MIT-CEEPR Clean Investment Monitor

    2. US elections could change the trajectory

    If Republicans win both the presidency and control of the Senate while also holding onto control of the House (a “red wave”), it is our Research analysts’ view that they could pursue revisions to some of the recent green legislation, especially its bedrock item passed in 2022, the IRA.

    House Republicans advanced several pieces of legislation in 2023 that sought to repeal all or parts of the IRA. However, none of these became law because Democrats controlled the Senate and the White House.

    Because most legislation requires a 60-vote majority in the Senate that neither party is likely to achieve, Republicans could try to repeal parts of the IRA using a special procedure, known as reconciliation, which Democrats used to pass the IRA. However, the earliest they could succeed in doing so would be 2026. A potentially faster way for Republicans to amend green legislation would be to use the Congressional Review Act (CRA) to overturn rules and regulations put in place to implement the laws.

    Employing this approach would have limitations since the CRA has specific time periods during which rules can be reversed. During the first Trump administration, Congress used the CRA to overturn 16 rules enacted by the Obama administration.

    3. A divided government is more likely, leaving IRA mostly intact

    Our Research analysts’ base case for November is that Democrats win the House and Republicans win the Senate, resulting in a divided government regardless of which party takes the presidency. If President Biden is re-elected, the IRA and other recently passed green laws would be protected from legislative or administrative changes. However, if Donald Trump is elected, there could be administrative changes that would not rely on a divided Congress.

    Rules and regulations for implementing IRA provisions on carbon capture, nuclear energy and hydrogen could be the least affected under a divided government scenario with a Republican president, as those may be seen as popular with Republican constituencies.

    However, implementation of provisions related to electric vehicles and bonus incentives could be the most likely to be limited through administrative changes.

    In the coming months, the Biden administration may work to speed up implementation of all IRA provisions.

    While the Republicans could reverse the final rules, the process for doing so is cumbersome and time consuming. Overall, our Research analysts believe a divided government would leave much of the IRA and other recent green legislation intact, limiting impact to the margins.

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    About the experts

    Maggie O'Neal

    Managing Director and Global Head of ESG Research

    Maggie O'Neal is a Managing Director and Global Head of ESG Research. Maggie ranked as the #1 analyst in HY Basic Materials, #1 in HY Manufacturing/General Industrials and #2 in IG Manufacturing/General Industrials in the 2022 Fixed Income II survey. She co-developed Barclays' approach to ESG Research and assumed her current role in 2022. Maggie joined Barclays in 2015; she has 15 years of experience in research, having previously worked at Deutsche Bank. Maggie studied at UCLA, Sciences Po Paris and King's College London for undergraduate and holds an MSc from London School of Economics.

    Michael McLean

    Director, ESG Research

    Michael McLean is a Director and Washington Research senior analyst, covering major US legislation, regulation, policy proposals, and political events. He is a member of the Barclays global cross-asset ESG Research team. Prior to his current role, Michael served as Director on the US Government Relations and Regulatory Policy team, where, among other responsibilities, he helped lead the bank's advocacy on financial regulatory and other policy issues and represented Barclays with government officials and industry trade associations. He earned a B.A. degree, cum laude, in Government from Harvard.

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